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Ether.fi Launches NFTs Backed By Staked ETH Ether.fi Launches NFTs Backed By Staked ETH

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Ether.fi Launches NFTs Backed By Staked ETH – Crypto News

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3 years ago

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Most NFT collections center around collectible art, or in the case of Uniswap V3, represent liquidity positions.

However, in the Ether.fan collection launched today by liquid staking protocol Ether.fi, every NFT represents a certain amount of staked ETH and enables the owner to earn staking rewards.

Each NFT in the initial 1,000-item collection comprises a provably random piece of character art, a flair value indicating the amount of ETH staked in the NFT, and a border whose color indicates how long the ETH has been staked. Higher tiers offer higher rewards that compound with staking returns, enticing users to stay staked.

“The NFT That Pays You”

Ether.fi CEO Mike Silagadze believes that the project bridges the gap between NFTs and quantitative DeFi in a way that supports Ethereum decentralization.

“This is the NFT that pays you,” said Silagadze. “It allows you to stake ETH and mint an NFT PFP that represents your membership in a loyalty rewards program that gives you higher and higher yields, the longer you stake.”

Users may withdraw their staked ETH or opt to increase their stake at any time, meaning there is “no sunk cost,” according to Silagadze.

Although there will be a certain level of randomness and rarity to the art, the primary value of each NFT comes from the ETH backing it, according to Silagadze.

“There will be some premium at which these things trade, but they would never trade below their base value because, obviously, that wouldn’t make any sense. You could always just burn it and get the original ETH back,” said Silagadze.

Driving Decentralization

Ether staked in these NFTs will be sent to solo stakers vetted by Ether.fi.

At a time when there are only around 6,000 individual servers running Ethereum nodes, many of which are clustered just 20 minutes from the CIA, even adding 1,000 or 2,000 more machines makes a significant difference, according to Silagadze.

In that effort, all of the ETH from Ether.fan is going towards what Ether.fi calls ‘Operation Solo Staker.’ In exchange for agreeing to run a validator for three years, participants receive free hardware, which they get to keep at the end of the term.

“They’ll make, you know, 10, 20 bucks a month. and then, on top of that, they get a free computer,” said Silagadze. “There’s basically unlimited demand. We have 1,000 applications, literally, from people that want to run nodes.”

The network utilizes distributed validator technology to guard against the failure of any given node, meaning no single user may damage the system. “The key difference of Ether.fi is that the staker has the keys. So if they [validators] go down or they’re not performing, the staker can exit the validator at any time,” said Silagadze.

NFT Lending Partnership

Ether.fi is partnering with NFT lending protocol Arcade.xyz to make the collection available in its marketplace, aiming to offer a more stable ecosystem for customers by providing lending options based on heavily collateralized assets as opposed to lending against volatile non-collateralized NFTs.

“We are excited to see new types of assets on the Arcade.xyz peer-to-peer NFT lending platform – particularly as the financialization of NFTs continues to rapidly grow and evolve along with the liquid staking derivatives (LSDs) market on Ethereum,” said Gabe Frank, the founder of Arcade.

US Users Excluded

As a result of the current regulatory situation in the US, Ether.fi has opted not to offer the collection in the country.

“It seems like they view everything as a security,” said Silagadze, adding, “We’re making a best effort to block American users.”

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