Back in November 2020, if you were paying attention to the launch of Ethereum 2.0’s “Beacon Chain,” you might have noticed a rallying cry about the need to run an Eth2 validator and support the decentralization of the network. The Beacon Chain itself refers to what will introduce proof-of-stake to Ethereum, which is a move away from the consensus mechanism used by Bitcoin and Ethereum today, proof-of-work.
This is a new way for one to help keep Ethereum secure. Think of it like a public good, one that is much less energy intensive and will allow you to earn more ETH in the process. Proof-of-stake will involve participants across the world staking ETH in order to activate validator software. As a validator, one will process transactions and create new blocks in the chain.
Staking and becoming a validator is designed to be easier than mining today with proof-of-work. By making staking as a validator easier, the hope is to help make Ethereum more secure in the long run because the more people that participate in the network, the more decentralized and safe from an attack it will become.
Regardless of how altruistic one’s intentions are to build a better, safer, censorship-resistant Ethereum network, there’s thankfully an incentive as a validator–which is to earn ETH. To run a validator it requires some hardware, a dedicated internet connection, and obviously lots of time and effort.
To make staking as a validator even simpler, we have new DeFi projects like Lido, a decentralized infrastructure for issuing stETH tokens that you can use while staking ETH. Today Lido has enabled staking 183,229 ETH ($290,113,247) and is earning with 3657 stakers about 7.9% APR on their staked ETH.
The advantages of this system for those wanting to help process transactions on Ethereum while getting paid in ETH are:
- Flexible ETH staking with no minimum: The Ethereum 2.0 protocol allows staking amounts divisible by 32 ETH only but Lido is more flexible. With Lido, you can stake any amount of ETH you possess and earn rewards even on small deposits for any amount of time. Those running Eth2 validators have their ETH locked in the Beacon Chain for the foreseeable future until we advance further in the implementation of Ethereum 2.0, which is one more thing Lido Eth2 stakers don’t have to worry about.
- Zero prep: Deposit ETH into the smart contract and get stETH tokens in return. You earn staking rewards for every day of holding these tokens in your wallet.
- More capital efficient: stETH tokens are very liquid, so you can use them for your needs at any time — trade, sell, exchange, collateralize, invest in DeFi projects with stETH.
- Trustless and run by Lido DAO: Lido DAO is a community now of 3657 stakers and 1997 LDO token holders focused on building liquid staking services for Ethereum. With Lido, you’re not blindly trusting a centralized third-party and instead you’re working with a crypto-economic system powered by the LDO governance token.
- Protection from Slashing: Slashing in Eth2 occurs when the network rules are broken by a validator. In that process, Eth2 validators or node operators are removed from the network, and a portion of their stake is burned. The Lido DAO was very clever to have purchased a new “slashing cover” for 196,749.86 stETH from Unslashed Finance, protecting stakers on Lido against up to 5% in…
Hi! My name is Lark Davis!
I’m a cryptocurrency investor with years of experience and I’ve been making consistent profits in the crypto space.
I’m passionate about helping others do the same, so I run multiple educational channels on crypto investing.
