Ethereum and PoS Problem

Back on Dec 1, 2020, Ethereum tested the proof of stake (PoS) approach on its Beacon Chain. Through this approach, users could become validators by staking 32 ETH. Their ETH tokens, however, were subject to a locking period. This meant that the staked assets would be illiquid for a while.

The possibility of all these began enticing new staking users. But there was a serious problem. Not every investor had 32 ETH to spare for staking. And because staking was a viable option for earning passive income, users tried to find alternative ways to stake ETH without jeopardizing liquidity.