Staking on Ethereum 2.0

A key vision of ETH 2.0 is to make their blockchain network more energy-efficient, fast, secure and decentralized. In order to achieve this, they decided to upgrade their network to support the proof-of-stake consensus, which will reduce energy consumption by 98% compared to existing proof-of-work-based mining.

So today we will discuss in detail how this beacon chain upgrade that supports proof-of-stake will help ETH 2.0 achieve its most ambitious transformation.

What is ETH 2.0 pledge and how does it work?

Pledge:

In ETH 2.0, pledge is the act of any user depositing 32 ETH (Min) or more, so that they are eligible to run and execute the required verification software.

  • Transaction processing
  • Transaction data storage
  • Approve and add blocks in the main chain

32 ETH is a necessary condition to become a full validator . Otherwise, if a user has less ETH, they can pledge their ETH with other pools of pledgers, and they will set rewards for the user’s contribution to their pledge pool. If you plan to pledge in someone else’s pool, it is strongly recommended to use DYOR, because it has some related risks that cannot be ignored.

What is the main goal of ETH 2.0 pledge?

Adopt the key goal of the pledge mechanism of proof of rights proposed in the beacon chain upgrade.

  • Encourage more decentralization
  • Enhancing blockchain security through more active verification node participation

ETH 2.0 Proof of Stake Description:

Proof of rights is a consensus mechanism, but what exactly is consensus? This is what we need to understand before we delve into PoS.

What is the consensus?

In decentralized and distributed systems, consensus is a way of reaching agreement in any given network, in which everyone agrees to a single source of truth. For a blockchain like ETH, which is essentially a distributed database, all participating nodes in the network must be able to agree on the current state of the system (this becomes the source of truth for all nodes). To achieve such a state consensus mechanism is necessary.

So what is a consensus mechanism?

It is a protocol that allows a network of distributed nodes (or computers) to collaborate and work in a secure environment. It establishes consensus among all database nodes, application servers, and other enterprise infrastructure.

ETH2.0 is upgrading itself to a proof-of-stake consensus to ensure that all nodes participating in its blockchain network comply with its PoS rules.

Consensus mechanism and its types:

  • Proof-of-Work (Proof of Work)
  • Proof-of-Stake (Proof of Stake)

The proof of stake consensus in ETH 2.0:

ETH 2.0 is prepared to adopt the consensus of proof of rights and interests to realize distributed consensus in its blockchain network nodes. Every user who decides to act as a network verifier needs to put their ether at risk. The behavior performed by these verifiers achieves the same function, such as

  • Verify each transaction and complete the creation of the block.
  • After each block is successfully created, a consensus is reached between all nodes to reach a consensus on the state of the network.

Why is it proof of rights? What new features will it provide?

The move to upgrade ETH 1.0 to ETH 2.0 is largely driven by these key goals to enable its network:

  • safer
  • More scalability
  • more convenient
  • More energy efficient
  • Pledgers (validators) get more rewards

It is recommended that once the Beacon chain merges with MainNet, all the above goals will be achieved.

Proof of equity has the following main advantages:

  • Like PoS, it is highly energy-efficient and users do not need much energy when creating blocks.
  • The entry barrier is low and easy to access : Now anyone can act as a validator as long as there is a decent laptop and smartphone, and current proof-of-work-based mining does not require expensive hardware.
  • Keep the decentralized structure : PoS is designed to enable more network participation, which will lead to more network nodes and more decentralization.
  • More scalability : PoS is designed to support layer2 scaling solutions, such as sharding that is recommended to be implemented to help ETH 2.0 expand.

How to pledge in ETH2.0?

If you want to contribute and help the ETH2.0 blockchain to make it more secure and accessible, there is actually only one thing to do. It is to put the lovely ETH accumulated so far and lock it until ETH 2.0 sees its final migration.

There is another important caveat to become a validator of ETH2.0

If you want to be a full-time validator (like a miner in ETH1.0), you need 32 ETH to do this. For ordinary retail investors, this may be a lot of money, but don’t worry, you can still contribute the scale of the project you like.

If there are less than 32 ETHs, you can still add a small amount of staking to the equity pool created by some companies or full-time validators.

Use 32 ETH pledge:

If you have 32 or more ETH, you can start as a full-time validator by staking your ETH. In order to do this, the user needs to run a verification software on his machine using the ETH2 launchpad.

Staking on Ethereum 2.0

ETH2 launch pad:

To pledge, you need to run the ETH2 client, which is a local copy of the blockchain. It may take a while to download to the user’s computer.

Follow the link given below, simulate the steps provided, and carefully refer to the terms and conditions before making pledge decisions as a validator.

Consultation and measurement and control:

The first step is to read the given suggestions and agree to understand them carefully and pledge ETH before installing the validator client software.

Staking on Ethereum 2.0

The user must accept all terms and conditions and complete the same 10 steps in order to continue installing the software.

Choose ETH1 client:

Since ETH2.0 is not yet on the mainnet, users need to set up an ETH1 client to help process incoming validator deposits from the mainnet (that is, the ETH1 client). The ETH 2 client runs in parallel with the ETH 1 client until the merge phase of ETH 2.0 is completed.

Staking on Ethereum 2.0

The whole process of setting up ETH 1 and ETH 2 clients is technical, if this is not your expertise, please ask an expert for help.

Choose ETH 2 client software:

And set up a verification node. Each customer type selected by the user will have a detailed document for your reference. So make good use of it.

Staking on Ethereum 2.0

Generate key pair: For network authentication:

https://launchpad.ETHereum.org/en/generate-keys

In order to access the ETH blockchain network, the user will need a secure key pair, which will be used to authenticate the user as a verification node. To do this, the following key steps must be completed:

  • Choose the number of verification nodes to run
  • Select the operating system of the machine the user wants to plug in
  • Download the deposit CLI to type and run your terminal commands

After downloading and setting up the Deposit CLI software, you can use the instructions given below to obtain a security key pair.

Generate key:

Staking on Ethereum 2.0

Save the key:

Users will get two keys that need to be kept with extreme care

  • signing_json key:

After the key pair is generated, it is very important to save the mnemonic, it will be displayed as shown below. Keep them safe. In addition, the keystore file associated with each required node must be stored securely. This validator key storage file can be located in the validator_keys directory of the system.

Staking on Ethereum 2.0
  • deposit_data JSON key (public key):
Staking on Ethereum 2.0

The deposit_data JSON key is the public key associated with the validator node, this key needs to be uploaded in the next step

Upload deposit data JSON:

After saving the storage data JSON file in the previous steps and accepting the terms and conditions, you will be navigated to this screen where you will be asked to upload the JSON file, as shown in the figure below

Staking on Ethereum 2.0

The user can find the file in the validator_key directory of the local system, and then continue the upload process.

Connect ETH wallet:

If you can successfully upload the deposit JSON data file, you now need to connect to a wallet that supports the ERC-20 protocol. Your users can use any ETH wallet from the pop-up options, such as Metamask, MEW, etc.

Staking on Ethereum 2.0

Final security check:

If you have followed the setup instructions of the ETH 2 launch board discussed earlier, users will know that they need to send the mortgage deposit contract to the transaction. It is recommended to check the address carefully. The official address can be found on ethereum.org and many other trusted sites.

Perform an ETH transaction on this address and you are done.

What if you don’t have 32 ETH to become a validator?

If you don’t have 32 ETH, don’t be disappointed. In fact, we can still play our role by participating in the staking pool. Some companies operate their staking pools, and users can invest a small amount of ETH and get rewards in return for helping them become validators.

Staking your own ETH to a third party may be risky, so it is recommended to conduct due diligence on these companies before making a decision.

What are your responsibilities as a verifier?

As a verifier, users will participate in the consensus (PoS) of the ETH2.0 protocol and will be a voter for each new block created. The more votes a block gets, the more likely it is to be added to the chain.

The vote of a validator is weighted according to the number of votes involved.

Now, as a validator, you have some responsibilities that need to be maintained

Need to be honest and positive: get rewards

Users are rewarded for the following reasons:

  • Proposal to create a new block
  • Prove that the new block is correct and can be included in the chain
  • Actively participate in and help the network reach consensus

You will be punished if:

  • If not active
  • Light penalties for negligence (or omission) that hinder the negotiation process
  • Major penalties (or reductions) for malicious behavior

Therefore, if you behave properly and help the network to perform optimally, you will get better rewards, otherwise you will be punished.

If you go offline, will you be punished?

Since the network relies on verifier nodes to reach consensus and create blocks, most verifiers must be active and complete their work.

This is why there are certain penalties based on the two situations given below:

  • If more than 2/3 (absolute majority) of validators are online and active, you will be slightly punished for being offline, because there are still enough validators online waiting for the chain to complete.
  • However, if the number of validators is less than the vast majority, the penalty will be higher and severer because the block is no longer finalized.

Therefore, if the second situation occurs, that is, you are offline, you will gradually lose up to 50% of the pledge (16 ETH) within 21 days. After 21 days, they will be kicked out of the verification pool. This ensures that the block starts to be finalized again at some point.

If you act maliciously, how will you be punished?

If emails are sent maliciously and prove invalid or contradictory blocks, the pledged ETH will be greatly reduced. The minimum amount that can be reduced is 1 ETH, but if other validators are reduced at the same time, this number will increase.

The drastic reduction is to ensure fair practice in the network and minimize losses caused by honest errors, but at the same time strongly suppresses planned attacks.

Benefits of setting up (PoS) in ETH 2.0:

The vision of ETH 2.0 is largely driven by the way it migrates from proof of work to proof of stake, so let’s see how this migration will help verifiers and pledgers, and more importantly, how it will make ETH The network as a whole benefits.

  1. Make ETH more sustainable and more energy efficient:

Since the proof-of-stake consensus does not require verifiers to have high-end energy-intensive machines, this will make the ETH blockchain more environmentally friendly and sustainable.

  1. More convenient and safer:

Since the hardware requirements are not so strict and people can also use laptops or smartphones as validators, the ETH 2.0 network will become more decentralized and can be accessed globally.

As the network becomes more distributed and decentralized, it will eventually help make it more secure and reliable.

ETH 2.0 upgrade and stages

The new ETH2.0 incarnation is proposed for the following upgrades

  • Beacon chain upgrade
  • Merge phase
  • EIP-1559 upgrade

Summary and way forward:

ETH2.0 brings new hope to crypto enthusiasts and investors, and its proposed update aims to overcome key challenges such as transaction scalability, network security, and sustainability. This new incarnation looks very promising for the future of the crypto world, because it will inject more trust and confidence into this new type of democratization and decentralized economy.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/staking-on-ethereum-2-0/
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

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