how to participate in ETH 2.0 Staking ?

ETH2.0 (“Tranquility” Serenity) is an upgrade for the ETH network, the purpose is to improve scalability, stability, and bring some economic changes. ETH2.0 will use sharding to significantly increase network bandwidth and reduce gas costs, thereby reducing the cost of sending ETH tokens and interacting with smart contracts. There will also be some fundamental changes at the economic level. ETH2.0 will allow support for staking nodes and obtain ETH as passive income. In many ways, ETH2.0 represents the result of thousands of developers working together for many years. The upgrade of ETH2.0 will start from stage 0 in 3 different stages (after all, developers start counting from 0 instead of counting from 1).

In the past few years, opponents of ETH have often criticized its transaction costs for being too high, and also believe that the ETH network is too fragile during peak usage periods. Can this upgrade of ETH2.0 solve these problems? Can the scale of the project support a large number of decentralized financial products (DeFi) and blockchain games under construction? This guide will cover the ETH2.0 upgrade schedule and the solutions to these problems.

In addition, ETH 2.0 also set up a validator node (validator node). These staking-based nodes will decide how ETH should operate and how to verify transactions in the future. So in this guide we will also explore all these concepts.

Main features of ETH2.0

  • Sharding-ETH will be divided into 64 “sharding” running at the same time, which will greatly improve the operating efficiency.
  • Staking-ETH will turn to Proof-of-Stake Consensus, a more energy-efficient way to maintain the network.

ETH2.0 will fundamentally change the current economic model. Because in fact this update will completely eliminate the concept of PoW mining. Therefore, after the ETH2.0 update is completely completed, PoW miners of ETH may all be “laid off”.

Ethereum 2.0 Roadmap (via Consensys)

What is the current status of ETH, and what about version 2.0?

As of April 2020, Prysmatic Labs launched the ETH2.0 Beacon Chain testnet (Testnet), and obtained exciting results. According to the ETH2.0 update roadmap given above, we are now in the working phase in phase 0. The launch of the testnet caused a lot of repercussions, with more than 20,000 validators signing up and contributing their own resources to support the beacon chain testnet. ETH founder Vitalik Buterin said that this will not be the “final” test of the beacon chain, so we can expect more people to participate in this community in the coming months.

As shown in the figure below, we are currently testing the first level of the ETH2.0 architecture, the beacon chain. In the coming months, the current phase 0 beacon chain will be gradually completed, and development will be transferred to the shard chain of the construction phase 1, and then the execution engine of the construction phase 2 will be completed at the end.

Ethereum 2.0 setup and architecture

Stage 0: Beacon Chain

Stage 0 will begin with the official start of the beacon chain. Currently, this is planned for the second quarter of 2020. The goal of stage 0 is to provide attestations and randomness for sharding. With the launch of Phase 0, a new token ETH2 appeared. Users before ETH will be able to convert it to ETH2 through a registration contract (at a 1:1 ratio, which can effectively replace previously held ETH). Community participants can also choose to deposit 32 ETH2 into validator nodes.

Phase 1: Shard Chain

The first phase will allow ETH to undergo large-scale expansion through “sharding.” The network will be divided into 64 concurrently running shards, which means that they will all participate in the processing and calculation of transactions. Phase 1 will also allow shards to communicate with each other.

Phase 2: Execution Engine

The second stage will bring the final form of ETH2.0. This will be when the existing old proof of work and the latest proof of stake network are combined. From then on, ETH will be merged into ETH2, and a new era of ETH will be opened.

ETH2 Multi-client network testnet

ETH2 is a plan involving multiple laboratories and working groups. As part of the plan to maintain ETH decentralization, different laboratories and companies are developing their own ETH 2.0 customer implementations, which means that multiple code bases use the same protocol to communicate. Eventually ETH will provide support for multiple clients to communicate with each other through a multi-client network.

On April 28, 2020, Prysm and Lighthouse released a multi-client testnet for ETH 2.0. This test allows ETH2 clients developed by different laboratories (eg Prysm, Lighthouse or Casper) to communicate with each other.

Pledge ETH on the verifier node

Ethereum 2.0 Staking rewards

ETH2.0 will be transferred to proof of stake consensus (PoS). In the “Stage 0-Beacon Chain” above, we mentioned that the community can pledge 32 ETH2 on the verifier node. The 32 pledged ETH2 will be used to verify the transaction and status on the network, and as a guarantee for the integrity and operation of the verifier node. Those who pledged will receive ETH in return for hard work, which means that the validator will receive a passive income of ETH, and earn ETH as interest over time. The current calculation of ETH2.0 shows that the annual return on investment (ROI) is about 14.2%. This is very useful for those who have ETH, they can maintain their funds on the verifier node while enjoying passive income. Analysts predict that once the proof of stake is implemented, the need for ETH for pledge and verifier nodes will increase the demand for ETH. At the same time, with the final elimination of ETH mining, the demand for GPUs will also decrease.

Beacon Node status showing Income and Attestations

You can see the status of our ETH validator node in the picture above. We initially had some offline time on this node, so we actually lost 0.01333 ether as a penalty for missed votes. Therefore, it is important to remember that once the node is activated, voting will be mandatory. Offline nodes will mean missed votes, resulting in the loss of ETH.

How to set up ETH validator node

At present, you can try to pledge ETH in the ETH 2.0 test online established by Prysmatic Lab (aka Topaz). Because it is a test, the actual ETH will not be used, but Göerli ETH, a testnet version of ETH that is available for free.

Required operation time: 2 days.

Set up ETH verifier node

This guide is adapted from the Prysm “Topaz” testnet guide

1. Get some GöerliETH

GöerliETH is freely available and will be used to pledge the 32 ETH required by the node. The easiest way to get Göerli ETH is to use social faucet.

2. Start the server

You need to be familiar with how to run a VPS server (you can use AWS, Hetzner, or Linode).

The recommended configuration includes 100 GB SSD storage and Intel Core i7 processor.

3. Start your beacon chain

We found that the easiest way to achieve this is through Docker

docker run -it -v $HOME/prysm/beacon:/data -p 4000:4000 -p 13000:13000 \ gcr.io/prysmaticlabs/prysm/beacon-chain:latest \ — datadir=/data

4. Generate a verifier key pair

docker run -it -v $HOME/prysm/validator:/data \ gcr.io/prysmaticlabs/prysm/validator:latest \ accounts create –keystore-path=/data

Complete the steps here to pledge ETH ( https://prylabs.net/participate )

5. Start the verifier client

docker run -it -v $HOME/prysm/validator:/data –network=”host” \ gcr.io/prysmaticlabs/prysm/validator:latest \ –beacon-rpc-provider=127.0.0.1:4000 \ –keymanager= keystore \ –keymanageropts=’{“path”:”/data”,”passphrase”:”changeme”}’

6. Complete activation

Wait for about 2 days to activate, and then you are ready to complete!

Frequently Asked Questions (FAQ)

Can we transfer ETH2 to Topaz Testnet?

Currently, the real ETH/or ETH2 is not used in the beacon chain testnet. The testnet runs on Göerli and uses freely available Göerli ETH.

Can you get ETH2 back to regular ETH?

In phase 0, ETH2 cannot be taken out as regular ETH. Before the third stage, once converted, ETH2 can only be used on the Staking Chain.

Will I lose ETH stored in the node?

Will do. The 32 ETHs pledged by the verifier node are designed to ensure that the verifier node is always running and online. If the node is offline, it will be punished and a small amount of ETH will be deducted over time.

What is “Slash Penalty”?

In addition, for malicious operations intentionally performed by nodes (such as two conflicting votes), there will be a “Slash” penalty (deducting a certain amount of ETH).

When will ETH mining be eliminated?

ETH mining will continue for many years. ETH will keep mining on the main chain at least until 2020. The main ETH1 chain will continue to use mining and run in parallel with the ETH2.0 chain. This operation is to ensure stability during the transition period.

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