tl;dr
- Ethereum initially used PoW, but mentioned switching to PoS.
- Ethereum transitioned to PoS on September 15, 2022, during “The Merge.”
- The Merge eliminated mining, reduced energy use, and introduced staking.
- ETH staking means locking ETH to help secure and operate the Ethereum network.
Introduction: From Mining to Staking - Ethereum's Big Shift
Although the Ethereum white paper made only two brief mentions of it, the idea of transitioning to a proof-of-stake (PoS) model was always on the horizon. One notable line reads: “Note that in the future, it is likely that Ethereum will switch to a proof-of-stake model for security, reducing the issuance requirement to somewhere between zero and 0.05X per year.”
Despite this vision, Ethereum operated as a proof-of-work (PoW) blockchain for most of its early existence.
Ethereum Classic, the result of a split following the 2016 DAO hack, still operates under PoW today.
However, over the years, community and developer discussions around Ethereum’s energy consumption, scalability, and long-term sustainability increasingly centered around the shift to PoS.
After years of research, testing, and phased rollouts like the Beacon Chain, the long-anticipated transition finally occurred on September 15, 2022, in what became known as The Merge. This historic event marked Ethereum’s official shift from PoW to PoS, eliminating mining in favor of staking. It drastically reduced energy usage, redefined validator participation, and paved the way for a more scalable and sustainable Ethereum ecosystem.
What is ETH Staking? A Plain English Definition
ETH staking is the process of locking up your ETH to help run and secure the Ethereum blockchain. When you stake ETH, you’re essentially locking your coins to support the network’s operations, like validating transactions and maintaining its overall security.
In return for helping the network, you earn rewards, kinda similar to earning interest from a savings account. The more ETH you stake, and the longer you stake it, the more potential rewards you can earn.
Think of it this way: instead of banks paying you interest for holding your money, the Ethereum network rewards you for helping it function smoothly. Your staked ETH is held by a validator on your behalf, and over time, you earn more ETH as a thank-you from the network.
How Does ETH Staking Actually Work? The Role of Validators
Ethereum’s Proof of Stake system relies on validators, which are individuals or entities who stake ETH and run specialized software to help secure the network. Validators perform two main duties: proposing new blocks and verifying existing ones.
Every 12 seconds, the Ethereum protocol randomly selects one validator to propose a new block of transactions. This block includes pending transactions, typically prioritizing those with higher fees or MEV (Maximal Extractable Value) opportunities. Once proposed, the block is shared across the network.
Other validators then verify the block’s contents (checking things like balances and digital signatures) and cast a vote, called an attestation, to confirm the block’s accuracy. A block is finalized once two-thirds of validators attest to its validity.
To become a validator, you must stake 32 ETH into Ethereum’s deposit contract and run a validator node. This node enters a queue before it starts participating in the network.
Validators earn ETH rewards for proposing blocks and attesting correctly. They’re also penalized for going offline or acting maliciously, which can result in slashing, a loss of part of their staked ETH.
This system keeps Ethereum decentralized, secure, and incentivizes participants to behave honestly while supporting the network.
Why Stake ETH? The Core Benefits for You and the Network
Staking ETH offers passive income through rewards typically ranging from 3-7% APY, depending on network conditions. By staking, you’re also helping to secure and decentralize the Ethereum network, ensuring its long-term resilience and integrity.
In order to extend yield opportunities, many users choose liquid staking solutions, which offer tokens that can be used across DeFi protocols for additional yield opportunities.
The 4 Main Ways to Stake ETH in 2025 (Pros & Cons)
Here are the four primary ways to stake ETH, each with its own benefits and trade-offs:
Solo Staking
Solo staking means running your own validator node. It requires staking 32 ETH, some technical know-how, and a stable internet connection that’s always on. The biggest advantage is that you keep 100% of the rewards and contribute directly to Ethereum’s decentralization. However, the setup can be complex, and mistakes could lead to slashing.
Staking as a Service (SaaS)
With staking-as-a-service, a provider runs the validator on your behalf, but you still control your keys. This option also requires 32 ETH. It’s ideal for people who want the benefits of solo staking without managing the technical side. Just keep in mind that you’ll pay a service fee.
Pooled Staking (Liquid Staking)
Pooled or liquid staking lets you stake any amount of ETH by combining it with others. In return, you receive a liquid staking token like stETH or hETH, which you can use in DeFi to earn even more. This is the most flexible option, though it comes with smart contract risks and possible platform fees.
Staking on a Centralized Exchange
This is the easiest way to stake. Platforms like Coinbase, Kraken, and Binance let you stake ETH with just a few clicks. You don’t need a minimum amount, and there’s no technical setup involved. The downside is that you don’t control your private keys, and exchanges usually take a cut of your rewards.
Understanding ETH Staking Rewards: How Much Can You Earn?
Ethereum staking rewards vary depending on how much ETH is staked across the network. In 2025, the typical annual percentage yield (APY) ranges from 2% to 4%. Rewards are distributed through two sources: the consensus layer and the execution layer.
Consensus layer rewards are earned by validators for performing core duties like proposing blocks and validating transactions. These come from newly issued ETH and make up the bulk of staking rewards.
Execution layer rewards, also known as tips, are fees paid by users to prioritize their transactions. These are only earned by validators who propose blocks and can boost your total yield.
If you use liquid staking platforms like Lido (stETH) or Hord (hETH), your rewards are delivered in one of two ways. Either your token balance increases (rebasing), or the token itself rises in value over time (accrual).
The Risks of Staking Ethereum: What to Watch Out For
Staking ETH comes with a few key risks. Slashing can occur if a validator acts maliciously or goes offline, resulting in a loss of staked ETH. Smart contract risk affects those using staking pools could lead to loss of funds. Price volatility means your ETH and rewards may decrease in value.
Finally, lockup periods and withdrawal queues can delay access to your funds
Conclusion: Is ETH Staking Worth It in 2025?
Staking ETH in 2025 remains a compelling way to earn passive income while actively contributing to Ethereum’s security and decentralization. With APYs typically ranging from 2–4%, it offers steady rewards, especially when paired with liquid staking options that unlock additional DeFi opportunities.
However, it’s crucial to understand the risks. Risks like slashing, smart contract vulnerabilities, and withdrawal delays. Also choose a staking method that aligns with your technical ability and risk tolerance.
