The latest Ethereum news update includes how the Ethereum merge date is nearing, and with it, the prices of Ethereum are positively swaying back and forth. But how will it impact the Ethereum staking rewards?
The new upgrade will introduce critical changes in the Ethereum blockchain by shifting the entire consensus from proof-of-work to proof-of-stake. The shift will also prioritise Ethereum staking as one of the critical elements of PoS.
However, PoS will also remove the need for Ethereum mining. This has led to an outcry from some miners, who have proposed an Ethereum hard fork to remain on PoW. Regardless, staking is coming, and here's a look at how the rewards will play out.
What can you earn from staking Ethereum
Rewards on Ethereum staking vary and are dependent on multiple factors including total ETH staked across the network.
However, users can earn a minimum of 3-5% APY yields on their staked Ethereum.
According to the website Staking Rewards, a validator can earn nearly 4.56% reward, while staking pools offer a reward of 4.06%.
Similarly, if a user wishes to stake Ethereum via crypto exchanges like Binance and Coinbase, they can earn up to 5% APR on each Ethereum staked on Coinbase while Binance offers an APR of up to 5.20% to users.
Several crypto enthusiasts dub staking as a way to earn free crypto rewards given you just need to deposit cryptocurrency, but it is slightly more complex.
Staked Ethereum is currently locked in the smart contract, and cannot be withdrawn until at least several months after the merge launches.
How does Ethereum staking work?
As already discussed, Ethereum 2.0 will be launched to improve the network's scalability and transaction speed.
The network will make a move from its mining to the staking model. The process of selecting a new user to validate a certain block is dubbed staking. In the staking model, a validator is selected based on the coins they had earlier staked in the protocol.
As a result, anyone can mine Ethereum transactions if they decide to stake a minimum of 32 ETH in the protocol, or join a staking pool. If a user wishes to stake ETH, all they have to do is lock up their ETH in a protocol for a fixed period to accrue yields on it.
It's not just mining/staking that is affected by the merge. Holders are also lookiung at how the merge affects NFTs, and also how Ethereum's merge will impact SHIB and other ERC-20 tokens.