Ethereum 2.0 blockchain

Ethereum 2.0: What You Need To Know About Staking

Ethereum 2.0 is the Ethereum Foundation’s new birth that has the potential of changing the face of the Ethereum blockchain. Ethereum 2.0 is a multilayer plan to improve the scalability, security, and programmability of Ethereum while maintaining its decentralization. Ethereum increased its gas limits by 25%, from 10 million to 12.5 million. It didn’t take up to two days, and this newfound capacity was used up.

This shows a genuine market demand for Ethereum, but the issue has remained its prohibitively expensive gas fees for most use cases. It necessitated the introduction of Ethereum 2.0. According to what Vitaik Buterin referred to as “rollup-centric Ethereum,” The blockchain will soon have the capacity to scale to around 3,000 transactions per second (tps). With the first phase of Ethereum 2.0, Ethereum will scale up to 100,000 tps. 

Ethereum 2.0 Staking  

Staking means holding a specified amount of Ether (ETH), so you can participate in the creation of blocks in the network. You will also obtain a reward in return. Here, you have to lock up a given amount of Ether in a wallet to be eligible for a given node’s operation. In theory, anyone can be part of staking on any blockchain operating a proof-of-stake consensus. There are different variations of proof-of-stake that allow users to participate in staking. 

The Timeline of Ethereum 2.0

Phase 0 of Ethereum 2.0 will launch in 2020, while phase 1 is anticipated in 2021. Meanwhile, phase 2 and beyond are expected to take effect in 2021 or the next year. Although Ethereum 2.0 seems like a new idea, it is not. The resolution to shift Ethereum’s underlying consensus mechanism to address the shortfalls of proof-of-work blockchain has existed from the onset. This recent 2.0 upgrade arrived on the heels of many planned upgrades to the Ethereum mainnet following the launch of the mainnet Frontier in July 2015, which includes:

  • Homestead March 2016
  • Metropolis, Byzantine, October 2017
  • Metropolis: Constantinople, February 2019
  • Instanbul December 2019

Unlike other upgrades, Ethereum 2.0 comes more significant because of the implementation of the Proof-of-Stake consensus mechanism. 

Rewards for Staking on Ethereum 2.0

Once you are a validator on Ethereum 2.0, you receive rewards for proposing and attesting the chain’s next block. You will get rewarded in ETH for making valid proposals and attestations. The “network level reward issuance rates” are dependent on the total amount of ETH staked and the average % online of validators. 

Rewards minus penalties will be transferred to validators every epoch (384 seconds). Therefore, the reward you will receive as a randomly selected validator may differ from what a validator receives. 

The Mechanism of Staking 

Staking involves depositing 32 ETH to activate validator software. This action allows you to store data, process transactions, and add new blocks to the blockchain. 

To begin staking on Ethereum 2.0, you will need to run a validator node and lock up ETH tokens in a deposit. Once this is done, you can be eligible to be part of block-creation. Different validator nodes will be selected to vote on new blocks semi-randomly. The other validators will have to agree on the result to reach a consensus on the network.

This process helps to keep the Ethereum network secure for participants and users alike.

Conclusion 

The launch of Ethereum 2.0 will undoubtedly bring a lot of positivity to the blockchain space. However, it is all theoretical at the moment, and we all anticipate the practical execution of this wonderful upgrade.

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