Front-Loaded Returns with Ethereum Flashstaking
If you're looking for new ways to stake Ethereum, you might start with the so-called flashstaking.
If you're looking for new ways to stake Ethereum, you might start with the so-called flashstaking. The payout is available upfront.
The Ethereum Merge has succeeded, and ETH staking is likely to gain further momentum. For example, the yield on Ethereum staking has jumped from 4% to 5.2% since the merge on Lido Finance. A major downside, however, is that the coins remain locked for the foreseeable future. The same goes for the returns they produce. This is a problem for those who want to stake their crypto but also keep it usable. Several staking operators offer users liquid ETH tokens for this purpose. One Ethereum project takes a very different approach. The fee for providing its own runners is paid out upfront.
Immediate yield thanks to Flashstaking
With the Flashstake protocol, users can receive an upfront, pre-calculated yield for supplying their tokens. At the platform's launch, that yield was as high as 15.64%. The return is paid out in a mix of Ethereum and the company's own FLASH tokens.
The idea behind flashstaking is simple. First, you connect your wallet to the app. Then you choose the number of tokens to stake and the duration of the stake. This determines how long the tokens are locked to earn the associated rewards. The protocol then calculates the yield. With one click, this is paid out along with FLASH tokens and becomes immediately available. The deposited tokens are then locked for the pre-set period.
Behind the scenes, the app moves the staked tokens to a liquidity ledger on Aave, where it generates the previously earned yield over the lock period. After the lock period ends, you return to the ledger and have the originally staked tokens paid out again.
For some DeFi users, this can offer big advantages. Unlike other Ethereum staking protocols, such as Lido Finance, the payout date for rewards and the original amount is certain. Those who don’t cash out their FLASH tokens right away can use them to recoup their initial investment even earlier. Users don’t have to worry about liquidating their staked tokens, as Flashstake isn’t a lending protocol, like Aave or Compound.
Risks
However, the setup isn’t risk-free. A key concern is the still-limited liquidity of FLASH tokens. If you want to swap or sell large amounts on a decentralized exchange, you could face price slippage.
Many users will likely decide to sell their tokens after flashstaking to realize their yield. A mass sell-off of FLASH tokens could also reduce the yields for stakers who still hold or otherwise use their tokens.
Like other DeFi protocols, there are general risks to be aware of before you stake, such as bugs in the smart contract code and potential, as-yet-unknown exploits of the protocol’s functionality. As with all platforms, a front-end hack of the app’s website is also possible.
With the protocol needing only minor adjustments, FLASH token liquidity pools could fill quickly. This form of staking could evolve into a plausible alternative for Ethereum Hodlers. The beloved ETH tokens don’t have to be given up for an uncertain period, and users don’t have to accept the looming centralization of the staking infrastructure.
