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Ether.fi is a decentralized, non-custodial staking protocol that also issues an LSD token. Its main feature allows stakers to retain control of their private keys, ensuring security and ownership of funds. Ether.fi leverages cryptographic technology and key management to achieve decentralization during the delegation process, while also creating a node service marketplace where stakers and node operators can register nodes to provide infrastructure services.
Users and stakeholders of Ether.fi include B-NFT holders, eETH-only stakers, node operators, and node service users. B-NFT holders, node operators, and eETH holders (in cases of insufficient liquidity) can all choose to exit staking and redeem assets at any time.
For each validator, Ether.fi mints two NFTs (T-NFT and B-NFT) representing ownership of the deposit. The T-NFT represents 30 ETH and is transferable; the B-NFT represents 2 ETH and is a soulbound token (SBT), which can only be redeemed for the corresponding ETH when exiting the validator.
In Ether.fi's staking process, stakers must deposit 32 ETH or multiples thereof into the ether.fi deposit contract. However, many stakers do not meet this requirement, so ether.fi introduced eETH to enable broader participation. eETH is an LST that re-stakes the underlying ETH deposit via EigenLayer, allowing depositors to earn both ether.fi points and EigenLayer re-staking points. Below are the steps to obtain eETH:
Stakers holding a T-NFT can deposit the NFT into a liquidity pool and mint an equivalent value of eETH, with the amount determined by an oracle.
Regular depositors can deposit ETH into the NFT liquidity pool, after which ether.fi mints an equivalent amount of eETH tokens and sends them to the depositor.
Users holding eETH can swap eETH for ETH in the liquidity pool; if liquidity is insufficient, validator exit is triggered.
On February 28, 2023, Ether.fi completed a $5.3 million seed funding round co-led by North Island Ventures, Chapter One, and Node Capital.
