Generally, The annual base rate at your local bank is close to 0.03%. But what if you could earn 5-10% interest on your money? That’s about 200 times more than a traditional bank can offer. All you need is to decide on the cryptocurrency you want to buy and secure it on a cryptocurrency platform.
Ethereum is one of the most popular blockchains because it was the first to introduce smart contracts. Ethereum 2.0 is the new version of Ethereum. The network is upgraded from PoW consensus to proof-of-stake (PoS) consensus.
Ethereum staking is easily available to any investor. But, there is one question that many new cryptocurrency investors want to know, especially now that the Ethereum 2.0 update is near: how to stake Ethereum (ETH) and earn passive income from it?
In this article, we’ll explain everything you need to know to stake safely. We will also cover the different options investors have for earning rewards.
Why Is Ethereum So Popular?
Ethereum is one of the most popular blockchains because it was the first to feature smart contracts. Whenever transactions are sent, these programs can execute specific code. Developers can build apps on the Blockchain using smart contracts and stake coins on the ledger using them.
Like Bitcoin, Ethereum uses a proof-of-work (PoW) consensus mechanism.
PoW requires raw computing power and massive amounts of energy to keep the Blockchain running. Unfortunately, this is no longer enough for the many decentralized applications and tokens built on Ethereum.
When using PoW, the network can only perform 15 transactions per second, and each one requires network fees – often high. Therefore, these issues make the platform impossible to scale. That is, it is no longer an alternative for new DApps, which cannot afford the platform fees.
Smart contracts have made Ethereum famous and widely used as they enable automation and transparent transactions on the Blockchain.
Ethereum Stake Benefits
The main advantage of staking Ethereum is that it helps to engage more participants in the network. They can become validators and earn ETH as a reward. If you’re wondering why you should stake Ethereum at all, take a second to examine these benefits:
- Earn passive income
- Become a validator and help maintain network decentralization
- Investors can run their own node
- Smaller investors can stake their funds on cryptocurrency exchanges or use a variety of apps
How To Stake Ethereum?
Ethereum staking is easily available to any investor. You can become a validator using a staking service or by staking directly from your cryptocurrency exchange account.
Becoming a validator is one of the most profitable ways to earn passive income if you want to stake Ethereum. However, this is a slightly more complicated method and requires a minimum of 32 ETH. But the platform wants to welcome all investors who are part of the network.
But you can stake Ethereum and earn rewards using staking pools even if your funds are less than 32 ETH. You can use the staking pool set up by other entities such as popular cryptocurrency exchanges.
Should validators fail to fulfill their responsibilities, Coinbase agrees to cover any losses.
The Ethereum Foundation is developing Ethereum 2.0 to run on a wide variety of computing devices. In spite of this, mnemonics and passwords, which determine the access to deposited coins, must be kept secure. In order to maintain security, however, important details such as mnemonics and passwords must be protected.