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MetaMask, one of the most popular cryptocurrency wallets in the world, has announced the introduction of an Ethereum staking service. This new feature promises to democratize access to ETH staking, but comes with a significant caveat: users in the United States and the United Kingdom, for now, are left out.

In an official statement, MetaMask revealed that its staking service will allow users to pool their funds to lock at validators operated by blockchain software company Consensys. The main benefit of this service is that it allows ETH holders to participate in staking without having to meet the high minimum requirement of 32 ETH, which is equivalent to around $112,000.

With the new functionality, users can lock any amount of ETH and still qualify for staking rewards. This move is a direct response to the fact that 99% of ETH holders do not have the 32 ETH needed to become independent validators. MetaMask identified that 74% of ETH in circulation is not staked, with the majority concentrated in a few larger pools.

What is Ethereum Staking?

Since Ethereum’s transition to the proof-of-stake (PoS) consensus mechanism, the network has come to rely on validators instead of miners. These validators are responsible for processing transactions, storing data, and adding blocks to the blockchain. The security and decentralization of the network depend on the active participation of these validators, who receive interest on their “locked” coins.

On the other hand, if a validator does not perform its functions correctly or engages in inappropriate practices, it may suffer what is known as “slashing”, losing part of its funds. Matthieu Saint Olive, product manager at Consensys, stated that since 2020, Consensys validators have operated without slashing incidents.

Basically, MetaMask’s shared staking service aims to bridge the gap for users holding less than 32 ETH. With this, more people will be able to contribute to the security of the Ethereum network, making it more robust and decentralized. Additionally, staked assets can be withdrawn at any time depending on validators’ exit protocols.

MetaMask’s introduction of pooled staking puts the company in direct competition with other major players in the market, such as Lido and Coinbase. Lido is currently the largest liquid staking platform, allowing users to stake ETH and receive Lido Staked Ethereum (stETH) tokens, which can be used in DeFi applications.

Coinbase, despite regulatory restrictions, continues to be one of the largest pooled staking providers with a significant market share. Together, Lido and Coinbase represent almost 45% of the 33 million ETH currently staked on the Ethereum network.

USA and UK are left out

Joseph Lubin, CEO of Consensys and co-founder of Ethereum, compared the new service to liquid staking, highlighting its convenience. He explained that the service allows you to allocate small or large amounts of Ether in a simple way and withdraw quickly if necessary.

Despite the advantages, the service is not yet available to users in the United States and the United Kingdom. MetaMask said it is working to launch the service in these regions soon, but faces significant regulatory challenges.

In the United States, the regulatory landscape for Ethereum staking is constantly evolving. In 2023, the Securities and Exchange Commission (SEC) fined Kraken $30 million for charges related to its crypto asset staking service. Coinbase also had to scale back its staking service after facing similar actions from the SEC.

In the UK, although the regulatory environment is less strict, there are still uncertainties. Treasury Economic Secretary Bim Afolami has promised to set rules for staking and stablecoins, but so far, progress has been slow.

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