What is Ethereum Staking?

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Why Stake Ethereum?

Staking is a way to help secure the Ethereum network and earn rewards in the process. In order to become a validator, you need to stake 32 ETH. This will activate the software and allow you to store data, process transactions, and add new blocks to the blockchain. As a validator, you’ll be rewarded with new ETH for your efforts. The proof-of-stake process is being introduced by the Beacon

Rewards

If you help the network reach consensus by batching transactions into a new block or checking the work of other validators, you’ll get rewards. This is important because it keeps the chain running securely.

Risks

You can earn rewards for doing work that helps the network, but you can also lose ETH if you do something bad or go offline without validating.

Requirements

In order to become a full validator, you will need to have 32 ETH. You can also join a staking pool with less than that, but you will need to run an execution client. The launchpad will guide you through the process and tell you what hardware is needed. Alternatively, you can use a backend API.

How to stake

It depends on how much you’re willing to risk. You’ll need to stake 32 tokens in order to become a full validator, but you can stake less if you want.

Stake solo and run a validator

To start the staking process, you need to use the staking launchpad. This will help you set everything up. Part of staking includes running a consensus client, which is a copy of the blockchain that is on your computer. This can take a while to download.

Check the deposit address

If you have followed the instructions on the launchpad, you will know how to send a transaction to the staking deposit contract. We recommend that you check the address carefully. You can find the official address on ethereum.org and other trusted websites.

Stake in a pool

If you have less than 32 ETH, you can add a smaller stake to staking pools. Some companies can do it all for you so that you don’t have to worry about staying online. Here are some companies to check out.

Proof-of-stake explained

In order to become a validator in a proof-of-stake system, you need to stake your tokens. Proof-of-stake is a new consensus mechanism that is going to replace the proof-of-work system. Proof-of-work is what keeps blockchains like Ethereum secure and decentralized.

Proof-of-stake helps secure the network by doing a number of things:

Your ETH is at stake

If you try to cheat the system by not validating transactions or creating new blocks, you could lose your ETH.

More validators, more security

In a blockchain like Ethereum, it is possible to censor and reorder transactions to suit you if you control most of the network. But to control most of the network, you need most of the validators, and for this, you would need to control most of the ETH in the system. That’s a lot!

As more people join the system, the ETH amount will keep growing. This makes the network more secure. Proof-of-work, which proof-of-stake will replace, requires the validators (miners) to have specialist hardware and lots of physical space. It is difficult to become a miner, so this does not make the network very secure against majority attacks. Proof-of-stake does not have these requirements, which means that the network can grow much bigger than with proof-of-work.

Benefits of staking to Ethereum

More sustainable

Validators don’t need energy-intensive computers to participate in a proof-of-stake system. They just need a laptop or smartphone. This will make Ethereum better for the environment.

More accessible

Ethereum will be more decentralized and secure with easier hardware requirements and the opportunity to pool if you don’t have 32 ETH. This will make it possible for more people to join the network, making it more difficult for someone to attack it.

Unlocks sharding

Sharding is only possible with a proof-of-stake system. If you shard a proof-of-work system, it would be easier for someone to control the shards if they had a lot of computing power. With proof-of-stake, there are randomly assigned stakers who can’t control as many shards as miners could.

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