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The Ethereum PoS protocol calculates these rewards based on key factors such as the participation rate, total staked ETH, epoch length, and network inflation 20. Staking Ether (ETH) involves participating in Ethereum’s PoS consensus mechanism by locking a minimum of 32 ETH as collateral in a validator. During staking, validators deposit ETH into a smart contract for a specified period, actively engaging in block validation and consensus-related tasks.
Later, on November 2, 2022, the centralized exchange FTX became insolvent, freezing customers’ digital assets. Table VI presents the taxonomy of the major LSTs that were empirically analyzed in this study, with most tokens operating in the reward-based model and naively launched on Ethereum. The differentiations between rebase and reward models for staking reward distribution is crucial for correct empirical analysis of the tokens. In the subsequent sections, we analyze the design decisions of various LSPs and empirically study the stability of their peg to ETH staking rewards. This section concludes with a comparative analysis of the historical performance of LSTs against native staking.
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The analysis includes limitations and empirical testing of LST performance in tracking staking rates, linking performance to architectural decisions. LSTs operate similarly to stablecoins and wrapped tokens in maintaining their peg. If you must go the secured card route, go online and compare the offers available.