- StakeWise uses a clever dual-token model that gives stakers more flexibility when managing their locked-up Ether, right now, as well as after Eth 2.0 launches.
- Plans are in motion to launch their decentralized autonomous organization (DAO), making StakeWise one of the first staking pools to become fully non-custodial.
- A dedicated and transparent team is fostering a friendly community that will be incentivized to earn $SWISE governance tokens and participate in managing the DAO.
The Competition is Heating Up
After two years of development and six months in beta, the StakeWise mainnet launched on January 28th, 2021. With that launch the team introduced a unique dual-token model that splits staking rewards from the principal deposit.
Founders Dmitri Tsumak and Kirill Kutakov came up with the dual-token model more than two years ago and have been working diligently to build their staking service around the idea ever since.
When depositing Ether in the StakeWise pool you receive a token(s) that represents your original deposit and another that represents the rewards you’re earning. You could loosely think of it like a stock that pays out dividends; the dividend is separate from the stock. You can reinvest the dividend, spend it or do nothing and let it accrue, all without touching the stock. As of this writing, no other staking pool offers this type of model.
All of those staking services are doing their best to evolve and anticipate the needs of stakers, but what the comparison above doesn’t include is whether each service is fully decentralized. StakeWise is leading the charge towards a truly non-custodial pool, edging out their more popular competitors.
Of course, some stakers won’t care about the benefits of dual tokens or non-custodial pools, and will simply want to stake and forget. For those uncomplicated hodlers, they will likely find the StakeWise website simple and user-friendly, as is. Connecting your wallet gives you a quick update on earned rewards and current APY. The learning curve is very minimal;
That being said, the dual-token model was really designed to give stakers more flexibility in the ways they can use and move their tokens. This includes reinvesting rewards to compound your returns, lending your deposit tokens for higher yields, borrowing against your deposit tokens, spending your rewards without touching the deposit and/or providing liquidity to earn governance tokens.
For example, those wanting to borrow against their principal deposit will find that they can continue to accrue rewards separately with certain DeFi protocols, such as Aave (yet to be announced). This creates more ways to access tax-free capital without selling your Ether, while generating rewards that could -in theory- pay the interest on the loan.
There’s a lot of speculation in that statement, as the team is currently working to form partnerships with protocols that would allow that to happen. But you can start to see the potential of a dual-token model and the many ways it could be used in the current DeFi landscape.
Becoming One With The DAO
It’s important to talk about the upcoming DAO, as well… especially if you are interested in earning the new $SWISE governance tokens. StakeWise will soon launch as a fully decentralized autonomous organization with 51% of the governance tokens going to the community over a 4 year period.
These tokens will carry their own value and give the holders voting rights when it comes to managing and making decisions about the StakeWise DAO, which you can find here.
The simplest way to earn $SWISE tokens is to lock up your rewards.
For a limited time you can get $SWISE tokens simply by depositing Ether, as part of the early adopter campaign.
Additionally, stakers can earn extra $SWISE tokens by providing liquidity for those who want to sell their rewards. This would be similar to providing liquidity through Uniswap (except it will likely be through Curve and Balancer to start with).
StakeWise does allow those with 32 Ether to run their own non-custodial solo validator, as well. I tested it out in their beta, and can confirm it’s very easy to set up (you just have to generate your own withdrawal key, which you can find in the instructions here). Although, only those that stake in the pool will be able to earn $SWISE tokens and participate in the DAO.
What I’ve found is that the StakeWise team has created a solid, easy-to-use and efficient platform, which has been audited by Runtime Verification, found here. They’ve entrusted the multisig withdrawal keys to various known members of the Ethereum developer community, which can be found in the whitepaper here. And they’ve been accommodating, transparent and easy to talk to in the community channels here.
I initially found StakeWise when I was researching different ways I could stake my own Ether. I have no affiliation with the team, but by the time you’re reading this, I will have some Ether staked on the platform and earning rewards… and I may even participate in the DAO.
Most of the information in this article came from my many conversations with co-founder Kirill Kutacov. If you’re interested in taking a deeper dive into the technical aspects, check out my interview with Kirill, found here.