Today we are going to show you how to start staking Ethereum (ETH). Vitalik Buterin has long said that he does not need miners, however, ether mining farms are still operating, and this year manufacturers of devices based on integrated circuits have slowly begun to squeeze out GPU miners from the Ethash algorithm.
In the end, they will take control of the mining of all coins protected by the PoW «proof of work» consensus algorithm and this will inevitably lead to a decrease in the level of decentralization of blockchain ecosystems.
An energy crisis is brewing in the world and the high consumption of electricity by miners of bitcoin and other PoW cryptocurrencies is causing discontent. Scalability and power consumption are becoming critical issues as cryptocurrency becomes mainstream and tries to establish itself as a legitimate and useful technology.
Last December, Ethereum took its first major step towards addressing these issues by launching a blockchain test case that will coordinate the betting and sharding process in Ethereum 2.0. Soon, the current Ethereum PoW mainnet will be merged with an updated chain.
What is staking in Ethereum 2.0?
Staking ETH 2.0 is the freezing of Ethereum coins on the deposit of a smart contract in order to become a validator and take part in the maintenance of the ecosystem, receiving a reward for this. The validator, like the miner, is engaged in verifying the transaction and searching for the hash signature of the block, but spends much less energy on this.
Blocking coins is needed to ensure that this node will not act to the detriment of the system, because in this case it will suffer as well. In order to start staking ether, the validator must deposit 32 ETH (the cost today is approximately 8,000,000 Russian rubles). The exchange rate fluctuates constantly, but, in any case, this is a large amount.
How to participate in ETH 2.0 staking?
A wealthy investor or an experienced miner who has accumulated enough money can independently launch a validator node and start staking ETH. But keep in mind, if you change your mind about working, locked coins cannot be returned. They will become available when the developers activate phase 1.5, which is likely to happen next year (and maybe later).
To prevent validators from rushing to withdraw money en masse and thereby not collapse the ETH rate, the system has a dynamic blocking period (256 epochs). Those who have frozen money earlier will be able to withdraw it first, and the rest will wait their turn. Given the fact that the first validators started staking ETH last year, the process of withdrawing money deposited in October 2021 could take several months from the beginning of phase 1.5. Therefore, it is better not to invest all the capital in this project.
You can contact the services to start ether staking through a trusted node. There are also certain risks here. If you invest in a scam or your validator will be fined, or even taken away from him at all for an attempt at malicious actions, then you will suffer along with him. We will tell you how to safely invest in collective ETH staking a little later. Well, those who nevertheless decide to act on their own will need instructions for setting up the equipment.
How to raise a node for staking: equipment and recommendations
To start staking Ether, you need to take several consecutive steps:
- Log in to https://launchpad.ethereum.org/ru, read the general provisions, and click » Become a validator «.
- If you are not familiar with the mechanism behind the Proof of Stake Algorithm, carefully review the information on the next page, and then click Continue .
- Please confirm that you are aware that the transaction on the Beacon Chain is one-way and irreversible and you are knowingly sending 32 ETH to become a validator.
- Confirm that you have enough skills to run the node.
- Accept the payment terms.
- Agree with the rules of punishment for malicious acts.
- Confirm that you know the rules for managing system access keys.
- Accept the validator’s responsibilities and network connectivity risks during the test phase.
- Review the staking checklist that you will use as a guide and click Agree .
- Confirm that you agree with all the rules for the provision of services and proceed with configuring the node.
First, you need to select and configure one of the four ETH 1 clients.
- Nethermind based on the NET core.
- Besu in Java.
- Geth in Go language.
- OpenEthereum written in Rust.
Technical documentation and detailed start-up instructions are on the page of each client.
Then you need to select and configure the ETH 2 client. Available:
- Prysm in Go language.
- Nimbus in Nim language.
- Lighthouse in Rust.
- Teku in Java.
Each client has its own characteristics, and the choice depends on your skills.
Now you need to specify how many nodes you want to start, the operating system and the terminal startup method. Then generate a key pair according to the instructions and load the validator keys file. Fund your wallet (minimum 32 ETH) and upload deposit_data. json. To proceed to the next step, confirm saving the keys and mnemonic phrase.
Upload the file with the deposit data to the management site to connect the wallet and block the coins on the smart contract. After that, your node will be launched and will start processing transactions. For trouble-free operation, you need at least 4GB of RAM (better than 8GB), and a network bandwidth of at least 10 Mbps. Buy an uninterruptible power supply for short power outages.
Staking Ethereum on Binance
If the user is unable to deposit 32 coins and set up a node, he can join one of the collective staking pools. This is a common practice for PoS ecosystems. You trust your money to a validator who wants to run more nodes, and he shares the profit with you and other contributors.
There are quite a few such pools, but if you want to be guaranteed to make a profit, activate ether staking on the largest crypto exchange Binance. We will now tell you how to do this.
Creating an account and buying coins
If you do not have an account, then you need to create one:
- Go to https://www.binance.com/ru and click » Register «.
- Enter your email (or mobile number) and create a password.
- Click » Create an account » and confirm your login with a digital code that will be sent to your email address or phone number.
Now you need to go through identity verification and activate additional security settings. You will need personal data, a copy of your passport (old-style documents are accepted) of an ID card or driver’s license, and a portrait photo. To complete the second stage of KYC, you will need to go through a dynamic face check.
It is not necessary to confirm the address yet, so if you were informed that the basic verification was passed, you can use all Binance services, including connecting to ETH staking.
The minimum contribution is 0.001 ether, you need to transfer money from your personal wallet or buy for another cryptocurrency or fiat directly on the exchange. If you have cryptocurrency, send it to deposit, and then exchange it for ETH.
Binance supports many trading pairs with ether. If you have rubles or another national currency, then you can use it to purchase Ethereum cryptocurrency in three ways:
- Replenish the deposit and buy ETH at the auction.
- Buy directly from your credit card.
- Find a suitable offer on a P2P site.
After the Ether is purchased, go to Binance Earn, open the “ETH staking” tab and transfer money to the validator wallet following the instructions. You will not be left without a penny, you will be transferred BETH tokens in the same amount that you have frozen in staking.
This is your money, you can spend it or withdraw it, but in this case, Binance will not pay dividends. It is best to use them for trading, keeping them on the spot wallet balance. When the Ethereum blockchain enters the next phase, you can stop staking and take back the invested ether by returning the BETH tokens.
Calculation of profitability
The profit will depend on how dynamically the new network develops, and, of course, on the amount invested.
Ether staking calculator can be found here. Testnet profitability metrics cannot provide an accurate representation of the validator’s real future earnings. Everything will become clear when both branches of the blockchain merge.
Advantages and disadvantages
|The system will become faster and more environmentally friendly
|Unable to stop staking before phase 0 ends
|Each ether holder will be able to earn on collective staking pools
|Tough system of penalties
|The level of reliability and safety will increase
|Reduce the risk of losing decentralization
Many in the blockchain community are unhappy with the move to PoS for ether. It is understandable that this coin feeds many miners and no one wants to lose a tidbit. But everything flows, everything changes. Humanity is gradually depleting its energy reserves and it becomes more and more costly to maintain the constant operation of hundreds of thousands of video cards and ASIC miners.
Most likely, in the future, almost all cryptocurrencies except Bitcoin will use the Proof of Stake algorithm and PoW miners will gradually disappear. It’s a pity, of course, but nothing can be done about it. However, mining is still far from the complete cessation of mining. But it’s worth starting to earn crypto in other ways. It is expensive to activate the ETH 2.0 node, but anyone can start staking ether on Binance. If you haven’t done so yet, we advise you not to postpone it.