Ether.fi is a decentralized staking protocol built on the Ethereum blockchain. It offers users the opportunity to stake their Ethereum (ETH) holdings while retaining control over their private keys. The protocol aims to provide a secure and non-custodial solution for staking ETH, allowing users to earn rewards while maintaining ownership and control of their assets.

Key Features of Ether.fi:

Decentralized Staking: Ether.fi prioritizes decentralization, ensuring that stakers maintain control of their ETH throughout the staking process. This means that users do not need to rely on third-party custodians to stake their assets, reducing counterparty risk.

Liquid Staking Derivative (LSD) Token: Ether.fi introduces a Liquid Staking Derivative token called eETH. This token represents the staked ETH and is minted from a liquidity pool that contains Non-Fungible Tokens (NFTs) associated with validators launched via the protocol. The eETH token allows users to have a liquid representation of their staked ETH, enabling them to trade or use it in other DeFi applications.

Node Services Marketplace: Ether.fi plans to create a marketplace where stakers and node operators can enroll nodes to provide infrastructure services. This marketplace allows users to access additional services related to staking, such as consensus protocols, data availability layers, virtual machines, oracle networks, and more. The revenue generated from these services is shared with stakers and node operators.

NFT-based Validator Control: Ether.fi differentiates itself by allowing stakers to generate and hold their own staked ETH keys. In most other delegated staking protocols, the staker deposits their ETH and is matched with a node operator who holds the staking credentials. With Ether.fi, the staker retains custody of their ETH while delegating staking to a node operator. This reduces the risk exposure for stakers.

Operational Phases of Ether.fi:
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Ether.fi has a roadmap consisting of three phases:

Delegated Staking: In this phase, stakers who wish to hold a bond and stake in multiples of 32 ETH can participate. The staker deposits their ETH into the Ether.fi deposit contract, triggering an auction mechanism to assign a node operator to run the validator. The staker retains control of their ETH by encrypting the validator key using the public key of the winning node operator.

Liquidity Pool and eETH: Stakers with less than 32 ETH or those who do not want to monitor validator nodes can participate in staking by minting eETH in the NFT liquidity pool. The liquidity pool contains a mixture of assets, including ETH and T-NFTs (representing staked ETH). Stakers can deposit ETH into the pool and receive eETH tokens in return. They can also swap eETH for ETH assuming sufficient liquidity.

Node Services: This phase focuses on the creation of a programmable layer on top of staking infrastructure. NFTs representing the economic value of staked ETH allow for the enrollment of nodes to provide additional services. The node operator, B-NFT holder, and Ether.fi must consent to enroll a node for services. The protocol plans to incorporate EigenLayer to support the node services layer.