The Ethereum ecosystem offers various opportunities to make money, with staking being one of them. If you stake ETH, you will receive rewards while helping secure the Ethereum blockchain. Do you want to explore this money-making opportunity? If so, keep reading this article. We have explained in detail the process of staking Ethereum.
Benefits of Staking ETH
There are two major benefits of staking ETH. They include;
Passive income: As stated, stakers are rewarded for locking their ETH tokens in the Ethereum blockchain. Staking can generate an annual yield of at least 3%.
Network Security: By committing funds to Ethereum, you help keep the network secure, making it difficult to be attacked.
Technical Terms in Ethereum Staking
Before we show you how to stake ETH, it is important you familiarize yourself with the technical terms used in Ethereum staking. They include:
Proof-of-stake: This is a consensus mechanism that requires transaction validators to lock or stake a specific amount of funds to add new blocks to a particular network. For instance, in Ethereum, validators must stake at least 32 ETH.
Validators: These are parties that lock ETH to create new blocks and verify transactions.
Epoch: This measures the time validators take to add new blocks and confirm transactions.
Slashing: Slashing happens when blockchain rules are broken. As such, the involved validator is penalized. For example, they could be removed from the validation process or see their ETH balance reduced.
Staking pools: As stated, one needs a minimum of 32 ETH to become a validator. This figure can be too high for some. Therefore, different individuals or entities can pool their funds together via a staking pool to raise the required ETH to validate transactions. The earned rewards are then distributed among the contributors in the pool.
How to Maximize Your Ethereum Staking Rewards
There are several ways you can adopt to boost your staking rewards. They include:
Increase your stake: The more ETH you commit to the Ethereum blockchain, the higher your rewards.
Choose reliable staking platforms: When planning to stake ETH, ensure you select the right platform that offers staking services at affordable costs.
Reinvest: You can decide to stake your rewards to increase your stake and boost your future earnings.
How to Stake ETH – A Complete Guide
Here are seven steps to follow to stake Ethereum or ETH.
Set Up an Ethereum-compatible Wallet
You need a secure wallet to store and manage your ETH. We recommend using a hardware wallet like Trezor or Ledger. For the purpose of this guide, we will use Ledger, which you can buy from Ledger.com.
Deposit Ethereum
Once you have your Ledger wallet, download the Ledger Live app on your computer to deposit Ethereum. You can buy ETH directly within the app or deposit it from an external source.
Select Your Staking Platform
Picking the right staking platform is key. Coinbase, a popular crypto exchange in the US, offers one of the most reliable staking protocols. To access it, go to Coinbase.com and create an account. After that, click the “Earn” button and select “Start Earning.”
Deposit ETH
Transfer some ETH from your Ledger wallet to your Coinbase account and press the “Stake Now” button.
Monitor Your Staking Rewards
Just above the “Earn” button, you will see the “My Assets” feature. Click on it and then select “My Earnings” to view your return on investment and rewards. As of October 2024, the staking rewards are roughly 3%. However, they are expected to surge in the coming months when Ethereum gas fees skyrocket due to increased network activity.
Withdraw Your ETH Staking Rewards
Coinbase sends staking rewards to your account automatically. From there, you can decide to cash out or reinvest your earnings.
Conclusion
While Ethereum staking promises steady returns, you should be aware of the risks involved before committing your funds. For instance, you could lose your money if the network is attacked. Also, price volatility can lower the value of your rewards.
