Ethereum
Leveraging CESR benchmarks to gain a competitive advantage
As the staking industry matures and more node operators enter the market, the need for performance metrics becomes increasingly important to gain a competitive advantage. Ethereum’s staking rate is the closest equivalent to the “risk-free rate” of digital currencies.
Institutional staking service operators, such as Platform two (where I work as CFO) and Figment, are dedicated to providing security and stability to the Ethereum ecosystem while delivering top-tier staking returns to customers.
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One such indicator that is gaining prominence is the Composite Ether Staking Rate (CESR) benchmark, created by CoinDesk Indices and CoinFund. CESR measures the average staking rate on the Ethereum network, providing a reliable standard for operators and stakers to gauge performance. By comparing staking rates to CESR, operators can objectively assess their competitiveness and efficiency.
Why landmarks are important
Benchmarks are important in financial markets to create structure, standardization, and comparability for many financial products, including ETFs. CESR is a useful rate for issuers looking to offer ETH staking funds, and for validators looking to engage in performance tracking or swaps to lock in rates and create more sustainable, less volatile business models.
How operators can use the CESR benchmark
1. Performance benchmarking
CESR provides operators with a measurement tool to compare the performance of their validators to that of the network as a whole. By comparing their results to a reliable industry benchmark, operators can identify areas for improvement and optimize their operations, as well as differentiate their staking products in a competitive market.
The CESR framework promotes healthy competition between operators. Those who perform better are rewarded with increased delegations, while those who do not are incentivized to improve their performance to remain competitive.
2. Walk Monitoring and strategic monitoring
CESR allows operators to gain deeper insights into the Ethereum ecosystem. By monitoring trends, operators can make informed strategic decisions and adapt to market conditions and network changes (including the recent Shapella and Dencun upgrades).
The CESR benchmark demonstrates that well-managed operators can achieve consistent returns despite market and network fluctuations. This underscores the importance of strong operational practices and vigilant oversight.
3. Improving infrastructure performance through RAVER classification
Reliable, high-performance infrastructure is essential for success. Operators must leverage high availability, low latency, and rigorous operational protocols to maximize staking efficiency and rewards. Evaluation of the effectiveness of the Rated validator (RAVER) helps measure these factors, taking into account uptime, consensus participation, and overall reliability.
By using CESR as an industry signal and Rated’s RAVER metrics to measure infrastructure performance, an institutional staking service operator can optimize its operations to maintain a competitive advantage. This holistic approach allows operators to continuously refine their strategies and operations to further improve their services.
The CESR benchmark provides operators with a tool to measure and improve their performance within the Ethereum ecosystem. By leveraging CESR alongside operational metrics such as Rated RAVEROperators can achieve greater transparency, trust, and efficiency. As the Ethereum network continues to evolve, these benchmarks will play an increasingly critical role in guiding and measuring validator success. CESR will continue to be used by market participants, validators, and financial institutions around the world as they engage in products that reference Ethereum as the first base financial rate of return for the internet.
Note: The opinions expressed in this column are those of the author and do not necessarily reflect those of CoinDesk, Inc. or its owners and affiliates.