How Ankr’s Decentralized ETH Staking Works Better For Our Community
Last week, some of our community were concerned that Ankr’s ETH2 validators were underperforming other staking solutions in a 24 hour period. This can be worrisome if you have staked some ETH through Ankr!
This article is here to assure our staking community that they will always receive their fair share of rewards, even if any one of our many independent ETH node providers is underperforming.
Any missed staking compensation due to poorly performing validators will always be delivered promptly from the accumulated rewards or insurance deposits of those validators. They will then be “slashed” or removed from the network to be replaced by more consistent nodes.
During this process, ETH will be re-delegated to the best nodes if one fails to meet demands. This is the beauty of Ankr’s decentralized staking process.
If you are curious to know more about how this works, let’s dive in!
Ankr Creates Delegated Proof of Stake for ETH2
Ankr effectively turns the ETH staking system into Delegated Proof of Stake (DPoS), which is a better way to decentralize the validation process for Ethereum.
With our system, users will contribute their ETH to the Ankr platform, where it is then staked to 208 of our selected ETH2 node providers that are “delegated” to validate new blocks and share rewards from transaction fees among stakers.
These validators agree to run their validator nodes on the Ankr network in return for more ETH staked to them from the Ankr platform and a hefty portion of the rewards. These node providers must agree to keep their nodes running at peak performance levels and make an insurance deposit of 2 ETH if they can’t meet demands.
This insurance policy ensures stakers will always receive their fair share in rewards even if some of the validators perform poorly (like what has happened recently).
Benefits For Ankr’s Staking Users
- Decentralizes the staking process meaning a safer and more reliable staking experience for users with no single point of failure and active risk management from Ankr.
- Creates a more transparent system where our staking users will always know information regarding fees, validator compensation, and other important factors.
- Ensures stakers will always receive their fair share of rewards regardless of any validator’s performance while simultaneously re-delegating ETH to the best performing nodes.
What Happens If Validators Fall Behind?
Sometimes validators can fall behind in performance and miss blocks or “attestations,” which are votes integral to the process of adding new blocks to the chain.
If this happens too frequently, any external node providers attached to Ankr will need to compensate those who stake with Ankr from their own rewards. If they don’t have sufficient funds, they will need to provide this from their 2 ETH insurance deposit.
This process ensures that Ankr’s staking users will always receive their fair share of rewards. Additionally, poorly performing validators will be “slashed” or removed from the network to be replaced by nodes operating more consistently.
Now that you know more about this process, you will not have to worry about any lapses in validator performance as you will always know there is a risk monitoring process behind the scenes to keep the system fully functioning with alternate and backup nodes as a failsafe!
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