ETH Solo Staking Guide
STEP BY STEP GUIDE
Staking
…is the mechanism, by which anyone with the minimum-required balance of 32 ETH can act as a validator for the Ethereum network by verifying transactions & creating new blocks. To do this, you are required a “loaded” pair of validator keys with which you sign the actions of your node on the network.
AVAILABLE ON:
- ETHEREUM MAINNET
- ETHEREUM TESTNET
Last Updated: August 2022
A SHORT INTRODUCTION
The first question we always hear is how the hell does that actually work?
In short: Your server acts as a validator, someone who is allowed to add block to chain for the network and get rewarded or punished (if you do something potentially malicious) for playing an important role in the network – Ethereum and its Proof of Stake (PoS) system make it possible.
What you absolutely need to be able to use Ethereum to its full potential? 32 ETH. Even with less you can stack, but then you have to rely on other entities – which means in the worst case (like with Staking options of exchanges) you don’t own your keys and if something happens to them, your ETH is at risk.
How does it work? What do I do when I stake?
“Blockchains” refer to “Decentralized Ledger Technology” (“DLT”), which are protocols that govern a distributed ledger, whose records are arranged in sequential “blocks” – in a chain of collected transactions. DLTs innovation lies in the fact the they solve the “Byzantine General Problem” – a riddle like presented consensus problem where a certain number of actors are assumed to act maliciously. These “blocks” governed by the Ledger in public blockchains like “Ethereum” and “Bitcoin” are publicly visible and created by a differing automated consensus mechanism – which gives you the ability to look into every detail of every transmitted transaction by the network participants & verify every block created on the network with a block explorer yourself.
The underlying details in protocol of every blockchain differ widely. Either by where they inherit security from, how private they are, or by how much permission a participant needs to transact on the ledger. Every single (decentralized) ledger technology, even legacy like banks, tackle the problem that they are naturally a subject off, referred to as the Scalability Trilemma or commonly referred to as the Blockchain Trilemma, differently.
Every area covered between the three pillars on the following graph describes a unique system with advantage & disadvantages.
Blockchains are often forced to make trade-offs that prevent them from achieving all 3 aspects:
- Decentralized: creating a blockchain system that does not rely on a central point of control
- Scalable: the ability for a blockchain system to handle an increasingly growing amount of transactions
- Secure: the ability of the blockchain system to operate as expected, defend itself from attacks, bugs, and other unforeseen issues
With every financial network, the most important part is the consensus mechanism through which the entities can reach a necessary agreement to its state to secure the network funds. DLT use different methods to reach a consensus – the most common one used being Proof of Work & Proof of Stake
Proof of Work (Bitcoin)
In Proof of Work a network participant (node) has to complete a specified task in order to submit new transaction to the blockchain. In the case of Bitcoin whenever a transactions occurs, they go through a security verification and are grouped into a block to be mined. Bitcoin’s proof-of-work algorithm then generates a hash for the block using a algorithm, which always generates hashes with 64 characters.
Miners race to be the first to generate a target hash that’s below the block hash. The winner gets to add the latest block of transactions to Bitcoin’s blockchain and receive rewards in the form of newly minted BTC coins and transaction fees spent on the network. Bitcoin has a fixed maximum supply of 21 million coins, but, after that, miners will continue receiving transaction fees for their service.
The proof-of-work algorithm used by Bitcoin aims to add a new block every 10 minutes. To hit that time, depending on how quickly miners are adding blocks, the difficulty of the generation changes. Does the mining happen too quickly, the hash computations get harder and easier if they are coming in too slow.
This variable difficulty changes the computation speed necessary for the consensus mechanism to work. The higher need for computation also raises the energy consumed by nodes used to mine, which in the case of Bitcoin lead over the years through raising mining competition to the case that it uses annually more energy to secure its network than the midsized countries of Argentina and the Ukraine.
Proof-of-stake reduces the computational work needed to verify blocks by changing the way blocks are validated using the machines of “staked” coin owners to ensure the integrity of the blockchain. To do this coin holders offer a specific amount of coins as collateral (“stake”) to become “validators”. In proof-of-stake validators are responsible for the same thing as miners in proof-of-work: ordering transactions and creating new blocks so that all nodes can agree on the state of the network…but other than with proof-of-work, the entity who gets to in the end add a block to the blockchain is selected randomly rather than using a competition based rat race of computational power. Validators also don’t mine blocks; they create / forge blocks when chosen and validate proposed blocks when they’re not. This validation is known as attesting, which is what is recorded in the beacon chain rather than the transaction itself.
At least 128 validators are required to attest to each block – this is known as a “(sync) committee.”, which are given a time-frame in which to propose and validate a block. This is known as a “slot.” Only one valid block is created per slot, and there are 32 slots in an “epoch.” After each epoch, the committee is disbanded and reformed with different, random participants. This helps keep shards safe from committees of bad actors.
Validators get rewards for proposing new blocks and for attesting to ones they’ve seen in a honest fashion, and gain additionally rewards if they are chosen to be part of the “committee” and extra, if they are the ones creating a block. In return they get penalized if they should propose or attest a malicious block, or use the same key multiple times to attest.
Why you shouldn’t SOLO stake ETH!
This might seem like a counterproductive measure for us to partake in this guide, but we personally believe that our goal isn’t to sell you on anything (which is hard anyway, because our SOFTWARE is completely free) – we want to convince of the possibility, we are offering to you and we believe to do that, you should also know of the disadvantages of Ethereum staking:
-) THE MAJOR DISADVANTAGE
Currently, because the system is still in its building up phase and the validators are needed to contribute to the development of the change to “Proof of Stake” – it is NOT POSSIBLE to WITHDRAW the stacked ETH or the rewards from staking. Which means if you would like to take some profits from your ETH investment the staked amount will be locked in the Beacon Chain, preventing you from quickly reacting to price changes. ONLY STAKE if you treat your ETH as a LONG TERM ASSET and have the CONVICTION to let your investment work on the BEACON CHAIN until the withdrawal is possible.
-) Beware of the returns, time & cost of running a validator
Becoming an Ethereum validator requires you to run a node, which requires you to run dedicated hardware, electricity & maintenance. While our Setup main goal is to reduce the technical burden of setting up your node and maintaining it, you should also try to learn as much as possible about what the validator actually does, when you use it. This is especially necessary, if you should run into individual problems you are having with your hardware. The risk is, if your validator goes offline unexpectedly and you aren’t completely on top of things, to get penalized & lose your investment partly or even completely!
-) Internet Connection
The one factor that is mostly out of your control is how good your Internet performs on average. To clarify: You will not get slashed if your node is not online. What happens is just that you lose ETH at about the same rate you would earn it if you were online, therefore it is less of a problem than it may seem. Still, if you want to turn a profit you should try to have a high up time. A connection that tends to disconnect could easily make you miss out on rewards and a backup internet connection is something most people aren’t reliant upon. ONLY stake if you are convinced that your connection is stable enough to keep your node online 24/7 – to maximize your profits and reduce the risk of getting slashed by having to migrate your keys.
-) Security
If your node gets hacked, you will probably lose all your ETH. If someone gets access to the machine your computer runs onto, then they could very easily compromise your funds. We recommend taking extra measures to ensure that this can’t happen: Don’t run anything but Stereum on your server. Don’t open any unnecessary ports or play around with the system.
PREPARATION
Don’t forget to install a supported server OS – if you need help, follow our server preparation guide!
SERVER REQUIREMENTS (for staking)
If you go into staking without any experience we recommend to get hardware with the following specs to ensure a smooth validation process and minimize your own risk:
- 4 (v)CPU cores/threads
- 8 GB Memory (RAM)
- 2TB SSD (good & reliable)
- Broadband internet connectivity, that is stable & fast to reduce your risk of getting slashed
- patiences to synchronize your node with the chain.
To SOLO STAKE you will also need to get a hold of 32 ETH!
PART 1# PREPARE NODE
STEP 1#
LOG INTO YOUR SERVER
STEP 2#
SELECT ONE-CLICK INSTALLATION PRE-SET
STEP 3#
SELECT A SUPPORTED NETWORK
STEP 4#
SELECT THE "STAKING" PRE-SET
Note: Consider changing the selection to a Minority Client by clicking execution / consensus client in the menu to support the network.
You can check out Client Diversity Data by visiting https://clientdiversity.org/
STEP 5#
WAIT FOR INSTALLATION
STEP 6#
WAIT FOR SYNCHRONISATION
PART 2# VALIDATOR KEY PREPERATION
STEP 9#
READ THE INFORMATION PRESENTED TO YOU ABOUT YOUR VALIDATOR DUTY
STEP 10#
SELECT ANY EXECUTION CLIENT
STEP 11#
SELECT ANY CONSENSUS CLIENT
STEP 12#
TYPE IN THE NUMBER OF VALIDATOR KEYS YOU WANT TO GENERATE
STEP 13#
SELECT THE OS OF THE SYSTEM YOU WANT TO GENERATE THE KEYS ON
STEP 14#
CHOOSE WAGYU
STEP 15#
Click on “DOWNLOAD FROM GITHUB"
STEP 16#
Scroll down and downLOAD THE RIGHT VERSION FOR YOUR SYSTEM
STEP 17#
GO BACK TO THE LAUNCHPAD, CHECK THE CHECKBOX & CLICK CONTINUE
STEP 18#
WAIT TILL THE DOWNLOAD OF WAGYU HAS FINISHED AND SWITCH TO THE APPLICATION
NOTE: For security reasons, we recommend you disconnect from the internet to complete the next steps involving validator key generation
STEP 19#
Click on “CREATE NEW SECRET RECOVERY PHRASE”
STEP 20#
Select the network in which you want your node to run & CLICK OK
STEP 21#
Copy your Secret Recovery Phrase & BACK IT UP SOMEWHERE
without it you will not be able to retrieve your funds!
CONSIDER: NOTHING BEATS A PIECE OF PAPER!
STEP 22#
Retype/Paste your Secret Recovery Phrase & CLICK ON CHECK
STEP 23#
TYPE IN THE NUMBER OF KEYS YOU NEED
STEP 24#
TYPE IN A PASSWORD FOR YOUR VALIDATOR KEYS
STEP 25#
RETYPE YOUR PASSWORD TO CONFIRM IT & CLICK NEXT
STEP 26#
Choose a folder where you want to save your keys IN
STEP 27#
Click on “CREATE” and wait for a couple of seconds for the programm to create your keys
STEP 28#
CHECK IF YOUR KEYS WERE SUCESSFULLY CREATED & CLOSE WAGYU
STEP 29#
OPEN UP THE LAUNCHPAD WEBSITE PAGE AGAIN
STEP 30#
Click on “Drag file to uploAd or browse”, SELECT THE GENERATED “deposit_data-[timestamp].json” & CLICK "CONTINUE"
STEP 31#
connect AN ETHEREUM WALLET WITH the NECESSARY FUNDS of 32 ETH FOR STAKING IN THEM
STEP 32#
MAKE SURE YOU ARE ON THE RIGHT NETWORK & HAVE ENOUGH FUNDS EXTRA TO COVER A TRANSACTION
STEP 33#
READ THE SUMMARY PAGE CAREFULLY & CHECK THE NECESSARY CHECKBOXES TO CONTINUE
STEP 34#
Click on “SEND DEPOSIT”,
STEP 35#
CONFIRM THE TRANSACTION WITH YOUR WALLET AND WAIT FOR THE TRANSACTION TO FINSIH
STEP 36#
CHECK THE VALIDATOR KEYS STATUS on beaconcha.in
PART 3# VALIDATOR KEY IMPORT
STEP 37#
OPEN STEREUM, LOG INTO YOUR SERVER AND OPEN UP THE STAKING PAGE
STEP 38#
TO IMPORT YOUR KEYS CLICK OR DRAG THEM ON THE BUTTON LOCATED AT THE BOTTOM
STEP 39#
SELECT (MULTIPLE) VALIDATOR KEYS YOU WANT TO IMPORT
STEP 40#
CLICK "ENTER PASSWORD & IMPORT"
STEP 41#
ENTER THE VALIDATOR PASSWORD YOU DEFINED WHEN GENERATING THE KEYS
STEP 42#
WAIT TILL YOUR VALIDATOR KEYS ARE IMPORTED
STEP 43#
GO INTO YOUR VALIDATOR CLIENT'S SETTINGS AND CLICK THE EDIT BUTTON ON THE BLOCK FEE RECIPIENT OPTION
STEP 44#
insert THE ETH ADDRESS WHERE YOU WOULD LIKE YOUR BLOCK FEE rewards to BE SEND TO AND CLICK CONFIRM
YOUR NODE WILL ATTEST WHENEVER YOUR NODE IS SYNCED & YOUR VALIDATOR KEY STATUS KEY IS ACTIVATED
WHENEVER YOUR NODE PICKS UP ATTESTATION DUTY THE SYMBOL WILL TURN GREEN!
STEP 45#
CONGRATULATION!
YOU ARE NOW SOLO STAKING ETH!
