Staking crypto is something I haven’t really dabbled in much before now. However, I have some ETH (Ethereum) that I plan to hold for a long period of time. Admittedly, I don’t know where ETH will go in terms of dollars. However, I like that ETH is a very green crypto since it has reduced its carbon emissions by 99.5%. I don’t know where crypto will go. I think a big part of how well it does will depend on government regulations, etc. However, even if things stayed as they are, I believe the long-term inflation rate for the USD may be around 2%. That seems reasonable since the Fed keeps stating that as their goal. Additionally, ETH will have an estimated burn rate (deflation) of 1.8% per year. Plus, if I allocate my ETH to a staking pool, such as the ones listed here, I may be able to earn about 3% (as of now) in additional ETH control.
Obviously, if ETH does terribly in the future due to some problem with quantum computing or being replaced by some other crypto, these yields won’t help much. However, I think the odds are not too bad for ETH to have moderate to large success over the next 10 years.
As far as purchasing the ETH, I already have it. I don’t have enough or the expertise to run my own node/validator at this time. So, I have been looking at Lido and Rocketpool. From my analysis, it seems Rocketpool is a better choice, better for the ETH community, and has a tax structure that will prevent me from having to realize yield income each year for taxes. Essentially, I can exchange my ETH for rETH, which has a dynamic conversion factor to ETH. At this time, the ETH I plan to use is not in a large unrealized profit position. Therefore, I won’t have to realize a large amount of taxable income to convert to rETH. Then, when I eventually have funds I want to spend, I can set the rETH for ETH under long-term capital gains rates.
I love that with BTC, ETH, and rETH it is possible to take full custody of them and not have exposure to an exchange like FTX or Coinbase. I have been in crypto since about 2017. I have seen massive runs up and down. I have done pretty well overall, but I think it may be time to carve out a section of my portfolio that is primarily a buy and hold venture.
I will likely try and see if I can get lower fees to convert to rETH either by using Uniswap or going directly to rocketpool. I will also be checking to see if I can get lower fees by waiting for a weekend or low demand time period. So I likely won’t make any swaps yet. I am still in the research phase, but I will likely start to get a crypto position that I intend to keep in crypto whether that is BTC, ETH, stablecoins etc. I like the idea of having a part of my net worth in an permissionless access vehicle that also isn’t stored in my home.
| RocketPool (estimated Prices now) | Uniswap (estimated prices now) | |
| ETH | 1 | 1 |
| rETH | 0.93684 | 0.93646 |
| Transaction Cost | 0.02360 ETH | 0.00813017 ETH |
| Transaction Cost a few hours later (after original post) | 0.01640 ETH | 0.00433 ETH |
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In addition to this blog you can follow my live brokerage accounts anytime. The three links below will take you to a third-party website called collective2 where I record and publish my personal trading decisions. If you have questions let me know!
Retirement Account #1:Patience is a Virtue
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Disclaimer
This is not investment advice. This website is designed to talk about investments but it is not designed to give you personalized investment advice. This site is generic and should not be used as the basis for any investment decisions. This is for entertainment and educational purposes only.
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