After major upgrades, the Ethereum network has transitioned from the original Proof-of-Work (PoW) mechanism to the Proof-of-Stake (PoS) mechanism. The core of this transformation is how the network reaches consensus, validates transactions and creates new blocks. Under the PoS system, the role of miners is replaced by validators. Verifiers participate in the consensus process of the network by "staking" a certain amount of Ethereum (ETH).

Staking is a way for Ethereum holders to support network operation. By locking their ETH, they have a chance to be selected to verify new transaction blocks. Blocks that are successfully verified and added to the chain reward validators, which constitute the main source of staking income. This mechanism encourages coin holders to actively participate in maintaining network security and decentralization .

What is Ethereum staking?

1. Ethereum staking involves depositing Ethereum into smart contracts to support the network's proof-of-stake consensus mechanism.

2. The purpose of pledge is to make these Ethereum the basis for network validators to participate in block proposals and proofs.

3. To become a complete validator node, you need to stake 32 ETH . ETH less than this amount can be participated by staking pools and other means.

4. The validator is responsible for checking the validity of transactions and packaging them into new blocks, or proofing the blocks proposed by other validators.

5. The pledged ETH is usually locked for a period of time and cannot be taken out immediately, which ensures that the verifier has financial incentives to act honestly.

Validator's workflow

1. The validator software will continuously monitor transactions and blocks on the network.

2. According to the proof of stake algorithm, the verifier has the opportunity to be selected to propose new blocks or to prove existing blocks.

3. The validator of the proposed block needs to collect pending transactions, verify their validity, and package them into a new block.

4. Attestation of blocks is a more common task. Verifiers confirm that a block is valid, which is a key step in building consensus.

5. Verifiers need to maintain high availability and proper configuration of their node software in order to perform assigned tasks in a timely manner.

How to calculate the pledge income?

1. The yield on Ethereum pledge is a dynamically changing value , not a fixed interest rate.

2. The benefits mainly come from the proposed rewards for new blocks and the proof rewards for proposed blocks.

3. The total pledge of the network is a key factor affecting the rate of return. The higher the total pledge, the lower the annualized rate of return allocated to each validator.

4. The profit calculation also depends on the performance of the validator, including its online time (uptime) and the frequency of successful completion of the proposed/proof tasks.

5. Verifiers may suffer fines for offline or misconduct (such as double signatures), which will reduce or offset part of the gains. Misconduct may even lead to "slashing" and loss of large amounts of pledged ETH.

Factors affecting pledge income

1. Total online pledge : This is the most important factor that determines the basic annualized rate of return. The agreement will adjust the reward issuance rate based on the total pledge amount.

2. Verifier performance : The online rate of the verifier, whether the proof is submitted promptly and correctly, and whether the blocks that are successfully proposed are directly affected by the specific number of rewards they receive.

3. Penalties : Verifiers will suffer minor fines when offline. This is a kind of "inactive punishment".

4. Slashing : Malicious behavior or serious operational errors (such as signing two different blocks at the same height) will cause some ETH pledged by the verifier to be confiscated, which is far higher than ordinary fines.

5. Transaction Fees : In addition to the rewards issued by the agreement, the validator (more precisely the block proposer) can also obtain the priority fees (tips) incurred by the exchange in its proposed block.

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