PoS Creates the Validators-as-a-Service Track

In the Ethereum Proof of Stake (PoS) mechanism, validators play a crucial role in maintaining the security and functionality of the network. They primarily maintain network integrity through staking, block proposals, and validation. Each validator is required to stake 32 ETH as collateral to ensure honest behavior. Validators are randomly assigned the opportunity to propose new blocks and validate blocks proposed by other validators to ensure compliance with network rules. By voting, validators help reach a consensus, ultimately deciding which blocks are added to the chain. In return, they earn transaction fees and block rewards, and they can also use MEV (Maximum Extractable Value) strategies to further increase their income. Validators can obtain optimized MEV blocks from block builders to improve returns. If a validator attempts to manipulate the network, they will face slashing penalties on their staked ETH, ensuring fairness and security for the network.

Validator Rewards

Source: etherfi.gitbook.io

Validator rewards, including witnessing, block proposals, and rewards from synchronization committees, may vary depending on network conditions and the number of active validators. The primary duty of a validator is to verify the validity of blocks and propose new blocks. MEV rewards and priority fees are part of the execution layer rewards, typically included in block proposals and associated with transaction processing, which may experience significant fluctuations. Less common penalty rewards are awarded to honest validators when malicious validators are found and penalized.

Due to the relatively high cost and entry threshold for individuals to maintain nodes, many protocols have made various efforts to solve this issue. At the same time, users want to maintain liquidity in their assets during staking to participate in other DeFi activities at any time. Therefore, with the popularization of PoS and the growing demand for staking, more platforms and infrastructure providers offering staking services have emerged in the market. These platforms provide convenient staking services for ordinary users and offer customized solutions to help institutions and large investors manage their staking assets.

Staking Solutions Overview

Lido: Lido is the largest decentralized liquidity staking platform, allowing users to stake any amount of ETH and receive transferable stETH or wstETH tokens. Lido’s advantage lies in its liquidity, as stETH can be used in various DeFi applications or as collateral. However, it charges a 10% fee, with 5% going to the protocol and 5% to the node operators.

Rocket Pool: Rocket Pool allows users to stake any amount of ETH and receive rETH tokens. It charges a 15% fee, all of which goes to the node operators. Unlike Lido, Rocket Pool allows anyone to become a node operator by staking 16 ETH and 1.6 ETH in RPL tokens, making it more decentralized. Although rETH’s liquidity is lower than stETH, its risk of “decoupling” is smaller due to market incentives.

Eigenlayer: Eigenlayer is an innovative protocol that allows Ethereum stakers to re-stake on top of their original staking, aiming to enhance Ethereum’s decentralization and security by providing an additional layer of network security. Eigenlayer attracts stakers by offering additional revenue opportunities for validators on the Ethereum network.

Kiln: Kiln offers a one-stop Ethereum staking solution, providing various staking methods to meet different user needs, including direct staking, DeFi integration, liquidity staking, and customizable smart contract services. Kiln focuses on providing easily integrable tools for platforms and developers, offering flexible reward management and smart contract features suitable for various users, including both institutions and individuals.

Kiln Product Overview

Funding Details

Kiln has raised a total of $35 million through two rounds of funding. The most recent round, completed in early 2024, raised $17 million, led by 1kx, with participation from well-known institutions such as Crypto.com, IOSG, Wintermute Ventures, KXVC, and LBank. Existing investors Kraken Ventures, GSR, and Avon Ventures also participated in this round. This funding will be used to support Kiln’s global expansion, DeFi reward mechanisms, and the expansion of staking services.

Before this, Kiln completed its first round of financing in 2022, raising $17.6 million from investors, including Illuminate Financial, LeadBlock Partners, Sparkle Ventures, Alven, and Blue Yard Capital. This funding helped Kiln become a leading staking infrastructure provider, managing over $4.2 billion in staking assets and operating the largest validator node cluster on the Ethereum network, accounting for about 4% of the total network.

Design Concept

Kiln adopts a diversified strategy in infrastructure integration, deeply integrating wallets, custodial platforms, and exchanges to provide flexible staking services for users and institutions. In collaboration with Ledger Live and Crypto.com, Kiln enables users to directly participate in staking via their platforms, and by integrating with Coinbase Cloud, Kiln offers small-scale ETH staking through smart contracts, providing staking opportunities for users who do not meet the 32 ETH minimum threshold. Kiln also achieves liquid staking by building a unified API and smart contract technology with cross-chain support, enabling users to participate in network staking without locking up assets, and supporting pool staking to lower entry barriers.

Unlike other staking platforms, Kiln focuses more on developing as a basic technology provider. It develops customized white-label solutions, integrates a wide variety of DeFi products across different blockchains, and comprehensively enhances the efficiency and security of staking services. For example, it provides tools for integrators to manage staking functions, as well as transparent reward management and comprehensive data tracking for platforms. As a one-stop service provider for staking technology, Kiln has also gained favour with traditional financial clients. Currently, about 35,714 stakers participate in staking on the Kiln platform, with a total of approximately 1,142,848 ETH staked.

Weekly inflows per channel

Source: dune

Kiln has developed a comprehensive product suite, including the Dashboard, Kiln Widget, Kiln Onchain, and more.

Kiln Onchain

Kiln Onchain aims to solve issues in Ethereum non-custodial staking, such as transparency, commission management, and user experience. Currently, Ethereum lacks an on-chain commission system, which forces platforms to hold users’ staked ETH or directly charge deposit fees as commissions, affecting the transparency of fund flow. The design of Kiln Onchain allows integrators to provide branded, customized Ethereum staking services for users, including setting commission rates, distributing rewards, supporting seamless integration of multiple operators, and even issuing liquid staking tokens (such as NFTs or ERC20 tokens) to represent users’ staking positions. This design enhances transparency and user experience and helps integrators achieve revenue sharing through staking services.

Source: Kiln

Kiln Onchain introduces a smart contract system designed for multiple-party needs, mainly serving three roles:

• Integrators: Wallets or exchanges can use the smart contracts provided by Kiln Onchain to create customized staking solutions for users, choosing a single operator for staking or selecting multiple operators and issuing their own liquid staking tokens (LSTs).
• Operators: Ethereum validator service providers can integrate smart contracts to support the staking service needs of multiple integrators, offering various staking models like pooled staking or exclusive staking.
• Stakers: ETH holders can choose between pooled or exclusive staking, ensuring they retain control over their assets throughout the staking process, with transparency and auditability of fund flows.

For Ethereum staking pools, early participants may experience reward dilution due to validator node queue delays, which can affect the overall reward rate (GRR). This initial dilution and GRR fluctuations are more common in pools without pre-allocated capital and will stabilize as more validator nodes are activated. Kiln emphasizes decentralization by collaborating with multiple operators, reducing centralization risks, and promoting diversified validator node distribution. Integrators can issue liquid staking tokens or NFTs to represent users’ staking shares, improving liquidity and customization options, while using Kiln’s infrastructure to manage the underlying staking operations.

Kiln’s on-chain solution works with The Graph’s data indexing service to ensure transparency in fund flow and reward tracking within the staking ecosystem. By integrating these options, Kiln’s solution supports user retention and a reliable reward-sharing model while allowing integrators to fully customize the user experience. The platform is based on modular contract designs that reduce counterparty risks and operational burdens, helping integrators easily manage partnerships and staking services.

Kiln DeFi

Source: Kiln

Kiln DeFi is a set of smart contract tools for partners to natively integrate DeFi protocols into their wallets or platforms. This solution operates entirely on-chain, with a high degree of automation and simplified integration methods. Users can integrate it directly into their platforms via the Kiln API or customize Kiln’s widgets to meet specific needs. Kiln DeFi has currently integrated with multiple protocols, such as Aave and Compound, allowing partners to use Kiln’s technology stack to offer these services to end-users.

Support for Multi-Chain

Kiln originally focused on supporting Ethereum staking and became a leading service provider alongside Ethereum’s transition to PoS, offering high availability and security assurance for institutional clients. With the rise of the multi-chain ecosystem, Kiln has expanded to support dozens of major public blockchains, including Solana, Avalanche, Polygon, and others, providing solutions similar to Ethereum staking derivatives (like stETH) for multi-chain.

In the future, Kiln plans to further optimize institutional services, expand Layer 2 (L2) staking support, and deepen liquid staking products. It aims to become a core infrastructure provider in the cross-chain staking field, offering liquidity assets for more public chains and expanding staking services to L2 and other new network ecosystems.

Partnered DeFi Protocols and Supported Public Chains

Source: Kiln

Kiln Widget

Kiln Widget is a newly launched tool designed for platforms that need to provide crypto rewards, including wallets, custodians, technology providers, and browser extensions. It helps platforms increase user engagement and generate revenue through integrated profit features. Kiln Widget supports platforms in quickly launching a branded dApp or seamlessly embedding it into any network interface. Platforms can customize reward modules through the Kiln Widget editor and support low-code/no-code integration. It can also be used as an independent website or embedded into existing web platforms and mobile apps, providing users with a one-stop service from discovering reward products to managing deposits and viewing detailed reward reports.

Conclusion

Kiln, with its robust technological support and deep ecosystem integration, has become an industry leader. Its core features include supporting staking services for Ethereum and other major PoS public blockchains, offering liquid staking and pooled staking solutions to lower the participation threshold, providing customized white-label solutions for institutions to simplify staking integration, and enhancing earning potential through smart contracts and DeFi reward mechanisms. These features serve individual users and offer flexible and efficient solutions for wallets, exchanges, custodial platforms, and other institutions. Looking ahead, Kiln is focused on global expansion, particularly in the Asia-Pacific region. It plans to introduce more chain support and innovative staking mechanisms to enhance user experience and ecosystem value further.