The Ethereum staking landscape is evolving rapidly, and early adopters of cutting-edge infrastructure are capturing outsized rewards. Today, we're excited to announce that Blockdaemon has successfully completed StakeWise's latest Pectra upgrade, positioning us as the premier validator choice for institutions seeking maximum performance and economic and operational efficiency. 

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The Emergence of Vaults: Transforming Ethereum Staking Efficiency

The Ethereum staking ecosystem continues to evolve with innovative approaches that maximize capital efficiency and operational streamlining. While the core staking mechanism remains robust and secure, sophisticated vault architectures have emerged to optimize the non-custodial staking experience through intelligent automation and enhanced liquidity management. These advanced systems build upon Ethereum's proven validator infrastructure, delivering additional value that benefits stakers.

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Before vault architectures emerged, smaller participants faced significant barriers to entry in Ethereum staking, requiring substantial technical expertise and 32 ETH minimum deposits. While Liquid Staking Tokens (LSTs) provided an initial solution by lowering entry requirements, they introduced their own liquidity risks and counterparty risk considerations.

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Institutional clients faced additional challenges when attempting to onboard their own customers, struggling with seamless deposit and withdrawal experiences while managing complex revenue sharing models. Traditional staking infrastructure lacked the flexibility needed for white-label implementations and client-specific configurations.

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Vault-based systems have also offered easily integrated liquid staking tokens that can be configured for institutional-dedicated use cases or general DeFi applications. This architecture unlocks multiple use cases while providing the operational simplicity and customization flexibility that clients demand, enabling seamless integration of staking rewards into broader investment strategies.

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Vault Advantages:

• Lower barriers to entry - Stake with less than 32 ETH
• Optimized capital efficiency - Intelligent allocation 
• Enhanced liquidity options - Easier entry/exit mechanisms if LSTs are integrated
• Flexible control - Customize parameters and settings to match different needs‍
• Integrated rewards sharing models - Built-in fee distribution systems‍
• Liquid staking integration - Native DeFi compatibility and enhanced liquidity options

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Vault Considerations:

• Smart contract risk - Additional layer of technical complexity
• Fee structure - Additional fees beyond base protocol costs
• Regulatory uncertainty - Evolving compliance requirements for non-custodial pooled staking

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The Pectra Advantage: Technical Innovation Meets Higher Performance

Ethereum's Pectra upgrade represents an advancement in the network's staking model, introducing improvements that directly translate to enhanced performance and superior capital efficiency. StakeWise has upgraded its smart contracts to fully leverage Pectra's new capabilities, positioning Blockdaemon’s offering to deliver the maximum benefits of this network-level enhancement. The upgrade's most transformative feature addresses the rigid 32 ETH maximum effective balance that creates liquidity inefficiencies in vault-based staking. 

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Pre-Pectra validators required exactly 32 ETH to activate and any excess funds remained idle until enough accumulated for additional validators, Pectra enables validators to be activated with any amount above 32 ETH. This means that when funds accumulate beyond the 32 ETH, they immediately begin earning additional rewards rather than sitting dormant. The technical implementation increases the maximum effective balance (MaxEB) for validators, allowing single validator entities to stake larger amounts and earn proportionally higher rewards without the delays inherent in traditional validator activation queues. The following charts explain how waiting for a 32 ETH to deposit a new validator and earn rewards represent a missed opportunity and how Pectra upgrade will unlock enhanced rewards for the vault’s users. 

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In addition, Pectra upgrade introduces sophisticated auto-compounding mechanisms that automatically reinvest earned rewards at mathematically optimal intervals. Rather than requiring manual restaking or waiting for sufficient rewards to activate new validators, StakeWise's Pectra-compatible systems continuously reinvest earnings to maximize growth. This automated approach not only delivers superior rewards but also eliminates the operational overhead and timing inefficiencies associated with manual reward management. The following chart shows the influence of autocompounding following the Pectra upgrade assuming a 2.7% APR and depending on the number of ETH per validator. 

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Blockdaemon's StakeWise Vault Offerings

Blockdaemon provides two distinct pathways for accessing our Pectra-enhanced StakeWise infrastructure, designed to meet the diverse needs stakers. Our public vault is designed for stakers who want to take advantage of high performant shared infrastructure and transparent fee structure.

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For organizations requiring customized staking infrastructure, our private vault offering delivers fully configurable solutions with dedicated support and flexible terms and a built-in rewards share, making it ideal for large-scale institutional deployments, White-label staking service providers and partners seeking dedicated infrastructure with SLA guarantees.

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The Blockdaemon stakewise vault offerings are accessible through: 

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• Direct platform access: Seamless staking through StakeWise's interface 
• Widget integration: Embeddable staking widgets for third-party platforms
• Smart contract interaction: Direct blockchain integration for advanced users
• SDK support: Developer tools for custom implementations

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