First, let’s emphasize that Ethereum does not currently support staking. However, the launch of deposit contracts enabled users to state, validate, and earn Ethereum thanks to the Ethereum 2.0 proof of stake consensus mechanism. Before diving deeper, a few things needs to be further explained.
What is Proof of stake?
Proof of stake is a type of consensus mechanism that allows staking. Unlike the proof of work, users don’t need sophisticated devices to validate and mine. Instead, they can use any device with an internet connection, power, and a certain number of tokens to validate and earn. Also, it solves the high energy demand of the proof of work as well as the possibilities of 51% attacks.
It is cited as the solution to the scalability problems of the blockchain and several projects are experimenting on it already. While some blockchains like Ethereum are scheduling launch on the 1st December, Cardano already tested the proof of stake.
For this article, you will get to know more about the Ethereum 2.0 staking yet to launch, rather than Cardano blockchain.
What is Ethereum 2.0?
This is the much-expected upgrade of the Ethereum blockchain. It is simply a software upgrade that allows the Ethereum blockchain to meet scalability challenges and thus possessing a higher transaction speed. It is also promised to take many key approaches as mentioned by Xord, to solve the inherent challenges of blockchain. However, the development as an upgrade of Ethereum is for the Ethereum ecosystems. Hence, setting a standard for other blockchains. Among the measure as highlighted by Xord are;
Migrating to Proof of stake.
Using Ethereum Virtual Machine
The above approaches will make Ethereum 2.0 more scalable, robust, faster, and rewarding.
What is a deposit contract?
Deposit contract is the first implementation of Ethereum 2.0 for everyday use. It acts as the bridge to migrate from proof of work to proof of stake. As announced by Afri Shoeden, it allows Ethereum holders to stake on the Ethereum blockchain. However, staking requires 32 ETh to be among the 16,384 validators to achieve an equivalent total deposit of 524,288 ETH.
Concurrently, the fulfillment of the conditions of the deposit 7 days to the 1 December means that the Ethereum 2.0 will be live on the same date. According to Ryan, There must be at least 16,384 32 ETH validator deposits 7 days before December 1. If not, genesis will be triggered 7 days after this threshold has been met (whenever that may be).”
Since launch, people are depositing on the contract to make the genesis launch a reality. Currently, there are over 39,173 ether worth $17.3 million held in the ETH 2.0 contract address. Therefore, less than 485,115 ETH to initiate the trigger’s 524,288 ETH threshold.
Okereke has a passion for researching blockchain and cryptocurrency. He enjoys creating long form educational content to inform others on the opportunities in this space.