Following the Merge, Ethereum now uses proof of stake (POS), which allows you to stake your Ether coins (ETH) in return for more ETH.
Staking is designed to make the Ethereum network faster, more scalable and more sustainable. Mining on Ethereum has stopped, leaving staking the only way to earn new ETH. There are both simple and complex ways to participate in staking, each with its own benefits and risks that you need to weigh up.
This is not an endorsement of cryptocurrency or any specific provider, service or offering. It is not a recommendation to trade or use any services.
What is Ethereum staking?
Ethereum staking involves validating transactions on the Ethereum network to earn new ETH coins. By locking up a minimum of ETH in a wallet, you gain the ability to confirm whether a transaction conforms to signature requirements and other rules. In return for your work, you get additional ETH coins – this is called staking rewards.
Anyone can become a validator by staking through dedicated software, through your Ethereum wallet or by joining a staking pool.
The minimum amount of ETH required to run a validator node alone is 32. Anyone with less than that will want to join a pool or another service that lets you stake small amounts of ETH for rewards. You can find these pools on platforms such as Crypto.com and Nexo, which usually let you start with 1 ETH or even less.
Staking's goal is to make the network more secure from attacks and more decentralised. Ethereum staking is the only way to create new ETH coins following the Merge, which made energy-intensive mining obsolete.
What is the Merge?
The Merge refers to the Ethereum network upgrade that went live in September 2022. It implemented the following:
The final transition to PoS and elimination of proof-of-work (PoW) mining.
Enabled future scaling upgrades that will increase transaction speed and throughput.
Reduced energy consumption by 99.95%.
How to stake Ethereum
There are various ways of staking Ethereum. This depends on how much Ether you're willing to deposit and how comfortable you are using the Ethereum blockchain.
You must stake 32 ETH to become a validator on your own. This means you get to keep the full staking rewards. With anything less than that, you can join a pool like the
DeFi protocol Lido or use an exchange like Crypto.com. This makes staking a lot easier for most people, although the pool will take a cut of your rewards.
Ethereum staking through an exchange pool
If you don't have 32 ETH or want to deposit that much, consider joining a staking pool.
This is a simpler process than staking alone as the pool and services staking for you typically do the technical work on your behalf. Because these pools provide a service for you, most pools charge either a flat fee or a percentage of your rewards for doing so.
Exchange pools operate on exchanges like
Binance,
Coinbase and
Kraken, but some of these may not be available to users in Canada. Joining is a matter of creating an account with an eligible exchange and following the instructions for staking your ETH.
Note: You can't withdraw your staked ETH immediately post-Merge. This feature will be available within 6–12 months after this upgrade.
1 - 3 of 3
Ethereum staking with a wallet
MyEtherWallet through a partnership with a node-hosting service called Staked lets browser and mobile wallet users stake ETH directly through their wallets. You must deposit the full 32 ETH required to become a validator and be willing to pay a 0.75% fee.
If you don't have 32 ETH to deposit, an alternative is Trust Wallet or
MetaMask, which allow you to directly stake using DeFi protocols such as Lido and Rocket Pool with less than 32 ETH.
Deposit your ETH to the official ETH staking address after verifying it at ethereum.org.
Hardware requirements to stake alone
You need storage space and a stable connection to run the validator software:
Staking requires around 2TB SSD storage drive.
You need a 24/7 uptime without bandwidth caps to sync and validate without interruptions.
4–8GB RAM if using Raspberry Pi or 16–32GB RAM on a regular computer.
Intel NUC, 7th-gen processor or higher.
How does Ethereum staking work?
With Ethereum staking, you secure and add new blocks to the Beacon Chain. You must deposit either 32 ETH to become a full validator or join a staking pool with a lower amount.
You earn rewards for correctly validating transactions. If you make too many mistakes – for example, validating conflicting blocks – you can lose a part of your staked coins through slashing, a process designed to punish poor validators. You might also be booted from the network.
Slashing
Slashing is a penalty designed to punish validators who submit fraudulent transactions to the Ethereum blockchain. If a validator breaks the rules, they will have a portion of their staked 32 ETH removed from their ownership and be booted from the network.
How much can I earn with Ethereum staking?
As of September 2022 you can earn around 4% of your invested ETH, paid annually in ETH coins. This rate is dynamic though and will change over time.
Your rate of return depends on the number of ETH staked at any given time across the network. When fewer ETH are validating the network, the reward is higher to provide an incentive for more users to stake their ETH. The more ETH staked at the same time, the lower the reward.
The dollar value of your return depends on the current price of ETH. If the price of ETH rises, your reward increases even more. But if the price of ETH drops, your reward value drops as well.
When do I get my staking rewards?
The network transfers ETH staking rewards to validators every epoch – every 384 seconds or roughly 6.5 minutes. The number of coins each validator receives is calculated based on the state of the Ethereum network after an epoch is complete.
You must be an active validator during the previous epoch to receive a reward, meaning you need to be online and validating the network. You will only be rewarded for the epochs you participate in. Calculations of potential rewards provide only an estimate and you won't know your exact reward amount until you receive it.
Benefits of staking Ethereum
Aside from earning ETH rewards, staking is designed for those who want to be part of the community actively building the foundation of the new Ethereum.
You help the network grow and contribute toward a decentralised world. If this kind of work aligns with your ideology, it might be your main reason to stake.
Drawbacks of staking Ethereum
Before getting started, weigh potential drawbacks that include the following:
You must lock up your ETH. You can't access your ETH until the developers make another upgrade after the Merge.
You can lose ETH. If you're offline for more than 50% of the epoch time or make mistakes, it can cost you. How much you lose depends on your impact on the network. Let's say you and more than two-thirds of validators are offline. You could progressively lose up to 50% of your stake over 21 days. After 21 days, you might be kicked out of the validator pool.
You must keep your address safe. Without your withdrawal address and recovery phrase, you can lose all of your ETH.
Value is affected by the market. Because your ETH is locked, if the price of Ether drops, you could lose the value of your cryptocurrency without the ability to sell them off.
Bottom line
Ethereum staking is the process of locking up a portion of Ether to validate the Ethereum network and earn rewards. You can stake solo with 32 ETH or join a staking pool with a lower amount.
Either way, you can't withdraw your deposited Ether until 6–12 months after the Merge. If the risks feel worth the reward, you'll need to
buy some ETH to get started on your staking journey.
Disclaimer: Cryptocurrencies are speculative, complex and involve significant risks – they are highly volatile and sensitive to secondary activity. Performance is unpredictable and past performance is no guarantee of future performance. Consider your own circumstances, and obtain your own advice, before relying on this information. You should also verify the nature of any product or service (including its legal status and relevant regulatory requirements) and consult the relevant Regulators' websites before making any decision. Finder, or the author, may have holdings in the cryptocurrencies discussed.
Kliment Dukovski is a personal finance writer at Finder, specializing in investments and cryptocurrency. He's written more than 700 articles to help readers compare the best trading platforms, understand complex investment terms and find the best credit cards for their needs. His expert commentary has been featured in such digital publications as Fox Business, MSN Money and MediaFeed. He’s also well-versed in money transfers, home loans and more — breaking down these topics into simple concepts anyone can understand. In another life, Kliment ghostwrote guides and articles on foreign exchange, stock market trading and cryptocurrencies.
How likely would you be to recommend finder to a friend or colleague?
0
1
2
3
4
5
6
7
8
9
10
Very UnlikelyExtremely Likely
Required
Thank you for your feedback.
Our goal is to create the best possible product, and your thoughts, ideas and suggestions play a major role in helping us identify opportunities to improve.
Advertiser Disclosure
finder.com is an independent comparison platform and information service that aims to provide you with the tools you need to make better decisions. While we are independent, the offers that appear on this site are from companies from which finder.com receives compensation. We may receive compensation from our partners for placement of their products or services. We may also receive compensation if you click on certain links posted on our site. While compensation arrangements may affect the order, position or placement of product information, it doesn't influence our assessment of those products. Please don't interpret the order in which products appear on our Site as any endorsement or recommendation from us. finder.com compares a wide range of products, providers and services but we don't provide information on all available products, providers or services. Please appreciate that there may be other options available to you than the products, providers or services covered by our service.
We update our data regularly, but information can change between updates. Confirm details with the provider you're interested in before making a decision.
