Everyone can stake on Ethereum 2.0! What you need to know

Everyone can stake on Ethereum 2.0! What you need to know


With this article, I want to remind you that anyone with less than 32ETH can stake Ethereum 2.0. Ethereum will eventually transition from proof of work to proof of stake. The fee issue is of course not the only issue that will be addressed. Now the scalability will increase, transaction speed will increase and the Ethereum network will also become more secure. Yet my two biggest irritation points at the moment are fees and the transaction speed. If the combination of these two problems is resolved through implementation of the staking system, I will use the Ethereum network again. I do not think it is responsible to use this network on the time of writing. 

So how do you stake Ethereum in the future? It is a misconception to think you need 32 ETH to be able to stake. You need 32 ETH to become a validator. But these these are two different things. In my view it is therefore not always clear what the options are exactly. In this article I try to put this on a list for you. Now I mainly want to talk about staking of Ethereum. How can you start staking, how do you do this and what exactly is the 32 ETH that you should need for this. So this is going to be a short and clear article about staking, staking pools and how to become a validator.

This article will describe the following:

  • Staking Ethereum
  • Staking pools
  • How to become a validator
  • Final thoughts


Staking Ethereum

By depositing 32ETH you activate the validator software to become a validator. The task you take on is that you will process transactions, store data and place new blocks on the blockchain. This is also why you earn new Ethereum. This is also why it is called proof of stake. Because you hold that 32 ETH and get rewarded for it. This is also the reason why Ethereum is becoming more secure. The Beacon Chain makes this discontinuation possible. If you want to know more about this, I refer you to this: https://ethereum.org/en/eth2/beacon-chain/ In other words, you can earn rewards for running the network and keeping it safe. But you can also lose your rewards by manipulating the system, going offline and by not validating transactions.

Now you think huh but you just said you can stake without 32 ETH. Yes this is certainly possible. By using staking pools it is possible to stake with less than 32 ETH. You can do this yourself by adding your Ethereum to a pool yourself. But there are also a number of companies that can do this for you. As a result, you do not have to do anything yourself and you hand over the work. For example, you no longer have to stay online yourself. Here you will find several companies that can do this for you: https://stakingether.com/ For more details about staking pools, I will make another article on this. Because there are many different pools and companies with different rules.

Staking pools

A staking pool basically means that several people join forces and merge their Erthereum and make sure they use their power from their common Ethereum. Such a pool ensures that you are a validator together and thus verify and validate new blocks. For people who have a little bit of Ethereum, for example, this is a great solution. You don't have to worry about hardware staying online and other stressful things. The pools take care of the heavy lifting and for this you also receive a reward in Ethereum. As an example I mention the following pool: Rocket pool. I am in no way connected to this pool. So this is just a simple example to show how much ethereum you need to start staking.

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For example, with Rocket pool you can start staking with 0.01 ETH. You exchange your Ethereum for this and then you get rETH in return. That is a tokenized version of the Ethereum that you have deposited. You can use this to prove that you have spent a certain amount of Ethereum and put it into this pool. There are many other features you can use, such as socialized risk. This means that the risk is jointly borne if a node operator is not fair and intends evil, the Ethereum stake can be lowered. So you can lose part of your Ethereum because of this. When you are using Rocket pool, the pool divides the loss and so you will not lose everything you have put into the pool. Normally if you run a node and you are doing things that are not allowed you lose all your Ethereum and can not be redeemd. 

Rocket pool uses smart contracts to provide transparency. This allows these contracts to be updated and checked. It is also important that external auditors can measure the security of these pools through the open source contracts. This also makes it safer to use Rocket Pool. If you deposit ETH in a pool of Rocket Pool, you will receive rETH in return. This token represents stake and yield. The token is simply an ERC-20 token and thus has the same properties as all other ERC-20 tokens. You can store them in any wallet and use them for DeFi products.

Be aware that once you have deposited your Ethereum in the staking pool your Ethereum will be trapped in this pool for several years. Also consider that this stake system is a beta version. Loss of Ethereum due to errors and bugs is present.

How to become a validator

To start the process you need to go to the following address: https://launchpad.ethereum.org/. You will be guided by the guide you can find here. Guidance will be present throughout the installation. An Eth2 client will be running and an entire copy of the blockchain will be made. This can cause the entire installation process to take a while to complete.

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Ethereum 2.0 uses proof-of-stake to secure its network.For this, we need active participants - known as validators - to propose, verify, and vouch for the validity of blocks. In exchange, honest validators receive financial rewards.

Importantly, validators need to post ETH as collateral - in other words, have some funds at stake. The only way to become a validator is to make a one-way ETH transaction to the deposit contract on the current Ethereum chain.

To become a validator, 32ETH will have to be deposited per validator you use. This process also means that it is not irreversible. You can therefore no longer turn your Ethereum 2.0 back to Ethereum 1.0. Sending Ethereum is not possible until phase 1. So you have to realize that it is an investment in the long term. What you should be aware of is that it is a beta version and there may still be errors and bugs in the software that can cause slashing. This means that you can lose some or all of your Ethereum 2.0. It is also important to know that new eth2 key pairs are used. To do this, you must be technically able to work with a terminal. So be aware of the risks and that you need technical knowledge to get this done.

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As you can see in the pictures above, it is a whole process that must be gone through. And for this you certainly need patience and the necessary technical knowledge. please don't underestimate this.

Final thoughts

Most people will use staking pools. Because you can start staking from a little bit of Ethereum. Becoming a validator costs about $ 62,000 at the time of writing. Well, most crypto fans don't have that much money in Ethereum.

I also want to indicate that I will dive into the staking pools in a next article. This allows me to provide you with more information. And there are many companies and projects where you can start or participate in a pool. It is therefore wise to find out more about this.

Likewise, I don't have 32ETH to become a validator. That's how I pinned my hopes on staking Ethereum in a pool. The options are still fragile now but will become more apparent as Ethereum 2.0 develops.

 


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LiquidAttic
LiquidAttic

I’m a simple man and a simple crypto enthusiast.


LiquidAttic crypto blog
LiquidAttic crypto blog

My name is Marc and i’m from holland. I’m interested in crypto, blockchain, privacy, DEFI and cybersecurity. And i wanted to share my simple thoughts about the crypto space. I will write about: News, cryptocurrency, tokens and much more.

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