The upgrade of the Ethereum blockchain to Ethereum 2 is imminent. Ethereum 2 will be a new blockchain based on a Proof-of-Stake (PoS) that allows holders to stake Ether tokens (ETH) — something the market has been anticipating for quite some time.
Staking — what is it?
The Ethereum 2 blockchain will be based on proof-of-stake. This gives the holder of ETH2 the opportunity to put them “at stake” in a validator node which then proposes and attests to blocks. By performing this task, the blockchain grants the holder rewards.
For a more in-depth look at what staking is and how it works, please read our Fundamentals article: What is Staking?
Staking on Ethereum 2
Staking on Ethereum 2 will begin in Phase 0 of the Ethereum 2 upgrade. The first step for those wishing to stake on Ethereum 2 is to send ETH to the Ethereum 2 deposit contract. This is a one-way transaction. In order to become a validator on Ethereum 2, each staker will need to commit 32 ETH. ETH which are staked on Ethereum 2 are locked until Phase 1.5 of the transition.
What’s in it for me?
By staking on Ethereum 2, validators earn staking rewards. These rewards are projected to be as high as 20% or more for those who begin staking as soon as Phase 0 begins. These rewards are likely to decrease over time as more and more validators come on the network. For more details on the risks and rewards associated with being a validator on Ethereum 2, read our in-depth article on validator economics here.
How to stake with Bitcoin Suisse
The all-in-one Bitcoin Suisse staking service offers clients a range of advantages and helps them get started with Ethereum 2 staking – quickly and easily. Getting started with Ethereum 2 staking is simple – access your staking account directly from your Bitcoin Suisse Online account.
Stake small amounts
If you stake with Bitcoin Suisse, you can participate with even a small amount of ETH. Ethereum 2 only supports stakes with exactly 32 ETH2, but with the Bitcoin Suisse staking service, you can stake with as little as 1 ETH.
Conversion and calculation of indicative predicted rewards
You will be able to deposit the amount of ETH you would like to stake in your Bitcoin Suisse staking account. Please note that this does not need to be the entire 32 ETH needed to run a validator. Likewise, it may be more – for example 40 or 55 ETH. We will subsequently perform the technical placement of your ETH in the deposit smart contract, thus converting your ETH to ETH2. There is no fee associated with this step. After depositing your ETH, they will be locked and non-transferrable or tradeable for one year or more.
Technical setup and maintenance
During the early development of Ethereum 2, it is assumed that Ethereum will do several changes in the protocol. To ensure the highest uptime, we will secure and monitor the deposited stakes, and regularly perform necessary updates to the staking software.
Re-staking of funds
When ETH2 become transferable on Ethereum 2, you will be able to reinvest your staking rewards at Bitcoin Suisse. Since a new validator requires exactly 32 ETH2, you would need to have a reward of at least this worth to be able to reinvest (“re-stake”).
Nevertheless, our optimization of staking allocations enables this type of reinvesting, meaning that the sum of the rewards resulting from your stake plus your original staking amount will be re-staked on a frequent basis. Over time this will earn you more ETH2 than if you did not do re-staking.
You will retain 85% of the earnings from the incoming rewards. Bitcoin Suisse will use the remaining part to cover costs associated with the infrastructure setup, protocol upgrades, maintenance, and servers.
Trading the ETH2 staking rewards
Once transfers of ETH2 are enabled, Bitcoin Suisse will allow you to trade your earned staking rewards into another crypto or fiat currency.