How Ethereum staking works

Since September 2022 Ethereum has used proof of stake. Instead of miners spending electricity, validators lock up ETH as collateral and take turns proposing and attesting to blocks. Honest work earns rewards; provable misbehaviour can be punished by "slashing" part of the stake.

Where rewards come from

Validators earn newly issued ETH for their attestations and block proposals, plus a share of transaction priority fees and any extra value from how transactions are ordered. The yield is not fixed: it falls as more ETH is staked and rises with network activity.

Ways to stake

• **Solo staking.** Run your own validator with 32 ETH. You keep full control and all rewards, but you must keep the machine online and up to date.
• **Staking pools and liquid staking.** Deposit any amount with a protocol that runs validators for you. Many issue a liquid staking token that represents your stake and can be traded or used in DeFi.
• **Exchange staking.** An exchange stakes on your behalf. It is simple, but you are trusting the exchange and its fees.

Withdrawals

Withdrawals were enabled in April 2023. Exiting a validator joins a queue, so getting ETH back can take days or longer when many validators leave at once. Liquid staking tokens can be sold sooner, but sometimes at a discount.

Risks to weigh

• Slashing and downtime penalties.
• Smart-contract risk in staking protocols.
• Concentration: if a few providers control a large share of stake, the network is less decentralised.

Key takeaways

• Staking rewards are variable, not a guaranteed rate.
• Each method trades control against convenience.
• Check withdrawal times before you stake funds you may need.