Ethereum 2.0 will launch staking mining in November 2020

To start staking mining on Ethereum 2.0, you need to run a validator node and lock up ETH tokens. After that, you are allowed to participate in the creation of blocks: validator nodes are selected and semi-randomly vote on new blocks; then, other validators will reach a consensus on the results.

Proof of stake has several other advantages over current mining: in theory, it is more secure and decentralized ; it will also help Ethereum scale and process transactions more efficiently .

You can still mine on Ethereum 1.0, but the mining rewards will gradually decrease. In fact, this is already happening: the Constantinople upgrade in 2019 slashed mining rewards. Since then, Drake has suggested that mining rewards (i.e. token issuance) could be reduced by a factor of 10 over the next few years, although this will ultimately depend on the price of ether.

If you want to stake and mine on Ethereum 2.0, you need at least 32 ETH , which is about $12,000 as of August 2020; instead, small investors should join a staking pool.

You don’t need a powerful computer to stake ETH, and ASIC devices don’t offer any advantages. Most consumer laptops , and even Raspberry Pis , are capable of supporting at least one validator slot.

But you need to be online all the time and be able to verify blocks . In addition, you need some technical knowledge to run Ethereum's node software. To this end, Somer Esat provides step-by-step instructions on how to run a testnet node on the page.

If there is no queue, validators need to wait at least 18 hours to withdraw ETH. Of course, most validators will stake their ETH for a longer period of time.

To maintain integrity and security, Ethereum 2.0 will use these deterrents . For example, small "penalties" incentivize validators to stay online. At the same time, "slashing" will take away a portion of the validator's stake and force them to leave the network - but this is for malicious validators.

It is not clear how much investors can earn through staking mining. Ethereum founder Vitalik Buterin recently proposed setting the annual return rate between 1.5% and 18%, depending on the value of ETH staked in the entire network. Lead developer Justin Drake suggested setting the return rate for validators at 5%. He also pointed out that the annual return here will take into account both the income from gas fees and inflation.

At the same time, market prices also affect profitability : a validator may earn a certain amount of ETH, but depending on market conditions, the value of this ETH may be much higher or lower than expected.

Whatever interest rates staking mining ultimately generates, those rates will be higher the longer you stay invested in ETH.

The income of 100 ETH pledged in the project for ten years

If you find it troublesome to run a validator node, you can use a staking pool such as RocketPool to stake, which will manage your stake on your behalf. You don't need to run the software and stay online, and you only need to pay a small fee. The staking fee can be as low as 0.01ETH (about $5).

You can even stake your ETH with RocketPool before Ethereum 2.0 goes live. At that time, you will receive placeholder tokens (rETH) that can be sold or traded for other tokens. When Ethereum 2.0 goes live, you can "burn" standard ether. There are also other staking pools or staking services; decentralized options give you more control over your cryptocurrency.

Other types of investments, such as liquidity mining and lending, provide other ways to earn interest on your Ethereum assets. These are unrelated to Ethereum 2.0’s proof of stake, but you still need to “bet” token earnings in the contract.

You will be able to mine when the Beacon chain of Ethereum 2.0 goes live (“Phase 0”), which is November 2020. If you want to use “play coins” (valueless testnet ETH), you can test staking mining on Medalla.

Initially, Ethereum 1.0 and 2.0 will work in parallel. In Phase 0, you will be able to migrate your ETH tokens to the Ethereum 2.0 Beacon chain, which will handle lock-in exclusively. In Phase 0, Ethereum 1.0 will also handle non-staking activities, including trading activities and smart contract activities.

Ethereum 2.0 is a multi-year project. But even with the introduction of staking mining, it won’t completely replace the old system. “Mining may end at some point,” Drake told Crypto Briefing. “ETH 1.0 will likely never stop being used unless the community explicitly supports it.”