3 min read · Nov 2, 2023
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Staking Ethereum is a fundamental concept in the world of blockchain and cryptocurrencies. It’s a way to participate in the network’s security, earn rewards, and support the Ethereum ecosystem. In this guide, we’ll explain what it means to stake Ethereum, the four main ways to stake Ethereum, and how you can get started.
To stake Ethereum, you first need to understand the consensus mechanism it uses, which is called Proof of Stake (PoS). Unlike Proof of Work (PoW), where miners solve complex puzzles to validate transactions, PoS relies on validators who lock up, or “stake” a certain amount of cryptocurrency as collateral to create new blocks and validate transactions.
Technically speaking, staking Ethereum enables investors to help secure the Ethereum network and reduce the risk of malicious activity. Besides this support function, it also enables participation in governance; some PoS systems allow validators to participate in network governance decisions, such as protocol upgrades and parameter changes.
For these services, validators are rewarded with more ETH for securing the network.
So how much do you make staking Ethereum? According to the figures from the official Ethereum website, validators earn an average annualized return of 3.6%. This figure varies slightly, depending on how you stake ETH.
According to the official Ethereum website, there are four ways to stake ETH:
Solo home staking
Pros: Does not require trusting anyone with your funds i.e. no counterparty risk. This also means you get the full staking rewards.
Cons: You need to deposit at least 32 ETH to activate the validator software, and a certain level of technical know-how. You also need to have a dedicated computer connected to the internet 24/7, failing which you can be penalized.
Staking as a service
Pros: You can outsource all the technical bits but still earn the full rewards of staking your 32 ETH.
Cons: A certain level of trust in the service provider is required, however this risk is mitigated by self-custodying your keys.
Pooled staking
Pros: Provides a viable option for those who do not have or feel comfortable staking 32 ETH. Some forms of pooled staking also go by the name ‘liquid staking,’ which enables easy staking and unstaking.
Cons: As with staking as a service, pooled staking carries some counterparty risk.
Centralized exchanges
Pros: Provides a convenient option to earn yield on your ETH with minimal effort or complexity.
Cons: Carries some counterparty risk similar to pooled staking and staking as a service if
Step 1: You’ll need to have a certain amount of ETH to stake. You can buy Ethereum (ETH) through CoinW’s single-click Buy Crypto function here.
Step 2: Log on to CoinW’s staking page.
Step 3: Decide how much ETH you want to stake. Follow through with the on-page instructions and wait to reap your staking rewards!
