Figment’s Institutional Ethereum Offering

May 22, 2023

Staking Ethereum offers a unique opportunity for token holders to secure the network and earn rewards in the process. By contributing to the stability and security of the Ethereum network, token holders are rewarded with freshly minted ETH and transaction fees, making it a beneficial relationship between the protocol and the staking participants. Serving as a validator, Figment takes on vital responsibilities such as storing block data, processing transactions, and adding new blocks to the blockchain.

Why stake ETH?

  • Stakers directly accumulate rewards in ETH: Staking Rewards encompass protocol inflation incentives and transaction fees. As Ethereum is the exponentially the largest and most widely used PoS Blockchain, staking rewards are more resilient based on a steady stream of transaction volumes and fees. 
  • Ethereum is one of only a few networks where token holders benefit from MEV-Boost when staking to earn additional rewards. MEV-Boost is the maximal extractable value that can be generated from block production that include, exclude and reorder transactions. 
  • Improve network security: As more ETH is staked, the network becomes increasingly resilient against attacks. As Ethereum is the largest PoS network by market cap, it would be more expensive for a malicious actor to gain control over the majority of the network than any other blockchain network. A more secure network instills confidence in users of Ethereum when interacting with the applications and layers built on the network.
  • For Exchanges and Custodians: Adding ETH staking is a new way to increase user engagement and retention while helping your customers earn rewards. As the digital asset market becomes more competitive, set yourself apart from competitors by adding staking services for your customers. 
  • ETH’s deflationary supply: Achieved through burning the base fee paid for transaction  on Ethereum. This reduces the amount of ETH in circulation, making its supply deflationary. 
  • Adoption & Use Cases: ETH stands at the forefront of adoption and serves as the primary platform for various use cases. It facilitates the widespread utilization of stablecoins, decentralized finance (DeFi) applications, non-fungible tokens (NFTs), and tokenized real-world assets. 
  • Roadmap designed for scale: The roadmap of Ethereum is strategically designed to achieve scalability. It includes the implementation of technologies like Eigenlayer and Layer 2 solutions. Ethereum aims to serve as a robust settlement layer capable of handling high throughput use cases. 

Figment’s Institutional Ethereum Staking Offering 

Our Ethereum infrastructure is highlighted by:

  • Figment’s “Safety Over Liveness” Approach
    • Slashing Infrastructure and Prevention
    • SOC 2 compliant and ISO 27001 certified
  • The Figment app, which contains a comprehensive staking dashboard
  • Utilizing multiple MEV relays to optimize Staking rewards
  • A multi-client approach to help mitigate centralization risks
  • Staking partner integrations through Figment’s APIs

Figment’s “Safety over Liveness” Approach

Our audited and scalable Ethereum architecture delivers the optimal rewards based on our “Safety over Liveness” approach. This approach is a unique and effective way to gain trust from token holders while minimizing slashing risks and potential losses. We optimize for uptime instead of maximizing it, believing that being offline is better than having a double signing incident, as safety is preferred during turbulent events. 

Figment’s Ethereum performance throughout Q1 continued to remain strong, having not missed any proposals nor being slashed for double signing. Since Ethereum’s move to PoS, Figment validators have had zero slashing events. We also performed above the network average Participation Rate, with an average rate of 99.98%, 0.51% higher than an average validator throughout the quarter.

Stakers may think the higher the uptime, the higher the chances of generating rewards. However, given the different characteristics of each PoS network, the rewards performance strategy is nuanced and unique. For example, having 99% uptime instead of 95% uptime on a PoS network like Ethereum is not necessarily better if it significantly increases the risk of slashing for a marginal increase in expected rewards. During Q1, Figment’s consensus layer rewards were on par with the network median, and our execution layer rewards were ~3.9% higher than the network median. 

For more insights on Figment’s Ethereum validator performance including rewards, participation, and slashing, view our Q1 Validator report here.

Figment’s Infrastructure offers four layers of double-sign slashing protection:

  1. Automated Deterministic Key Distribution: Upon key generation, each validator is deterministically deployed to a single validator client to ensure it never signs from more than one place.
  2. Local Anti-Slashing Database: For each validator client, we record every block and attestation signed by each validator key. The validator client uses this information to avoid attesting or proposing two different attestations or blocks for the same slot.
  3. Remote Signer: Acts as a universal slashing database across all validator clients to detect multiple signatures for the same block height to prevent a double-signing event.
  4. Validator Private Keys: Stored separately from the signing infrastructure in a cloud-based and zero-trust secured vault.

Figment’s Infrastructure External Audits and Certifications

Institutional clients have peace of mind knowing our institutional infrastructure provides operational and comprehensive management controls. Figment achieved a SOC 2 Type I attestation final report as well as an ISO 27001:2013 certification. Our multi-layered security approach encompasses continuous proactive measures and purpose built controls to maximize the resiliency and security of its staking services. Security is integrated throughout all aspects of Figment to reduce risk and enable the assurance, integrity and confidentiality customers expect. Our SOC 2 Type 1 Audit Report and ISO Certificate can be requested here.

 

The Comprehensive Staking Dashboard

The Figment Staking App enables asset managers, marketplaces, exchanges, foundations, and token holders to easily manage their digital assets. Institutional digital asset holders can now control their staking positions across multiple custodians or wallets in a single dashboard.

Key features of the Figment Staking app:

  • Point-and-Click Staking: Manage your staking positions with in-app ETH staking and unstaking 
  • Track & Manage Rewards: View all of your ETH staking positions – for every validator you use – with real-time information on your balances, including stake, wallet, and rewards balances
  • Comprehensive Rewards Reporting:  Track your portfolio across multiple networks and download detailed rewards reports in various formats
  • Custodian Integrations: Maintain custody of your digital assets with your preferred provider

Utilizing MEV-Boost to Earn More Staking Rewards

Ethereum stakers benefit from MEV-Boost when staking their ETH with Figment to earn additional rewards. MEV-Boost is the maximal extractable value that can be generated from block production that include, exclude and reorder transactions. Due to Figment validators leveraging MEV, our execution layer rewards in Q1 were ~3.9% higher than the network median.

Since the Merge, blocks from MEV-Boost have received 0.1347 ETH per block, on average, for execution rewards compared to 0.0389 ETH per block for non-MEV-Boost blocks. With an average of 7,104 blocks per day, that amounts to about 957 ETH/day for MEV compared to only 276 ETH/day. Almost 90% of the proposed blocks on the network are attributed to MEV-Boost. Moreover, MEV-Boost accounts for over 90% of network execution layer rewards.

Learn more about Figment’s MEV policy here.

Figment supports multiple MEV relays including Flashbots, and Blocknative. Multi-relay support helps maximize the rewards derived from MEV-Boost. Learn more about Figment’s MEV policy here

 

Multi-client approach

Multiple client implementations can make the network stronger by reducing its dependency on a single codebase. Figment supports both Lighthouse and Teku Ethereum clients. By supporting multiple clients, we can avoid client concentration and reduce the impact of a client-specific problem leading to potential penalties.

 

Staking Partner Integrations through Figment’s APIs

With a focus on speed and simplicity, Figment’s on-demand ETH staking reduces integration time, required knowledge of Ethereum, and resources needed to start staking Ethereum. 

By providing a withdrawal address, a funding address, and the amount of ETH to stake, developers can simply sign the transaction generated by the API and Figment will handle the rest. Under the hood, this includes complex operations like provisioning validators, generating transactions for deposit and exit, broadcasting transactions, and tracking validator activation and deactivation. 

Powered by Figment’s Staking API, users have the flexibility to create and deposit to Figment validators or even bring their own deposit and exit data from other staking providers, while still reaping the benefits of the API. You can fund up to 100 validators in a single transaction by leveraging Figment’s batch deposit contract, which never has control of your funds but rather acts as a proxy to the official Beacon Deposit contract, removing the need to send a transaction for each individual validator. For a detailed understanding of the process, users can view our comprehensive API documentation for staking and unstaking, as well as visit our website for further questions. 

Ready to Stake?

If you are interested in staking Ethereum, Figment offers a host of services aimed at delivering safe and reliable staking rewards for your assets. Figment is the largest independent ETH staking provider with 4.78% share of staked ETH. 

Our 250+ institutional clients rely on Figment to provide best in class staking services including seamless and easy integrations, detailed rewards reporting, insights, MEV-Boost activation on ETH, double-sign slashing, and downtime penalty coverage. The Figment team has extensive Ethereum knowledge intended to help dive into the specifics such as rewards and staking information. Visit our website to stake using the Figment app.

The information herein is being provided to you for general informational purposes only. It is not intended to be, nor should it be relied upon as, legal, business, or investment advice. Figment undertakes no obligation to update the information herein. 

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