Ethereum is a decentralized computing platform that uses ETH (also called ether) to pay transaction fees. It is a technology that is home to digital money, global payments and applications. The community has built a booming digital economy and bold new ways for creators to make money online. Among cryptocurrencies, Ether is second only to Bitcoin in market capitalization.
Ethereum has transitioned its model from proof of work (POW) to proof of stake (POS) which allows you to stake your ether coins (ETH) in return for more ETH. Staking is part of Ethereum 2.0, an upgrade designed to make the network faster, more scalable and more sustainable. Staking is a process of validating transactions on the Ethereum network to earn new ETH coins. In return for one’s work, one gets additional ETH coins called staking rewards. The minimum amount of ETH required to run a validator node is 32.
The two ways of staking Ethereum depend on how much Ether one is willing to deposit. Ethereum staking through the wallet requires a deposit of the full 32 ETH required to become a full validator and be willing to pay a 0.75% fee. Ethereum staking through a pool is for users who do not have 32ETH. It is a simpler process than staking alone because the pool does the technical work for you. Most pools charge a flat fee or a percentage of your rewards as payment.
With Ethereum staking, the rate of your return depends on the number of ETH staked at any given time across the network. The dollar value of your return depends on the current price of ETH. If the price of ETH rises, your reward increases even more and vice versa. To run the validator software effectively, one needs a storage space of around 450GB and a stable internet connection.