StakeWise Pool
The goal of the StakeWise Pool is to enable holders of ETH to earn maximum staking rewards from participating in the Ethereum 2.0 consensus mechanism and allow them to utilize their stake in various DeFi protocols with help of StakeWise tokens.
We apply a 10% commission on rewards that the Pool generates to compensate for the costs of developing, running, and maintaining the infrastructure and smart contracts that underpin the StakeWise platform. To our knowledge, this is the most competitive offer on the market, which underscores our commitment to helping users maximize their staking returns while maintaining the highest level of service.
StakeWise Pool is a network of validators created and operated by StakeWise on behalf of stakers using ETH deposited into the Pool. For each new block of 32 ETH collectively deposited by the users, a new validator is created and added to the StakeWise Pool to earn rewards. All rewards and penalties generated by the Pool are distributed among stakers pro-rata according to their share of the Pool. The balance of ETH deposits and rewards is reflected in sETH2 (staking ETH) and rETH2 (reward ETH) minted to stakers in a 1:1 ratio.
Anyone can deposit any amount of ETH into the StakeWise Pool. Upon each new deposit in the Pool, StakeWise mints an equal amount of sETH2 (ie 1 ETH = 1 sETH2). Newly minted sETH2 will start accruing rETH2 immediately, even if the deposit is not part of a new validator yet.
Deposited ETH first goes to the Pool contract, where it sits with other small deposits until it collects a total of 32 ETH required for a new validator.
Once the Pool contract collects 32 ETH, it sends them to the Validator Registration Contract (VRC). VRC registers a new validator entity on the Beacon Chain. Simultaneously, StakeWise Pool adds the new validator to its network. After progressing through the activation stage in the Beacon Chain, the newly created validator starts earning rewards for stakers in the StakeWise Pool. For every ETH earned as a reward by the Pool, StakeWise mints an equal amount of rETH2. It is accrued to the holders of sETH2 every 24 hours.
Your earnings from staking in the Pool can be tracked by looking at the amount of accrued rETH2 or by consulting the dashboard within the StakeWise Pool section of the app.
At the later stages, StakeWise will add a dedicated Statistics page to show the most important KPIs for the StakeWise Pool and the Ethereum 2.0 network as a whole.
Upon arrival of Phase 2, StakeWise users will be able to burn sETH2 and rETH2 within the app and receive ETH in return at a 1:1 ratio.
Every deposit into the Pool will pass through the two stages of utilization, whose length and relative size will temporarily affect the yield of the Pool. These stages are Activating and Staking.
Newly registered deposits enter the activation queue to start staking in the Ethereum 2.0 network. The length of the activation queue depends on the amount of ETH being simultaneously registered in the network during a certain period. If the amount is large, it can take the network several days or even weeks to activate all queuing ETH.
ETH that is stuck in the activation stage is labeled as Activating in the StakeWise Pool. The amount of Activating ETH can cause a temporary drag on the Pool's performance, especially at the moment of StakeWise's and Phase 0 launch. This is because sETH2 starts accruing rewards immediately, whereas activation of deposited ETH may take days.
Once ETH in the registered validator gets activated by the network, it proceeds to staking and starts earning rewards for the Pool. At this stage, there is no discrepancy between the amount of ETH earning staking rewards and sETH2, and hence there is no drag on the yield of the Pool.
The effect from Activating ETH will be the most pronounced during launch and other periods when many new validators are being registered at once. Despite a temporary drag to the staking yield that emerges in periods of mass inflow of new deposits in the Pool, the long-term benefits to stakers in the Pool are the expected increase in liquidity of sETH2 and rETH2 associated with rising deposits in the StakeWise Pool.
StakeWise avoids sole custody of the withdrawal key for the Pool's validators by creating something we call the Horcrux. It is a trustlessly generated withdrawal key that is split into 7 parts, which are held by the widely-recognized figures in the Ethereum community. The withdrawal process will be overseen by these people, ensuring StakeWise processes all withdrawals fairly.
This semi-custodial approach will be used for all validators created for the Pool until a non-custodial solution becomes possible.
The Horcrux is created during an offline ceremony, where the participants (part holders) are required to exchange a series of cryptographically encrypted messages to create their part to the Horcrux and store it on an offline machine. The withdrawal key is never shown to any of the participants and only its public part is revealed. This part is then used by StakeWise to register validators for the Pool.
Generation of the Horcrux happens using an open-source tool developed by StakeWise. Its code has been audited and the tool is available for examination on Github.
The Horcrux can only be recreated if x of the 7 parts are combined. Recreating the Horcrux is necessary to process the withdrawal of funds from the Pool's validators in Phase 2. The distribution of funds to the users will be handled by a Smart Contract; however, the release of funds into the Smart Contract (i.e. withdrawal) will need to be approved by the Horcrux holders.
We omit the specific x threshold for security reasons, but users should expect x to be in the range of 4 to 6.
Preston van Loon (https://twitter.com/preston_vanloon)
Collin Myers (https://twitter.com/StakeETH)
Jerome de Tychey (https://twitter.com/jdetychey)
Auryn Macmillan (https://twitter.com/auryn_macmillan)
Tom Teman (https://twitter.com/tomteman)
Ofer Rotem (https://twitter.com/oferrotem)
StakeWise (https://stakewise.io)
All individuals participate in the Horcrux mechanism in a personal capacity and StakeWise has no affiliation with their employers.
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