Daniel Fernandes on Warpcast

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https://warpcast.com/~/channel/walletbeat

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Some wallets use the label "staking" to refer to the act of handing over your coins to a custodian who will turn around and stake them. Is this label correct? Staking may have been the user's goal, but the "handing over the coins" part feels too critical to not be reflected in the action's label. Am I off-base here?

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Daniel Fernandes

This is true, but even as a solo home staker maxi, I can acknowledge that some dependencies are illegible to me. Yes, it's basically UI sugar hiding a swap. But I'm not as offended b/c staking always means 'something is at stake' i.e. you are taking on some risk to get some reward. The only question is what & where do the risks come from?

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Daniel Fernandes

For example, I use @ethnimbus, Besu, and @dappnode. If any of those have a critical bug, my keys could be leaked and/or I could be slashed. I can't read much less understand every line of code, so I'm trusting others to be careful with their coding & testing. In a sense, "I'm handing over the coins" insofar as I have substantive trust dependencies external to myself. If I swap ETH to stETH or cbETH, or rETH: I'm trusting Coinbase, Lido, and Rocketpool organizationally as corporate/DAO entities. Wallets primarily through orderflow/advertising, so I don't bemoan Coinbase Wallet offering users to 'stake' by swapping to cbETH. But I would complain if it's just sending the money to Justin Sun's personal staking farm.

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Daniel Fernandes

*primarily make money

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Those are all great points, and they show that the "risk" aspect of this labeling imprecision isn't an all-or-nothing proposition vs actual staking. I'd still contend that there is a large distinction on the broader "does the action being done actually matches what the user intends to do" aspect of the label, of which riskiness is just a part. Say you're new to Ethereum and you learn about it. You come across the fact that it has a Proof-of-Stake consensus anyone can participate in to help secure the network through a process called staking. So then you use your Ethereum software to do this staking thing! You think you're helping secure the network and Ethereum is paying you for it. But in actuality, you are growing some staking provider's share of the network. Ethereum is paying them for it (not you!), and what you perceive as staking rewards are actually just kickbacks from the provider. Even ignoring the risk component of this from the extra layer of indirection, this feels meaningfully different to me.

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