Among the flurry of news about bankruptcies and the iron fist of regulatory agencies over crypto organizations, the community appears to have forgotten about the Ethereum Shanghai Upgrade. But the event is coming up quickly, and it looks like it will give the market a new lease on life.
The Spotlight is a Coin98 Insights exclusive interview series with industry builders on hot market topics. In this episode, we talked with Tiago Pratas, Business Development Manager at Ankr, a Web3 core infrastructure company focused on Liquid Staking Tokens (LSTs).
"Us Before Lido"
- Hello Tiago. Ankr is a well-known protocol in the field of LSTs, and the Shanghai Upgrade is coming soon, so it will become even more popular. Can you tell me why the LSTs field was added to Ankr?
Tiago: This is very interesting and maybe people don’t know this, but Ankr was actually a pioneer in LSTs. We did it (getting into LSTs) even before Lido. At the moment, Lido is a competitive force on Ethereum for a lot of reasons. But we are one of the biggest players in the LST space and have multiple chains that we covered there and besides, we also incubate a few products and projects so yeah that's Ankr.
Going back to the beginning, you know that we need a stable and strong infrastructure for everyone to build on if we want a strong market. This is why Ankr made the LSTs platform in the first place. Because LSTs are a pretty important part of keeping networks safe by getting more people to take part in transaction authentication.
In short, Ankr was building up its infrastructure at the time, so adding LSTs was a natural and reasonable thing to do.
- At the moment, both Ankr token and ankrETH are traded at a discount. Why did Ankr choose this approach?
Tiago: Shanghai Upgrade will allow people to unstake. As we speak right now staking ETH is a one-way street and this adds extra layer of liquidity risk to this type of asset. For people who acquire ankrETH, they don’t know when they’re getting their ETH back, right? So discount at this point is just a normal thing, and that’s why we chose this approach.
And I believe this is the first step to allow more easy swapping between LSTs. For any LSTs being traded at a discount on the market, people can buy them and come back to Ankr and redeem them. This adds another layer of liquidity on top of it because you don’t need to interact with any DEX or have any slippage.
One more cool feature about Ankr, which was already present and live on BNB Chain so everyone could try and test it out, is a mechanism that allows people to instantly redeem their LSTs assets without having to wait for a bonding period to end just to get their assets out. We do this because we want to become the most “liquid” liquid staking provider.
When LSTs are added to the Ethereum network, this feature will be turned on as soon as the network enables the unstaking of ETH.
- What else does Ankr have in store?
Tiago: Shanghai Upgrade is an opportunity that Ankr is taking to become more competitive. In terms of rewards and incentives, we are going to launch a “referral program” soon that will basically allow influencers or platforms to delegate on Ethereum and we share our revenues with them.
And basically, we are going to partner with SSV and Obol to decentralize our node operation with the help of DVT. Just imagine that, instead of having one key and one note, now you can split this key into three or four providers, and these four providers will validate the transactions together.
As a result, even if one of them fails, you still have three guys that are validating the transactions and make sure that the nodes still function and operate well and against slashing.
In addition, we are going to launch a marketplace for validators, where people can directly choose where they want to delegate their ETH.
So, instead of us who decide each node, it’s the community who do it (delegate their ETH) through a voting system using the Ankr token, and this will decide how the ETH gets delegated and to whom. Basically, these validators have insurance, so if they misbehave and got slashed, the users (who delegate these validators to run their notes) are still protected.
Finally, with Shanghai Upgrade, staking will have lower risk therefore more constitutions are probably coming in. And our philosophy is that corporation is more important than competition, so we want to help them onboarding into this LSTs field. Ankr is working with some well-known partners, and the information will be made public soon.
- What does Ankr do to make it easier for regular users to use the platform besides helping big companies get into the LSTs field?
Tiago: Comparing to other LSTs providers, the UI/UX of Ankr is one of the easiest to use, you just need 2 to 3 clicks to complete your staking. This is really helpful for people who are trying to enter this space. After all, why hold BNB or ETH if they could give you 3 to 5 percent of APY staking? You know it’s free money, right?
So Ankr could be the only one that has a DeFi dashboard that allows you to check all the assets that you staked. On top of this, we also have a DeFi calculator that will basically allow you to calculate your future earnings based on what you invested. So if you invest in BNB or ETH, you know that in one year from now you’re getting your $100 back, which is quite useful.
And we also have a DeFi tab, where you can see all the yield farming opportunities with your token.
I think most users would feel a bit lost when they come to the space (the LSTs platforms). So with all those features, not only Ankr could help facilitate their staking experience, but we could also help them optimize their portfolio and gain better knowledge about the available DeFi opportunities.
We'll fight harder on Ethereum
- With the Shanghai Upgrade, other LSTs platforms are sure having many plans up their sleeves. What’s your input about your competitors?
Tiago: I think it's interesting that staking competitors in centralized areas like Coinbase have their own version of liquid staking. They think it is safer and gives them more control because you have to do KYC if you want to stake.
But since this version is centralized, you can't buy or sell ETH on the market, which is the whole point of LSTs. I think they went this way because institutional investors might like this option for staking, but regular DeFi users would not.
I think that other people who play in the decentralized LST space will have different strategies for each chain. At the moment, Lido is the leader on Ethereum, but Ankr is in charge on BNB Chain. But on this chain, the APY you get goes down as more BNBs are given to you. So, even though Ankr is the most popular name on the BNB Chain, users might not want to run all of their nodes on Ankr. Because of this, we and other platforms have to come up with a lot of ways to reward users to get them to join.
As for innovation, Lido sits on top of their throne so they don’t have any incentive to innovate much, right? However, as for the rest of the LSTs platforms, they still have a lot of room to grow. I hope that the LSTs game will start over after Shanghai Upgrade.
- People might sell their unstaked ETH after the Shanghai Upgrade, according to some. You also have liquid staking tokens right now. What are your thoughts on this?
Tiago: I have ETH, and I'm not going to sell them. I'd like to keep my ETH. Again, why should I sell Ethereum when I could hold liquid staking tokens of Ethereum, which earn a yield? Since there is no risk, why not hold on to them?
Especially since these liquid staking tokens of Ethereum are currently being traded at a discount, and I prefer the Ankr liquid token because it can be used to build infrastructure on Ethereum.
But we are also a bit concerned that after the Shanghai Upgrade, users will unstake their ETH and move to other platforms. So, LSTs may become more competitive after Shanghai, and Ankr plans to fight harder on the Ethereum network.
- This is how LSTs look after the Shanghai Upgrade, but what about the Ethereum network itself?
Tiago: I think Ethereum will have a lot of opportunities following the Shanghai Upgrade.
You know, at the end of the day, Ethereum is one big decentralized computer where you could build a computer program that runs forever, right? And as long as Elon Musk doesn’t run nodes on satellites or something like that, Ethereum will exist and the programs and the smart contracts that we build in Ethereum will still be working. And this is powerful. So anything that works towards the consolidation and increasing of security of this (Ethereum) network will make it more robust. And Shanghai Upgrade is one of those things.
With negative inflation, Ethereum's decentralized computer is a center of innovation and strong for price appreciation. This will increase its appeal to institutions and investors, along with the Shanghai Upgrade and lower liquid staking risks. Ethereum will draw innovation and investment because it has a secure network and lower risk.