ETH 2.0 beacon chain is about to be launched. When will staking start? When will rewards be distributed?

On October 12, ConsenSys researcher Ben Edgington wrote in an article published on Coindesk:

It’s time. It’s time to launch the Ethereum 2.0 Beacon Chain.

Why pay attention to the progress of the beacon chain? Because the official launch of the beacon chain, as the headquarters of Ethereum 2.0, means that ETH 2.0 has taken a key step on the road, and from the perspective of coin holders, after the deposit and mortgage function is enabled, the lock-up rate of Ethereum will reach a new high.

The Ethereum community is currently preparing for the arrival of the beacon chain.

Currently, the Ethereum community has multiple test networks undergoing iterative testing: Ethereum 2.0’s multiple single-client test networks (Sappire, Topaz, and Onyx) have been tested for a long time; and the multi-client test network Medalla currently has more than 50,000 validators participating in it.

When the Ethereum 2.0 beacon chain goes online, there will be multiple audited and community-tested clients that can operate normally (Teku, Lighthouse, Mimbus and Prysm).

With these preparations, the most pressing issue for Ethereum followers may be: When will Phase 0, the beacon chain phase that marks the start of the Ethereum 2.0 launch process, come?

According to Ben, we don’t have to wait too long this time. The key step in launching the beacon chain is to deploy the deposit contract. Currently, the Zinken testnet is progressing smoothly, and the community plans to launch the genesis of the beacon chain within six weeks. This means that we may see the beacon chain go online by the end of November at the latest.

The Ethereum 2.0 network improves the scalability and processing power of the network by introducing sharding, and the beacon chain is the "command and control center" of the entire Ethereum 2.0 network. In the initial stage after the beacon chain is launched, with the introduction of sharding, the beacon chain can coordinate the operation of up to 64 shard chains.

The complexity of the Ethereum 2.0 upgrade is no less than changing the tires of a high-speed off-road sports car. That’s not all. It also needs to be modified to make it fly. This process is not a one-day job and needs to be achieved through multiple stages. Currently, there are three stages that are relatively certain: Stage 0, Stage 1 and Stage 2.

Ethereum 2.0 will introduce the PoS consensus protocol Casper, and the key step is the implementation of Phase 0. Because in Phase 0, the launch of the beacon chain will serve as the control center and command center of the Ethereum 2.0 network.

The subsequent Phase 1 will introduce sharding, and the beacon chain will reference the state of the shards through crosslinks, but will not process transactions at this time. Then, in late 2021 or even early 2022, with the introduction of virtual machines, smart contracts can be executed on shards, and only then will we see the Ethereum 2.0 network being truly used.

Previously, the Blockchain Study Society published an article introducing the multiple stages of the launch of Ethereum 2.0. For details, click: "The industry urgently needs Ethereum 2.0, but it will take at least 2 years to be "usable"! "

The beacon chain is online and the deposit function is enabled, which means that users can deposit their Ethereum into the Ethereum 2.0 network (that is, Staking is enabled). According to the settings of Ethereum 2.0, to become a network validator, you need to stake 32 ETH and run a node. While maintaining the stability of the network, you will also get rewards for your investment.

Why is the launch of the beacon chain so important?

Because Ethereum 2.0 adopts the PoS consensus mechanism, the beacon chain will record the stake witnesses (Staker/Validator) and their staked tokens, and randomly select stake validators. After the shards are launched in the future, the beacon chain will also randomly assign the block generation tasks of the shards to the validators. The beacon chain will adopt consensus rules, sanction cheating validators, give rewards to working validation nodes, and act as a link hub between different shards.

Although it has been verified through multiple rounds of test networks, and although many functions and features can be perfectly simulated on the test network, and bugs and problems can be found, only in the real beacon chain formal network can real money be involved and practiced, and the real PoS token economics characteristics, real mortgage, real punishment and reward mechanism can be obtained, and there is more pain and interest, which cannot be simulated on the test network.

Ethereum 2.0 is not a simple upgrade of Ethereum 1.0. Instead, Ethereum 2.0 creates another blockchain network. As development progresses, users and applications of Ethereum 1.0 gradually migrate to Ethereum 2.0. For example, after activating the support feature for virtual machines in Phase 2, the original Ethereum smart contracts can be deployed on Ethereum 2.0.

How is the beacon chain launched?

After the beacon chain is launched, if you want to become a validator of Ethereum 2.0, the validator needs to deposit 32 ETH tokens into the official smart contract before becoming a verification node in the Ethereum 2.0 network and receiving rewards. However, the process of launching the beacon chain is not that simple.

In order to achieve the genesis of the beacon chain, in addition to the common block height requirements, an additional condition must be met: the number of validators who pledge 32 ETH must exceed 16,384 before the beacon chain can be officially launched. Prior to this, in the pre-genesis phase of the beacon chain, only beacon chain nodes will participate in the ETH 2.0 network. Once the number and block height requirements are met and the genesis phase is achieved, it means that validators can participate in the consensus mechanism, maintain the operation of the network, and communicate with each other.

However, the beacon chain at this time is like the frame of a building, like the keel of the Ethereum 2.0 ship. Apart from mortgaging coins and running the network, it has no substantial use.

Most concerned: When will the Staking rewards be distributed?

Will validators on Ethereum 2.0 be able to earn income after the beacon chain genesis state is achieved? This is a question that many users are concerned about.

As mentioned above, in addition to meeting the block height requirements, at least 32 X 16384 = 524,288 ETH must be deposited into the relevant smart contract as collateral for the validator. It should also be noted that since the state of the Ethereum 1.0 network needs to be synchronized to the beacon chain, there will be a delay in state synchronization. Therefore, students who are concerned about the progress of Ethereum 2.0 and the beacon chain online need to know that after the collateral ETH meets the requirements and the block reaches the specified height, there is still a certain genesis delay period. As shown in the picture above, there is an estimated delay of about 48 hours. Only after this means that the beacon chain is officially opened, and the rewards for becoming a validator will also begin.

It is estimated that the initial annualized rate of return for becoming a validator on the beacon chain is about 20%. It should be noted that after the initial noise of the Ethereum 2.0 network, this return is equivalent to a risk-free return on Ethereum 2.0. Even at the peak of DeFi projects, this 20% rate of return is very attractive.

Therefore, I think it should not take too long to meet the 543,000 ETH pledge requirement during the beacon chain launch process.

But don’t get too excited yet, there are still some issues we need to pay attention to.

Participating in the ETH 2.0 network, these are the risks you need to know

Like any major project launch process, although the ETH 2.0 test network and the corresponding client have undergone multiple tests, the test environment is still a test environment and cannot be compared with the official network. In addition to factors such as software vulnerabilities and network failures, it is also necessary to consider that hackers can keep vulnerabilities and accumulate them without releasing them until more tokens are deposited in the official environment before attacking in one fell swoop.

It is not necessarily a wise choice to rush in at the beginning of the beacon chain launch, although it may be for the sake of novelty. If you are interested in participating, it is better to wait for the network to stabilize and enter after the security team and company evaluation. Although there are fewer verification nodes in the early stage of launch, participating in it is more likely to get rewards, but risks also come with it.

In addition, although Ethereum 2.0 allows more people to participate as validators by setting a low threshold of 32 ETH staking requirements, running the software to become a validator is still a somewhat technical job.

Under the PoS mechanism of Ethereum 2.0, corresponding penalty mechanisms are also set: confiscation and laziness penalty. If the validator's node is continuously offline, part of the deposit will be confiscated by the system; if the validator does evil and the system identifies malicious behavior, the assets will be confiscated. And when the confiscation is lower than the requirement of 32 ETH, it will be eliminated and no longer qualified for block verification, and naturally cannot receive rewards.

Special reminder

It is worth noting that even if the beacon chain is launched as scheduled, the pledged assets will remain immobile for a considerable period of time.

As a validator, after transferring to the system contract on the Ethereum mainnet and staking 32 ETH to obtain validator qualifications, the rewards will continue to accumulate. When can I claim them?

According to ConsenSys researcher Ben Edgington, after the beacon chain goes online, validators can stop verification and freeze their staked tokens and rewards at any time, but before Ethereum 2.0 reaches stage 1.5, the Ethereum tokens staked and rewarded will always be locked on the beacon chain and cannot be withdrawn.

In phase 1.5, validators who stake tokens will be able to claim rewards and unfreeze the staked ETH. Before that, tokens will be locked for a long time and there is no way to redeem them.

This will bring uncertainty, because there is no clear roadmap or time node for when Ethereum will achieve phase 1.5. According to the current progress, even if it is optimistically estimated, it will take one to two years. Perhaps such a long waiting period for returns will test the confidence of coin holders.

After talking about the details of the beacon chain launch and the risks of participation, it is time to talk about the possible opportunities that Ethereum 2.0 brings to ordinary people. Of course, these are all my personal inferences and do not constitute investment advice, but are only for information reference.

1. Become a validator and stake tokens to participate in the network

This is the most obvious way to participate. The above also estimates the benefits that validators can obtain. However, for non-technical enthusiasts, although starting a verification node currently requires certain software and node operation and maintenance knowledge, it brings a certain threshold.

In order to solve this problem, several projects targeting the Staking track have also emerged. Previously, the Blockchain Study Club also introduced "How to plan ETH 2.0 Staking? Take Blox, Ankr, and Rocket Pool as examples". Let's take a brief review.

Ethereum 2.0 will have a large number of nodes. If calculated based on the industry average staking rate of 50%, it is roughly estimated that 50 million ETH will enter the staking state. Providing third-party staking will become a big business. After all, even if calculated based on an annualized return of 15% and a commission rate of 20%, the annual yield is as much as 570 million US dollars. It is hard not to be tempted by this piece of cake.

In the Ethereum 2.0 Staking track, ordinary people can participate in it with the help of some third-party Staking projects. After their own independent judgment, they can choose a good staking service provider. Although commissions are given, they do not have to operate and maintain nodes themselves, which saves some trouble. Blox, Ankr and Rocket Pool are three projects worth paying attention to in the Ethereum 2.0 track.

Specifically, Blox provides non-custodial staking services, which, like DEX, allows users to have their own autonomy. Blox provides a set of programs for configuring, running and managing nodes for users to use. The public beta version has been released on October 12. Those who are interested can download it to experience it. Blox's token model is still relatively simple at present. It will take a certain percentage of the commission collected from users to repurchase its own platform tokens.

Ankr initially wanted to do cloud computing, but later turned to node-related businesses. Users can use Ankr to run their own ETH 2.0 nodes. After the subsequent launch of Stkr, third-party node service providers will be introduced for users to choose from, while supporting small amounts of ETH Staking. Ankr's tokens will also become a means of payment on the platform. According to official news, the test network will be announced soon.

Rocket Pool provides a simple UI that allows users to directly input the Ethereum they want to pledge and obtain the certificate rETH after staking, which not only allows users to obtain returns but also liquidity. It also supports small amounts of ETH to participate in Staking.

Recently, I saw a project called Lido, which has a similar model to Rocket Pool and will launch a test network in the near future. This track will definitely become more and more crowded.

For ordinary people, running a node by themselves requires too much effort and may face the risk of punishment. Choosing a reliable third-party service will still be the choice of many people.

2. How to play Staking + DeFi

In fact, it can be inferred that projects such as Ankr, Rocket Pool, and Lido provide liquidity for Staking ETH, so these rETHs will definitely be accepted by DeFi, and rETH's trading, lending, and other scenarios may also capture relatively large value.

3. Benefits from the increase in Ethereum staking

In addition to the above ways of participation, there is one more thing to note: with the launch of the Ethereum beacon chain, the staking rate of Ethereum will increase. Ethereum 2.0 staking + DeFi staking will continue to change the market supply and demand relationship of Ethereum tokens, which means that ETH will face more demand-side markets. After all, the amount of Ethereum produced each day is limited.

Holding ETH to share the value brought by the network may provide holders with more confidence in holding coins for the long term.

If everything goes well, Ethereum 2.0 will begin the official launch process at the end of November. Although at the beginning of Phase 0, we can't do more than staking tokens to run nodes, but with the community's various creative ideas, combining ETH 2.0 staking with DeFi, etc., it can be optimistically predicted that the amount of Ethereum tokens pledged will break through the previous high.

Participating in emerging networks has its risks, but the launch of Ethereum’s beacon chain will mean that a long journey has finally come to an end. As long as you start walking, the road is long but you can reach it. After all, even the pigeon king Filecoin has officially launched, right?

After the Ethereum Beacon Chain goes live, there are many possibilities for us to participate. Follow us to continue to discover new opportunities.

https://www.odaily.com/post/5154319

https://www.coindesk.com/time-to-launch-ethereum-2-beacon-chain

https://www.coindesk.com/ethereum-2-lockup-defi-innovation

https://www.chainclub.cn/1986.html

https://www.coindesk.com/time-to-launch-ethereum-2-beacon-chain

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Statement: This article is the author’s independent opinion, does not represent the position of Blockchain Research Society (public account), and does not constitute any investment opinion or suggestion.