The Merge is here: Ethereum has switched to proof of stake

To activate your own validator, you’ll need to stake 32 ETH; however, you don’t need to stake that much ETH to participate in validation. You can join validation pools using “liquid staking” which uses an ERC-20 token that represents your ETH. The Merge was the moment when Ethereum switched off its proof-of-work-based consensus mechanism and switched on its proof-of-stake-based consensus mechanism. None are identical to Ethereum; Ethereum’s proof-of-stake mechanism is unique.

does ethereum have proof of stake

Proof of work has been used by the Ethereum mainnet since its genesis, and it underpins older blockchains like Bitcoin. The comments, opinions, and analyses expressed on Investopedia are for informational purposes online. As of the date this article was written, the author does not own bitcoin or ether. However, it takes years to implement successfully, and the community would need to agree to the change. Proof-of-stake is designed to reduce network congestion and address environmental sustainability concerns surrounding the proof-of-work (PoW) protocol.

‘Proof of stake’

Re-orgs could also be used to prevent certain transactions from being included in the canonical chain – a form of censorship. The most extreme form of reorg is “finality reversion” which removes or replaces blocks that have previously been finalized. This is only possible if more than ⅓ of the total staked ether is destroyed by the attacker – this guarantee is known as “economic finality” – more on this later. The “work” in proof of work comes in the form of mining, where miners expend energy in the form of computing power to add blocks to the blockchain by validating transactions.

does ethereum have proof of stake

For PoW, miners must invest in processing equipment and incur hefty energy charges to power the machines attempting to solve the computations. A fork choice algorithm implements rules determining which chain is the canonical one. Under optimal conditions, there is no need for a fork choice rule because there is only one block proposer per slot and one block to choose from. Occasionally, though, multiple blocks for the same slot or late-arriving information leads to multiple options for how blocks near the head of the chain are organized. In these cases, all clients must implement some rules identically to make sure they all pick the correct sequence of blocks.

Ethereum’s ETH 2.0 shift to proof-of-stake is just months from launch, and analysts are bullish about the update. Here’s why.

These validators, or “stakers,” put their crypto into a smart contract that’s held on the blockchain. This means that 1/32 of their staked ether (up to a maximum of 1 ether) is immediately burned, then a 36 day removal period begins. During this removal period the validator’s stake gradually bleeds away. At the mid-point (Day 18) an additional penalty is applied whose magnitude scales with the total staked ether of all slashed validators in the 36 days prior to the slashing event. This means that when more validators are slashed, the magnitude of the slash increases.

does ethereum have proof of stake

And though staking is not as directly damaging to the planet as warehouses full of computer systems, critics point out that proof of stake is no more effective than proof of work at maintaining decentralization. Ethereum’s proof-of-stake system is already being tested on the Beacon Chain, launched on December 1, 2020. So far 9,500,000 ETH ($37 billion, in current value) has been staked there.

How Does Staking Ethereum Work?

Researchers developed Casper specifically for Ethereum, and Ethereum is the first and only blockchain to have implemented it. Whereas under proof-of-work, the timing of blocks is determined by the mining difficulty, in proof-of-stake, the tempo is fixed. Time in proof-of-stake Ethereum is divided into slots (12 seconds) and epochs (32 slots). One validator is randomly selected to be a block proposer in every slot. This validator is responsible for creating a new block and sending it out to other nodes on the network.

That said, if you are HODLing anyway, the Ethereum staking rewards may offset some of the losses if it goes down. Simply put, a delegator will deposit their coins with a validator who will stake and earn block rewards on the delegator’s behalf. Coinbase does not impose a lock-up period, but users may have to wait until the unstaking process is complete by the protocol to receive their crypto. EToro is a prominent stock and cryptocurrency broker operating globally and is highly regulatory compliant. This makes it one of the most secure ETH staking platforms, rendering it a favourite amongst newbies and those that remain on the fence about the wild-west of DeFi.

What are the risks of The Merge?

“It’s like we’re artificially adding miners on the network, which raises the difficulty, making it harder for every other miner that’s on the network to actually mine a block.” Proof of stake, first proposed on an online forum called BitcoinTalk on July 11,  2011, has been one of the more popular alternatives. In fact, it was supposed to be the mechanism securing Ethereum from the start, according to the white paper that initially described the new blockchain in 2013. But as Buterin noted in 2014, developing such a system was “so non-trivial that some even consider it impossible.” So Ethereum launched with a proof-of-work model instead, and set to work developing a proof-of-stake algorithm. Proof of work pits miners against each other, as they compete to solve a difficult math problem.

In each of the block proposal slots, the attacker withholds their block, collecting them up until the honest chain reaches an equal subtree weight with the withheld blocks. Then, the withheld blocks are released so that they equivocate maximally. The authors suggest that proposer boosting – the primary defense against balancing and bouncing attacks – does not protect against some variants of avalanche attack.


On Monday evening, Ethereum creator Vitalik Buterin reminded his 4 million Twitter followers that the “merge” is fast approaching—and urged those requiring essential software upgrades to do so ASAP. Bitcoin price has been moving sideways for nearly 50 days now, with no directional bias in sight. With volatility hitting all-time lows, investors are bored out of their minds and are looking at other avenues for trading opportunities.

  • Slashing is the term given to the destruction of some of a validator’s stake and the ejection of the validator from the network.
  • You end up doing all that work—consuming vast amounts of energy or staking all those coins—for nothing other than maintaining an illusion.
  • Most recently, ether fell some 8% on April 11 after an Ethereum lead developer said plans for the event set for June had been pushed back as tests on the software continued.
  • RavenCoin is essentially the same as Bitcoin with larger, faster blocks and a larger maximum supply.

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