The recent upgrade to the proof of stake (pos) network may have brought some questions that need to be clarified. Be it the difference between proof of stake to proof of work, the pros, and cons, the process of staking, or misconceptions. We’re here to clarify all these topics in hopes that by the end of the article, you’ll be able to answer the questions of others.
Validators – What are they?
The most important component of the proof of stake network is a validator. A validator is responsible for processing transactions on the Ethereum network. Network validators also play a big part in securing the network by validating transactions. There are no special requirements other than staking a minimum of 32 ether to become a validator.
Then, the protocol chooses people at random to make and vote on new blocks. An execution client, a consensus client, and a validator are the three software pieces necessary for becoming a validator on Ethereum.
What are epochs?
In blockchain language, an epoch is the amount of time that determines when specific events will occur. An example of an epoch is the rate at which rewards are distributed or when a new group joins as validators for verifying transactions. The time span that defines an epoch varies between blockchain protocols that use it.
With the proof of stake Ethereum network, an epoch occurs about every 32 slots, approximately 6.4 minutes. A committee of validators which is at least 128 validators who can propose and testify to (vote on) the validity of new blocks throughout each slot in an epoch.
How are Validators Rewarded?
Validators are rewarded with block rewards. As we spoke about, there are 32 sets of committees in each epoch. Once a committee is assigned to a block, a random person from the 128 committees is chosen – the block proposer. The block proposer is the only one to propose another block of transactions. Meanwhile, 127 people vote and attest to the transactions. The block is uploaded to the blockchain when a majority approves it. The validator who suggested the block is awarded a variable sum of ETH.
The Notion of Finality on Proof of Stake
The concept of finality is when transactions on the blockchain network turn immutable. Immutability guarantees data will not be touched, altered, erased, canceled, or lost once entering the canonical chain. Depending on the latency of blockchain technology, finality can take some time.
The finality of proof of stake in Ethereum is through deterministic protocols – “checkpoint” blocks. The first block out of the existing 32 epochs is a checkpoint. The participants then vote on checkpoint pars that are valid. The moment a checkpoint reaches a supermajority vote, it is then justified. All prior epochs are upgraded once their child checkpoint goes through justification. In essence, a checkpoint’s position in the timeline determines whether it is justified or finalized.
Finality requires two-thirds of votes; however, an attacker could prevent this by voting with one-third of staked ETH. But here is where the leak caused by inactivity comes in. The inactivity leak will lower staked ether from validators voting against the majority. If the chain fails to reach finality for more than four epochs, then honest validators can complete the chain.
What is Solo Staking?
Solo staking is the best method of staking in the industry. Why so? Solo staking allows for complete autonomy over an individual’s hardware and funds. Besides solo staking, there are methods such as SaaS and pooled staking.
As mentioned above, a regular validator must stake a minimum of 32 ETH. However, a staking service or pooled staking is for people who need help handling the hardware necessary or cannot meet the 32 ETH requirement.
What if I don’t have 32 ETH – Can I Stake?
Interesting in joining staking, but you don’t have enough ETH. A staking pool is an alternative method for individuals who cannot deposit the 32 ETH. As with SaaS, it also eliminates the requirement for hardware maintenance, but there are risks with allowing a third party to run and maintain the node, which will cost some fee.
Many staking pools offer a liquidity token that acts as a claim on ETH that has gone through staking. In addition to rewards given and offering prizes for ETH staking. Staking pools also allow customers to keep control of their money and utilize staked ETH as security in Defi (decentralized finance) apps.
In conclusion, the main benefit of the proof of stake upgrade is the lower ongoing costs. Along with lower costs, it consumes less energy, unlike proof of work. The proof of stake network is here to bring benefits to the industry, we hope by now you have a full understanding of the proof of stake network, the staking process, and the notion of finality.
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