Staking will become the proof required to maintain the blockchain when Ethereum transitions to Ethereum 2.0 (or Eth2). Ethereum is switching from Proof of Work to Proof of Stake, meaning it’s switching from mining-based maintenance to staking-based maintenance.
What is Ethereum 2.0?
The upgrade to Ethereum 2.0 is broken down into 3 phases (Phase 0, Phase 1, and Phase 2). Phase 0 is already live, and consequently, Ethereum staking is already happening and you can check the latestnetwork stats on ETH2 explorer.
Ethereum 2.0 promises:
- Higher scalability,
- Increased network security,
- Faster transaction speeds on the Ethereum blockchain,
- A better and more efficient way to develop applications on “shards” instead of the main blockchain,
- Staking to earn rewards by validating blocks from an always-on node,
Among other things.
How to participate in Eth2.0 staking?
Eth2 staking is already live.
You need at least 32 ETH to be a solo staker if you wish to stake.
However, it’s possible to stake lower amounts by joining staking pools. Note that there are no official Ethereum staking pools. A list of validated and well-functioning staking pools is available on the official Ethereum website here: Ethereum staking.
If you go solo, you will need to run a validator node. Validator nodes are assigned block validation jobs randomly. When your node is assigned one, you’ll be able to finish the job and earn the rewards. You need to start with the Launchpad in this case: Eth2 Launchpad.
On the other hand, if you wish to join a pool then there are various options with good track records. Redot exchange has ETH2 staking feature with various limits and zero-comission.
Risks and benefits of staking
- If you’re running a solo validator node and you pass incorrect validation judgments, you’ll be penalized.
- If you participate in any shady practices or do anything with a wrong intention, you will be penalized.
- If your node goes offline, you’ll be penalized.
- If you’re part of a pool, then you’re at the mercy of the pool operating user or service. If the service goes down and you lose your staked ETH, there’s no possibility of recovering it.
Penalties mean a deduction of your total staked ETH.
- Staking will allow you to earn rewards passively after you’ve set up a node.
- Staking rewards are high and they will be the only way to earn ETH.
- ETH’s value itself will increase after Eth2, so your rewards will hold even more value in the future.
Staking might sound complex but it’s not. It’s very simple. All you need to do is stake your ETH from the ETH you own. You can transfer ETH from your Eth1 (current) wallet to a deposit address.
There are risks, but as long as you do good work, there are only rewards waiting for you.