Staking Risks

Staking of any kind is never risk-free.

Don’t invest unless you’re prepared to lose all the money you invest. This is a high-risk investment and you should not expect to be protected if something goes wrong. Take 2 mins to learn more

Staking Risk Overview

  • Slashing Risk: Staking assets carries the risk of loss if your validator(s), or validators in a staking pool, incur network penalties.

  • Smart Contract Risk: smart contracts may contain vulnerabilities that can impact the security and functionality of the staking service, putting your funds at risk.

  • Protocol Risks: Protocols, including updates they deploy, can introduce bugs or vulnerabilities to the staking protocol putting your funds at risk.

  • Liquidity Constraints: Staking ETH locks funds, potentially risking liquidity if needed urgently or in changing market conditions; assess your liquidity needs.

  • Staking Reward Variation: Staking rewards are determined by the protocol and can fluctuate, with no guarantee of future returns.

Slashing risk

Validators face staking penalties, which can result in up to a 100% loss of their staked ETH if they fail to fulfil their responsibilities.

When you stake with this service, Kiln will operate validator(s) on your behalf. If these validators are incorrectly operated, it is possible for a portion of the ETH you have staked to be slashed, meaning they are destroyed by the protocol.

Please read this article to learn more about Kiln monitoring and slashing and downtime mitigation.

Smart contract risk

It is important to acknowledge the inherent risk that the Kiln smart contracts may contain vulnerabilities or bugs.

Our smart contracts have undergone comprehensive audits conducted by industry leaders such as Spearbit and the Ledger Donjon. Access reports and read more about our security practices here and here.

Protocol risk

Ethereum, a rapidly evolving technology developed by a decentralized collective, operates independently of any central authority such as Kiln. It is important to note that, due to its nascent stage, Ethereum may contain potential errors or vulnerabilities. Consequently, these vulnerabilities could pose a slashing risk to the network.

Liquidity constraints

When you stake your ETH, it becomes locked in the staking process for a certain period of time, during which it is not readily available for immediate use or trading. This lack of liquidity can pose a risk if you need to access your ETH quickly or if market conditions change unfavorably during the staking period. It's important to consider this liquidity risk and assess your own needs for liquidity before engaging in native Ethereum staking.

Additionally, it's important to be aware of the bonding and unbonding periods involved in the staking process. These periods refer to the time it takes for validators to enter and exit the system, as well as the withdrawal queue duration, during which your validator will not be earning any rewards.

Before staking, it is highly recommended to familiarize yourself with these processes. You can find more detailed information in the documentation that follows.

Kiln is a technology services provider that operates a validator on your behalf on the Ethereum blockchain. It enables access to the staking process as defined by the Ethereum protocol developers and does not possess the ability to influence or modify its implementation.

Staking reward variation

Rewards are not guaranteed.

We invite you to read this informative article that provides insights into the expected staking rewards on the Ethereum network. It covers the various types of rewards and their characteristics in detail.

In summary, Ethereum staking offers two types of rewards: consensus layer and execution layer rewards.

Execution layer rewards tend to be less frequent but more substantial in value. On the other hand, consensus layer rewards are received more frequently but are relatively smaller in amount. These rewards become available for claiming once they have been "skimmed" or "withdrawn" by the protocol, which typically takes around five days.

It's important to note that all staking rewards are generated by the Ethereum protocol itself and are not determined or influenced by Kilnv or any other entity.

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