Ethereum is the world's second-largest blockchain platform, which has seen significant changes since its inception. The most significant change occurred in September 2022 when it transitioned from a Proof of Work (PoW) consensus mechanism to Proof of Stake (PoS). This event, known as "The Merge," marked the end of energy-intensive mining and the beginning of a more sustainable and scalable future for Ethereum. Central to this new PoS system are the validators. But who are they, and how do they work?
Ethereum validators are those who, in the network, propose and validate new blocks. Unlike the miners in a PoW system, validators don't depend on computational power to solve complex mathematical puzzles. They are chosen based on the amount of ETH (the native cryptocurrency for Ethereum) that they have staked as collateral.
Any individual can become an Ethereum validator after staking at least 32 ETH. This has been made as a requirement in order to keep the validators more interested in maintaining the integrity and security of the network. The validators work individually, may join staking pools, or outsource to third-party staking services if one lacks the necessary technical know-how for self-execution.
Proposing New Blocks: Validators take turns proposing new blocks to be added to the blockchain. The selection process is pseudo-random, so it is fair across the network.
Attesting to Blocks: When a validator proposes a block, other validators review and attest to its validity. This process involves verifying transactions and ensuring the block adheres to the network's consensus rules.
Securing the Network: By staking their ETH, validators align their financial incentives with the network's security. They risk losing some of their staked ETH in a process called slashing if they act dishonestly or negligently.
Reward Mechanism: Validators get paid in terms of ETH. They get the payment from two sources: new transaction fees and newly issued ETH. But for every instance of downtime or malice, validators have penalties to face.
Ethereum's PoS mechanism relies on the Beacon Chain, a distinct chain that operates the validators and staking mechanism. The Beacon Chain was activated in December 2020 and co-existed with Ethereum Mainnet up until The Merge. It acts to coordinate validators, assign work, and enable the network to operate smoothly.
To participate in the network, validators use specialized software. They must maintain a node, which is essentially a computer running Ethereum's client software. This node must be online and running at all times if it is to perform the required duties in the most effectual manner.
Security, decentralization, and efficiency of Ethereum are ensured by validators. The timely participation of all holders makes the blockchain resistant to tampering and attacks from external aggressors.
They also account for the scalability of Ethereum, the introduction of PoS will enable sharding by which the Ethereum blockchain can be divided into smaller and manageable sections. This comes as an improvement since it would lead to an increased transaction capacity of the network altogether in the future.
Although staking becomes rewarding, the challenges associated with being a validator should not be forgotten. For many, the minimum staking requirement of 32 ETH is financially daunting. Also, validators are expected to overcome technical challenges; for instance, maintaining their nodes and avoiding downtime penalties.
Also, the staking pools and third parties have democratized access to staking, so smaller investors can join in without the full 32 ETH. These increase participation and decentralization of the network.
Validators of Ethereum are the heart of the network's new PoS system. Replacing miners as the custodians of blockchain security and integrity, validators will make sure that Ethereum remains thriving in a more sustainable and scalable way. Whether they do this as individuals or by pooling resources, validators represent the decentralization ethos of the mission.