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Ethereum 2.0 Reconsiders Staking Rewards and Penalties Policy: Vitalik Buterin

Wed, 11/11/2020 - 11:27
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Vladislav Sopov
Staking rewards incentivize Ethereum 2.0 validators to keep ETH2 active and secure. But how generous will these payouts be?
Ethereum 2.0 Reconsiders Staking Rewards and Penalties Policy: Vitalik Buterin
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During the interim period within the first weeks of the Ethereum 2.0 rollout, all validators will be offered more favorable payout conditions, Vitalik claims. Will they be better than in Medalla testnet?

"Forgiving" rules of Ethereum 2.0

Vitalik Buterin, cofounder of the Ethereum Foundation, shared that the penalties in early Ethereum 2.0 have been reduced from 33.3 percent to 25 percent from the levels registered in Medalla, its last long-term testnet experiment. This "early-bird" offer will make Ethereum (ETH) validators' payouts policy more attractive for all sorts of enthusiasts.

Vitalik announces reduction of Ethereum penalties
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In Ethereum 2.0, validators can be penalized or slashed (prevented from validation for a lifetime) for breaking the rules of fair transaction confirmation, e.g., penalties may be imposed for double-attesting the same block, for prolonged inactivity or for attempting to initiate a chain split.

Based on these assumptions, Vitalik calculated that, even if a validator were to be expelled from the ETH2 proof of stake (PoS) mechanism three weeks after entering it, he/she may be net profitable.

Also, Vitalik confirmed that, if 524,288 Ethers are locked in the deposit contractwhich is the minimum stake for ETH2 to become activatedits validators would be rewarded with extremely high payouts of 25 percent APR.

Potential validators concerned

Mostly, the Ethereum community is more than enthusiastic about the approaching ETH2 launch as almost 10 percent of required deposit have been locked so far.

Meanwhile, some Ethereans are concerned about the conditions of validator rewards. As covered by U.Today previously, Vitalik dismissed the rumors about 100 percent uptime as a must for validators.

Vitalik Buterin Reveals Main Advantages of Ethereum 2.0. Is It Worth It to Attack ETH2?

He claimed that 60 percent of uptime (the net share of time the validator should be active to participate in validating) would be sufficient for successful staking.

At the same time, the high value of minimum stake per one validator (32 ETH or $14,500) can be the most difficult barrier for the average ETH enthusiast.

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About the author

Blockchain Analyst & Writer with scientific background. 6+ years in IT-analytics, 3+ years in blockchain.

Worked in independent analysis as well as in start-ups (, Monoreto, Attic Lab etc.)