ViaBTC | The Merge is Coming Soon: The Current State of Staking on Ethereum & Impacts of the Merge
Since Ethereum announced its shift to PoS, the crypto community has kept close eyes on how the different stages of the transition progressed. According to the official roadmap, the Merge is undoubtedly the network’s highlight in 2022, no wonder the ETH community is always talking about it.
After Ethereum’s Ropsten testnet completed its Merge in early June, Nethermind tweeted on June 21 that “Sepolia Beacon Chain is deployed”, and that “Ethereum’s 2nd public testnet chain-merge is just around the corner!” It has been reported that Sepolia may complete the Merge in early July. By then, the Merge would reach its final step after Goerli, the last testnet, goes through the process.
For now, founder Vitalik Buterin, Ethereum developers, community members, and most Ethereum enthusiasts are confident that the Merge will be completed in mid-August, and a big reason is that Ethereum recorded excellent overall performance during the current Beacon Chain. Let’s take a look at the current state of Eth2 staking introduced during the Beacon Chain stage at the end of 2020.
During the past six months since December 26, 2021, the number of validators on the Beacon Chain has kept growing. To date, the total number of validators has exceeded 404,000, and Eth2 staking has totaled 12,960,117 ETH (worth about $15.7 billion), an average of 32.08 ETH staked per validator.
Data from BeaconScan also shows that the total income of Beacon Chain validators in the past six months has reached 236,800 ETH, and the average daily total income stands at about 1,592.16 ETH. The figure peaked at 2,681.77 ETH on August 23 last year and is now on a steady rise.
Beacon Chain differs from regular blockchains in terms of operation. Instead of “blocks”, it uses slots and epochs as the basic time unit. Ideally, the system could generate a slot every 12 seconds, and every 32 slots constitute an epoch. In other words, an epoch is generated every 6.4 minutes. In each slot, a validator is randomly selected to propose blocks. The selected validator would be able to propose a new block and earn rewards if it is online; however, if it is offline, then no block could be generated during the slot, and a “skipped” slot will be created. Also, in the latter scenario, the selected validator would not be able to get rewards.
As of June 27, the Beacon Chain has generated about 4.129 million slots and 129,000 epochs. During the past six months, validators have generated 7,200 blocks every day, approximately 7,177 (98.84%) of which were normal blocks and about 75 (1.04%) were “skipped” blocks. The figures indicate that most validators are now running stably.
Of course, the annualized rate of return (APR) of staking on Ethereum is a top concern for validators. In fact, the staking APR is not fixed, and the rate changes with the total amount of ETH staked on the network. The higher the total amount, the lower the APR, and the specific APR can be predicted via Staking Calculate on BeaconScan. As of June 27, the APR of staking on the Beacon Chain stands at 4.2%.
It is noteworthy that each validator must stake at least 32 ETH. Moreover, validators will not be able to withdraw their stake/returns for a long period from now on, which will be true even after the Merge is completed. This is the case because ETH deposits/returns can only be withdrawn after an upgrade that will take place roughly 6 months after the Merge. As such, users do not have to worry about the dumping of staked ETH after the mainnet goes through the Merge.
That said, there are certain risks associated with staking, which include:
- Penalty mechanisms: Malicious actions by validators, such as submitting invalid proofs or generating two contradictory blocks, will be punished, and a portion of the staking reward will be burned. However, it is also fairly easy to avoid such penalties, and validators who follow the regular validation process will not be deemed malicious;
- Offline penalties: A validator going offline while most (more than two-thirds) validators remain online will face a relatively small penalty. Meanwhile, a validator who remains offline when just over one-third of all validators are online will lose 50% of its stake (16 ETH) over 21 days. Moreover, it will be kicked out of the staking pool after 21 days;
- Other risks that are hard to avoid (e.g. system errors). For example, a critical client loophole or a bug in the Eth2 rules could result in a system error.
Except for the third kind of risks, most staking risks are easily avoidable.
Having gone through multiple delays, the Merge has finally shown us what Ethereum has achieved in 2022, and the network has started the final run towards the Merge. We hope and are confident that Ethereum will successfully complete the upgrade and become a role model for other public chains, thereby enabling better user experiences.
