How To Set Up The Node For ETH Staking

World’s preparing for the energy crisis, and the fact that PoW miners consume too much electricity is a serious problem. Scalability and energy consumption are becoming critical issues as cryptocurrency becomes mainstream and tries to position itself as a legitimate and useful technology. 

We have already told you about cryptocurrencies regulation in various countries — Germany, South Korea, Brazil, UAE, Australia, Nigeria, Mexico, India, Russia, Vietnam, USA, Switzerland, Portugal and Finland. Make sure to check them out if you search for crypto-friendly locations. 

But let’s discuss the measures Ethereum has taken to solve these problems. In its freshest upgrade, ETH 2.0 moved from Proof-of-Work (or PoW) to Proof-of-Stake (PoS) in order to increase scalability and safety. This is supposed to affect the mining process and improve the energy efficiency of blockchain. It gives more space for crypto enthusiasts to interact with the coin, for example, join the Ethereum staking. Further we will discuss this point in detail.  

Ethereum staking explained

Staking ETH 2.0 is the freezing of Ethereum coins on a smart contract deposit aiming to be a validator and join the ecosystem maintenance, while receiving a payment for it. The validator, likewise the miner, verifies the transaction and searches for the block hash-signature, but spends much less energy on it.

Coin blocking is required to reassure that this node will not act at the expense of the system, because in this case, it will be damaged, too. To launch Ether staking, the validator must deposit 32 ETH (which is about $50,203 as for the end of November 2022). The rate is constantly fluctuating, but in any case, it is quite a big sum.

To get full control over staking Ethereum, you might want to set up your own node. To do so, you don’t have to embed ETH or be a miner. Actually, miners and validators only cover every second node. Having your node cuts the need of trusting the 3rd party network status information. That’s the significant reason for setting up the node — people prefer to completely control the situation out there.

How to take part in ETH 2.0 staking

If you want to be a validator, prepare 32 ETH. Luckily it’s not the sole way to join. Validators give smaller ETH holders an opportunity to devolve their coins to them and get revenue from staking. 

Here are three main ways to stake ETH:

1. Centralized exchange. Coinbase and Binance help ETH stakers to begin. This way is the easiest one and will fit the newbies. You just need to select the service and make a few steps to sign up, buy ETH, stake them and start getting profit from your ETH. 
2. Staking pool. This one is a bit more complicated and requires effort and time to get into it. Nonetheless, it has its own advantage of giving users the liquid tokens to use instead of staked ETH. 
3. Setting up your node. The most hard yet ambitious way. If you plan to do this, you will have to stake 32 ETH and own a PC connected to the Internet every day and night.

Please keep in mind that you’ll need to do your own deep research to decide if you want to stake or not and to pick the right way for you to join staking. 

Why would you set up a node and stake ETH?

As we have mentioned above, the important cause of running your node is an opportunity to manage the staking and monitor the network status yourself. Surely there are more reasons to highlight:

1. Confidentiality and security. Running your node gives you a chance to prevent personal info leakage to 3rd party nodes.
2. Resistance to censorship. You get guaranteed access when needed and protection from censorship.
3. Decentralization. Improved protection against centralized failure points. The network sustainability develops as more nodes managed by different people appear in various places.  
4. Independence. While running a personal node you receive an individual copy of Ethereum blockchain and govern your coins.   

Okay, we got it. Setting a node can be really useful for ones who want to profit from staking. But why would you participate at all? You will lock up your ETH for a long time — someone will consider this option impossible since they simply don’t own that much ETH or are willing to spend it for other purposes. 

The core reason behind one’s decision to join staking is to receive an annual percentage rate from 7% to 15%. After a contribution of 32 ETH you can count on something from 2 to 5 ETH considering the up-to-date cost. 

Aiding the network is another explanation why people stake ETH. Nodes, which actually are separate PCs that staked ETH and are working, should validate the network to be legal. So if you wish to aid the network and get a share for it, go ahead. 

Get ready for the node

In case you decide to run your node, get acquainted with a few tips to prepare. 

On the earlier stage, users had to interface with the command-line to work with a node. If you’re skilled enough to do that, check out the complete guide on how to spin up your ETH node. 

Nowadays, Ethereum gives everybody a chance to join the staking and create individual nodes with minimal effort. Devs have made DAppNode, a completely free and open-source software allowing users to manage their nodes. To set it up, you need to read the overview and install the right type of DAppsNode. 

The additional option is to use hardware. The minimal specs your PC should fit in: 4 - 8 GB RAM and 2 TB SSD. 

How to run a node

Step 1: go to https://launchpad.ethereum.org, check the general info and click on Become a validator.

Step 2: If you don’t know how the Proof-of-Stake works, carefully study the information on the page, and then click «Continue».

Step 3: 

1. Confirm that you understand the transaction in the Beacon Chain is non-reversible and you understand that you have to send 32 ETH to become a validator. 
2. Confirm you’re technically able to set up and run a validator.
3. Accept to keep your validator online and updated.
4. Agree with the rules of penalties for bad behavior.
5. Accept the fact that keys are your responsibility and that your seed phrase will be the only way to withdraw your funds.
6. Confirm that you understand that you can’t transfer your stake for a while, and you won’t be able to withdraw until the merge.
7. Agree upon the possibility of various bugs as you are an early adopter. 
8. Review the staking checklist.
9. Agree to the Terms of Service. 

Step 4: Choose one execution client. You’ll be given 4 to pick from.

Step 5: Choose consensus client (again, out of 4 options)

Step 6: Generate key pairs by selecting your OS and the method to generate the keys. 

Step 7: Upload deposit data. It’s needed to link the wallet and block the coins on the smart contract. 

That’s it! Your node will be launched after you finish the set up.  

Conclusion

Staking is the keystone of Ethereum 2.0 — with The Merge, its power use will be decreased by almost 100% compared to the PoW algorithm times. Later on other improvements as scalability and processing speed are planned.  

Financial analysts forecast better revenue with the update and right now Ethereum staking seems to be a great chance to join the network and contribute to it while receiving some rewards. 

SimpleSwap reminds you that this article is provided for informational purposes only and does not provide investment advice. All purchases and cryptocurrency investments are your own responsibility.