Overview

Updated on 2023-08-03 GMT+08:00

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Staking is one of the core mechanisms of Ethereum 2.0. It aims to implement the transition of network consensus algorithm from proof-of-work (PoW) to proof-of-stake (PoS). Staking is the act of depositing 32 ETH to activate validator software. As a validator, you will be responsible for storing data, processing transactions, and adding new blocks to the blockchain. This will keep Ethereum secure for everyone and earn you new ETH in the process.

Benefits of Staking

Earn rewards: Rewards are given for actions that help the network reach consensus. You will get rewards for running software that properly batches transactions into new blocks and checks the work of other validators because that is what keeps the chain running securely.
Better security: The Ethereum network gets stronger against attacks as more ETH is staked, as it then requires more ETH to control a majority of the network. Validators are responsible for safeguarding the network and protecting their own interests. This entails that in the event of staking nodes violating regulations or launching network attacks, their ETH will be diminished.
More sustainable: Stakers do not need to do energy-intensive PoW computations to secure the network, as they rely on staked ETH rather than computing power. This allows Ethereum to efficiently validate and process transactions, resulting in faster overall transaction speeds and throughputs.

Staking Options

Selecting a staking solution depends on how much you are willing to stake. You will need 32 ETH to activate your own validator, but it is possible to stake less.

**Table 1** Staking options
Item	Solo Home Staking	Staking as a Service	Pooled Staking
Description	Solo staking on Ethereum is the gold standard for staking. It provides full participation rewards, improves the decentralization of the network, and never requires trusting anyone else with your funds. Those considering solo staking should have at least 32 ETH and a dedicated computer connected to the Internet 24/7.	If you do not want or do not feel comfortable dealing with hardware but still want to stake your 32 ETH, this option allows you to delegate the hard part while you earn native block rewards. This option usually walks you through creating a set of validator credentials, uploading your signing keys to them, and depositing your 32 ETH. This allows the service to validate on your behalf. This method of staking requires a certain level of trust in the provider. To limit counter-party risks, the keys to withdrawal your ETH are usually kept in your possession.	Several pooling solutions now exist to assist users who do not have to or do not want to stake 32 ETH. Many of these options include what is known as "liquid staking" which involves an ERC-20 liquidity token that represents your staked ETH. Liquid staking enables easy and anytime exiting and makes staking as simple as a token swap. This option also allows users to hold custody of their assets in their own Ethereum wallet. Note that pooled staking is not native to the Ethereum network.
Rewards	Solo stakers receive full rewards directly from the protocol by batching transactions into a new block and checking the work of other validators.	This usually involves full protocol rewards minus monthly fee for node operations. Dashboards are often available to easily track your validator client.	Pooled stakers accrue rewards differently, depending on which method of pooled staking is chosen. Many pooled staking services offer one or more liquidity tokens that represent your staked ETH plus your share of the validator rewards. Liquidity tokens can be held in your own wallet, used in DeFi and sold if you decide to exit.
Risks	ETH is at stake and cannot be traded. Going offline or other malicious behaviors can result in "slashing" of larger amounts of ETH and forced ejection from the network.	Same risks as solo staking plus counter-party risk of the service provider.	Risks vary depending on the method used. In general, risks consist of a combination of counter-party, smart contract, and execution risk.
Requirements	Deposit 32 ETH. Maintain hardware that runs both an Ethereum execution client and consensus client while connected to the Internet.	Deposit 32 ETH and generate your keys with assistance. Securely keep your keys. Perform operations according to the service provider.	This requires low-ETH commitment as some projects need as little as 0.01 ETH. Deposit directly from your wallet to different pooled staking platforms or simply trade for one of the staking liquidity tokens.