The Basics of Ethereum 2.0 Staking

What is Ethereum 2.0 and Why it is Important?

Ethereum is rapidly moving up the crypto chain as it is now the most popular block chained-based platform to host hundreds of decentralized applications in a single network. Despite this fame, it had a few drawbacks that were causing some inconvenience to the ETH stakeholders. With the launch of Ethereum 2.0, the missing pieces came together and were marked for an upgrade to the base model.

Two things practically define Ethereum2.0 and tell us the difference it makes.

Proof of Stake

The previous Ethereum functioned through Proof of work. It relies on a physical computational network and miners. This system consumes a large amount of energy in form of electricity to keep the system running.

But the Proof of Stake only allows virtual miners or validators. It is less energy-consuming. It implements new blocks, as well as offers computer power, security, storage, and bandwidth for transaction validation.

Shard Chains

It breaks up a single blockchain into multiple minor blocks or shards. In this, the data processing responsibility is shared among multiple nodes that act simultaneously. Therefore, it increases the transaction speed. Ethereum previously only had a single chain with consecutive blocks that led to slower process time.

Ehtherem 2.0 enhances scalability, allowing it to alleviate bottlenecks and boost transaction volume.

What You’ll Need to Start Staking?

In the new Ethereum 2.0, you can become a transaction validator and start earning crypto rewards. Staking is basically mining in a proof-of-stake blockchain system. After becoming a validator, you’ll be in charge of storing data, processing transactions and creating new blocks in the blockchain network. A minimum balance of cryptocurrency is required as a node deposit, which then goes into the network.

To start staking in Ethereum, you will require the following things.

  • At least 32 ETH is to be deposited in the staking pool to activate the validator.
  • Eth1 or Mainnet client.
  • A backend API
  • Other hardware requirements.

To check the activity of this network you should use the special ETH2 explorer as ETH1 blockchain explorers simply show nothing related to ETH2.

How Much Can You Earn By Staking?

In return for helping to safeguard the network, you may earn 6-8% APR on each ETH you stake. Usually, it doesn’t go beyond 6%. Staking payouts for ETH2 are calculated based on how long and how much you are validating. It also depends on the incentives available on the network in a time period.

If the amount of ETH reduces in the mining pool, the rewards offer increases to bring in more ETH. When the pool has sufficient ETH on stakes, the reward offer reduces.

Staking can help you earn a passive income but, it comes with some risks. If you go offline or fail to validate, you may lose your ETH.

Where to Stake Ethereum 2.0?

There are several Crypto Exchange platforms where you can stake your Ethereum 2.0. The idea behind it is that these Crypto exchanges will construct a staking pool where retail investors will do their contributions. It enters in a smart contract. Whatever benefit is received is proportionally distributed among stakeholders. Some exchanges you can try out are Coinbase, Redot, Binance, Kraken among others.


Nathaniel Villa
Nathaniel Villa