Curriculum·J313 Mining, Validating, and Running Infrastructure·about 32 min
Delegation and staking services
By the end of this lesson you can
- →Separate the three routes into a validator and name what each one delegates
- →Compute the commission drag over a realistic holding period
- →Find the point at which running it yourself beats paying somebody to
- →Price the risk that a service is removed by somebody other than the service
Junior · enrolled learners
This lesson opens with Kraken and the SEC, 9 February 2023.
- What happened
- The SEC announced settled charges against Payward Ventures and Payward Trading, together Kraken, for failing to register the offer and sale of their crypto asset staking-as-a-service program, in which investors transferred assets to Kraken for staking in exchange for advertised annual returns of as much as 21 percent. The SEC alleged US investors held crypto assets worth over $2.7B on the platform through the program, earning Kraken around $147M in revenue. Kraken agreed to pay $30M, to stop offering the program to US account holders and to unstake the assets of US clients, without admitting or denying the findings.
- The decision point
- Nothing about the staking failed. The validators ran, the rewards accrued, and the service performed. It ended because a regulator and the operator settled a registration question, and every US client's position was unwound as a term of that settlement. When you delegate, the counterparty is not only the party that can perform badly. It is the party whose permission to exist you are relying on.
- Recorded loss
- $30,000,000
What you will be able to answer
- →What are the three routes?
- →What does a 15 percent commission cost?
- →Where does solo beat custodial?
- →What risk has no price attached?
Orientation and Year One are open: anyone can read them without an account. From Year Two onward the lessons are for enrolled learners, because progress through the later years only means anything if it is tracked against a record.
It is free. We do not sell the list and there is nothing to buy at the end of it.
Sources and review
- https://www.sec.gov/newsroom/press-releases/2023-25
- https://www.cnbc.com/2023/02/09/crypto-exchange-kraken-settles-with-sec-over-us-staking-operation.html
- https://www.velaw.com/insights/a-stake-in-the-ground-what-the-secs-settlement-with-kraken-tells-us-about-the-future-of-crypto-regulation-and-enforcement/
- https://stakehound.com/blog-post/fireblocks-eth-2-key-management-incident/
Confidence high·Volatility high·Reviewed 2026-08-06·Owner unassigned
Contested
The SEC figures of over $2.7B of US client assets and around $147M of Kraken revenue are allegations in a settled action with no admission or denial, and the period the revenue figure covers is not stated in the release. They are reported here as what the regulator asserted rather than as established facts, and the argument does not depend on either number.
Whether staking-as-a-service is a securities offering remains contested and jurisdictional, and the enforcement posture has shifted more than once since 2023. Per J311-03's rule, this lesson states the position and its instability rather than predicting where it settles.
The economics in part two carry forward J313-02's stated assumptions, being a 3.0 percent solo reward rate, ETH at $3,000, a $1,200 machine over five years and power at $0.15 per kilowatt hour, with a 3.2 percent gross rate and 15 percent commission used for the service comparison. None are current figures.