Effective Ethereum Staking in Cryptocurrency Exchanges

Abstract

Cryptocurrency staking has become a popular investment option, and multiple cryptocurrency exchanges have been offering staking services to customers. Among the various proof-of-stake cryptocurrencies, Ethereum has become one of the most attractive choices. However, due to the complex architecture of Ethereum, exchanges face several challenges in designing and operating their staking systems while ensuring security and efficiency. In this paper, we analyze the solo-staking method on Ethereum and identify four challenges that exchanges are likely to encounter: wallet configuration, validator key security, stable validator node operation, and profitability. To address these challenges, we propose certain solutions, such as implementing a multi-tiered wallet configuration for customer assets and conducting validator operations on cloud platforms. We have implemented some of these proposed methods on the cloud, and successfully achieved stable operation for the Holesky testnet. We have also identified additional challenges that need to be addressed. We summarize them as open challenges and show the research direction.