Ethereum now has over 500,000 validators keeping the network secure ahead of its highly anticipated Shanghai upgrade, scheduled for March.
The update will allow such validators to withdraw their ETH from the Ethereum staking contract, some of which have been locked up for years.
Rise of Ethereum validators
According to data from BeaconScan, Ethereum validator count passed 500,000 on January 12, 2023. It registered at 501,893 on Monday.
A “validator” is a user within a proof-of-stake network who helps validate incoming transactions and blocks, while occasionally proposing new blocks. To become a validator, users need to stake at least 32 ETH as an initial investment, worth about $50,000 at the time of writing.
Ethereum’s validator count has grown steadily since the launch of the Ethereum beacon chain in December 2020. However, until now those validators have been prevented from withdrawing their participation for security reasons.
Despite many delays, the beacon chain was finally merged with the Ethereum execution layer in September 2022, changing the network’s consensus mechanism from proof-of-work to proof-of-stake. Since then, Ethereum developers have promised to prioritize enabling withdrawals, with the feature expected to hit its public testnet in February and launch on the mainnet in March.
Under its previous proof-of-work mechanism, Ethereum was secured through computational power consumed by “miners” completing complex mathematical equations to build Ethereum blocks. Miners who successfully mined blocks were rewarded with new ETH.
Under proof-of-stake, miners become obsolete in favor of validators, who can create and attest to the validity of blocks in exchange for an ETH reward. The more ETH a validator chooses to block, the more likely the network will select them to create a block, thus earning more rewards.
Theoretically, staking one’s ETH allows one to earn an effective return on their holdings at no cost, except for the opportunity cost of where that ETH might be deployed.
Nevertheless, liquid staking Options provided by staking services like Lido and RocketPool allow stakers to receive stETH or rETH in exchange for their staking assets. Backed by assets that have been locked up, each of these tokens is freely tradable as ETH equivalents, giving holders the benefits of staking without sacrificing liquidity.
Last week, ConsenSys Announced that MetaMask had partnered with Lido and Rocketpool to allow users to stake with each service and receive stETH and rETH directly within the wallet app.
Exchanges like Binance, Coinbase, and Kraken also offer staking services and provide their own ETH-equivalent tokens in exchange for clients (for example, BETH on Binance). Such services allow smaller ETH holders to bypass the 32 ETH barrier required for independent participation, in exchange for a small fee charged by the provider.
Some fear that centralized participants could gain too much control over the Ethereum consensus over time and could conspire to compromise the integrity of the network. Coinbase CEO Brian Armstrong has claimed that if regulators asked his exchange to do something nefarious, his company would likely shut down its staking service.
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This post Ethereum tops 500,000 validators as staking withdrawal deadline approaches
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