Ethereum, smart contracts and altcoins
Staking on Ethereum
3 min
In 2022, in an event known as The Merge, Ethereum switched from Proof of Work to Proof of Stake. Understanding staking on Ethereum ties together consensus and the economics of the network.
What staking means here
To become a validator and help secure Ethereum, a participant locks up 32 ETH. The protocol then calls on validators to propose and attest to blocks. In return they earn rewards, paid in ETH, roughly proportional to their stake.
If a validator behaves honestly, it earns a modest yield. If it tries to cheat or goes offline at the wrong time, part of its stake can be slashed (destroyed) — the economic penalty that keeps validators in line.
Ways to participate
- Solo staking with 32 ETH and your own hardware gives the most control and decentralisation but requires technical effort and uptime.
- Staking pools and "liquid staking" let people stake smaller amounts together. Liquid staking issues a token representing the staked position so it can still be used elsewhere.
The risks to state plainly
Staking is sometimes marketed as easy "passive income". Be cautious: rewards are not guaranteed, slashing can cause loss, staked funds can be subject to withdrawal queues, and pooled or liquid staking adds third-party and smart-contract risk on top. The yield is compensation for taking on real risk, not free money.
This content is for educational and informational purposes only and is not investment, financial, tax or legal advice. Trading and investing carry risk, including the possible loss of capital. Any performance shown by third-party tools is hypothetical and not a promise of future results. Do your own research and consider professional advice before making any decision.