NFTs: A new use case for Ethereum Validators.

A simple onboarding experience to the staking ecosystem through NFTs. SenseiStake: 1 NFT=1 ETH Validator.

The transition of the Ethereum blockchain to Proof of Stake consensus not only brought a promise of scalability, but also a redesign in the dynamics of participation, and the rewards for the corresponding involvement.

This milestone translates to mining no longer being the means to produce valid blocks in Ethereum. Instead, PoS validator nodes have adopted this role and are now responsible for processing the validity of all transactions and proposing blocks. And, therefore, charging network transaction fees when signing new blocks.

The previous role of "mining" with rigs and video boards is now the task of the coordinated participation of Validators - nodes that are activated by a 32 ETH stake - opening doors to new paradigms for integrating and aligning the incentives of being a user and protector of the blockchain through a new consensus mechanism

Infrastructure Providers

The mission of blockchain infrastructure providers - those in charge of creating and maintaining nodes - lies in increasing the number of participants at the network infrastructure level, as this makes the blockchain more secure and resilient, helping to preserve Ethereum's core value: decentralization.

Setting up and managing a validator requires specific technical skills to avoid exposing funds to security risks and penalties for poor performance. According to the new Ethereum 2 rules, a Validator that does not perform well not only loses the opportunity to earn staking rewards, but also has penalties (slashing) on its original stake.

This creates the conditions for a latent niche for the creation of symbiotic solutions between stakeholders and infrastructure providers that facilitate the onboarding of nodes, ensuring the best technological performance.

SenseiStake: 1 NFT = 1 Validator

One proposal to bring these worlds closer together is SenseiStake, a solution developed by SenseiNode, the first institutional-grading blockchain infrastructure company in Latam, where through a Web3 app an Ethereum validator node can be activated in two simple steps with a non-custodial fashion.

Created for non-technical users, where it is only required to connect a wallet and make the stake deposit directly to the smart contract.

Along with the deployment of the Validator, an NFT certificate is mined which represents the ownership of the node, its stake and rewards.

An NFT (Non-Fungible Token) is a type of token on the Ethereum blockchain that represents a unique, transferable property. These tokens are often used to represent virtual objects such as digital artwork, virtual pets and other non-physical goods. However, the technology extends beyond this realms to certificates of authenticity, and ownership receipts.

Our smart contract activates a dedicated validator node on the Ethereum network, while issuing an NFT receipt certifying ownership of the share and rewards accrued.

Beyond jpeg

The use of NFTs as representations of active Validator nodes in the Ethereum network has some interesting advantages.

  • Firstly, it allows stake owners to get a form of liquidity in anticipation of the Shanghai update, as until then stake withdrawals on Ethereum are disabled.

  • The NFT can obtain liquidity through secondary markets, without having to wait for the implementation of the upcoming Ethereum 2.0 updates, and in the future would imply being able to obtain stake without having to shut down the computer. Ensuring that the structure of these tokenized nodes is built for network resilience.

  • These tokens function as a clear way to verify participation in the network, for those who want to demonstrate their commitment to the security and decentralization of the blockchain.

Finally, the use of NFTs as representations of active Validator nodes in Ethereum is a re-dimension of the purpose of this technology and an asset with objectives that go beyond the legitimization of a community or an aesthetic trend.

Utilizing NFTs to represent active nodes on the Ethereum network is a new application for the technology, an asset with purposes, rather than just being used for community legitimization or aesthetic trends: They align directly to the original purpose of Ethereum: to be more scalable and secure, but also remain decentralized.

The NFT Validator has an intrinsic value, it represents an active node in the blockchain consensus that contributes directly to the network's vision, with a verifiable stake of 32 ETH plus staking gains (approximately 6% per year at the time of publication) and the extra - for now incalculable - MEV boost (Maximal Extractable Value) gains.

In the end, this provides a tangible value-addition to the current NFT market.

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