Ethereum is headed to transition from proof-of-work to proof-of-stake. nikopolos breaks down how you can put your ETH to work and earn a yield for it.
As a minimum requirement, you’ll need to use a computer with enough memory space to download both Ethereum blockchains – the old and the new. Already, Ethereum 1.0Validators are also expected to keep their nodes connected to the blockchain 24/7. Therefore, a quality internet connection is a core criterion.
This payment validates your claim to become a validator. It also provides the network a way to punish rogue validators undermining the validity of the Ethereum blockchain intentionally or accidentally. Whenever the blockchain notices discrepancies in the activities of validators, it will “Slashing is the term used for when an Ethereum 2.0 validator purposefully breaks network rules and is forcefully removed.
Likewise, offline validator nodes get issued minor penalties too to encourage staying connected to the network. The protocol issues both penalties and rewards approximately every six and a half minutes or epoch.The reward distributed to stakers depends on the total number of ETH staked and the number of validators on the network. When the pool of staked ETH dips, the annual interest rate increases.
For example, when there were only around 500,000 ETH staked last year, the annual percentage rate of interest was a little over 20%. Today, there are more thanAs soon as the pool of stakers is large enough to promote a decentralized ecosystem, the interest rate drops. For now, it is impossible for stakers to withdraw staked funds and accrued rewards, at least not until the Ethereum 2.0 and Ethereum 1.0 merge.
Staking unlocks opportunities for the Ethereum ecosystem. It will make Ethereum a more environmentally friendly blockchain. And it also puts a lot more participants in the position to become validators and earn ETH.
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