Ether.fan is using NFTs to incentivize stakers

Solo stakers can now receive staked ether from Ether.fan NFT holders

article-image

whitehoune/Shutterstock modified by Blockworks

share

Ether.fi is a self-proclaimed non-custodial ETH staking platform that enables users to distribute their staked ETH to node operators for rewards without having to reveal their private key information.

This is achieved through using a shared validator key that uses an integrated encryption scheme (ECIES). Stakers generate encrypted validator keys that are associated with a winning bid generated by a node operator public key. This then forwards information back to the node operator who can decrypt the information using a registered private key.

Source: Ether.fi

This is different from staking with Lido, or centralized node operators, Mike Silagadze, the CEO of Ether.fi, told Blockworks.

“The way it works is you send them your ETH and they generate the private keys that control the keys,” Silagadze said. “There’s a trust assumption that they will return their ETH to you.”

By contrast, Ether.fi ensures that stakers generate their own private keys — stakers only share an encrypted copy of their key with validators.

This does not mean that a staker’s ETH is safe from slashing conditions, as their ETH is still being used to operate the nodes. 

So what is Ether.fan?

Ether.fan is Ether.fi’s membership loyalty program, built on top of its liquid staking token eETH.

EETH — like most liquid staking derivatives (LSTs) — enables users to participate in securing the Ethereum network while also actively participating in DeFi activities without having to lock up 32 ETH. 

With Ether.fan, users can stake ETH and mint a fan NFT. The process involves converting the user’s ETH into eETH, which is then wrapped within an NFT. This NFT not only represents ownership, but it also contains rewards and membership points for the user.

“It’s designed for people that have smaller amounts of ETH,” Silagadze said. “We want a product that is usable by the average person rather than just being limited to institutions.”

Fundamentally, this means that a fan NFT is simply a wrapped staked ETH that accumulates rewards over time. The longer a user holds the NFT, the more loyalty points they will gain. The higher the loyalty points, the greater the amount of yield and rewards the user will receive.

There are 4 membership tiers: bronze, silver, gold and platinum. Different tiers will have different rewards. 

“We copied the airline model basically,” Silagadze said. “The model is you’re collecting airline points and you’re either cashing them in or selling them.”

If a user withdraws ETH, their membership status will be bumped down, Silagadze notes. If a user plans to withdraw more than 50% of their ETH, the platform will burn their NFT.

“It makes more sense to sell the NFT [on] like OpenSea or something so that you get to capture the premium,” Silagadze said.

Ether.fan NFTs will also have a role in governance, allowing users to participate in Ether.fi governance without the protocol having to issue its own native token.

All ETH that goes through Ether.fan will also go to solo stakers, Silagadze notes. 

“It goes towards launching Ethereum nodes in diverse geographies, because right now Ethereum is actually quite centralized when it comes to where the nodes are located,” he said. “We’ve launched the first node in Guatemala and we have others that are in the queue.”


Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter.

Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. Subscribe to the Forward Guidance newsletter.

Get alpha directly in your inbox with the 0xResearch newsletter — market highlights, charts, degen trade ideas, governance updates, and more.

The Lightspeed newsletter is all things Solana, in your inbox, every day. Subscribe to daily Solana news from Jack Kubinec and Jeff Albus.

Tags

Upcoming Events

Javits Center North | 445 11th Ave

Tues - Thurs, March 18 - 20, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

recent research

Research Report Templates (6).png

Research

In recent months, a number of highly accretive developments were implemented across the protocol to improve fee capture, expand product functionality, and ultimately drive value accrual to the RUNE token, with more upgrades on the immediate horizon. These developments include hiking the minimum swap fee parameter to increase revenue, adding a Burn System Income Lever to reduce the RUNE supply, the addition of COSM-WASM smart contracting and IBC to enable an application layer, new chain integrations, and more.

article-image

Former IRS agent and Binance executive Tigran Gambaryan will remain imprisoned in Nigeria’s Kuje prison

article-image

When Permissionless III wraps on Friday, there will be 26 days left until the 2024 presidential election

article-image

Plus, an update from the ground in Salt Lake City at Permissionless III

article-image

The US regulator accused the crypto market-making firm of acting as an unregistered dealer

article-image

Customers can pay merchants in USDC or USDP on Ethereum, Solana, and Polygon, while US-based merchants are paid in dollars