Vitalik Buterin Proposed Higher Staking Rewards for ETH 2.0 Validators

By Shannon Wilson | May 4, 2019
Vitalik Buterin Proposed Higher Staking Rewards for ETH 2.0 Validators

Ethereum (ETH) token creator Vitalik Buterin is reportedly considering more rewards for validators who participate in securing the functionality of Ethereum 2.0.

Ethereum 2.0, the next version of the world’s second-largest blockchain update earlier this month, purportedly deploys a proof-of-stake (PoS) consensus mechanism. This is where users deposit an amount of their tokens to become validators of a network’s blocks of transactions, and receive rewards for it later on; as opposed to its older counterpart, the proof-of-work (PoW) protocol, which often requires much efforts from miners to add such blocks to a shared chain.

Hence, the security of the Ethereum 2.0 ecosystem relies chiefly on a collectively enormous amount of wealth, as the company envisions eliminating human flaws in the validation process and downsizing costs on the network.

If going as planned, the Ethereum network would need about 32 million ETH (roughly $5 billion at press time), and ETH-based entities could profit around $160 million worth of ETH annually if they decided to leverage the PoS algorithms as well, as proposed by Ethereum Foundation’s researcher Justin Drake.

In the latest proposal, Buterin allegedly held that the validator return rate could be up to as high as 18.10% for about 1 million ETH staked on the platform, or could drop to as low as 1.56% if over 100 million ETH are staked. Yet, these are merely suggestions, as no official numbers has been publicly announced by the creator at press time.

Fredrik Harryson, CTO of innovation-focused company Parity Ethereum Client, reportedly likened the proposed solution to “behavioural economics”, while Jonny Rhea, a protocol engineer at ConsenSys, added that this would help keep validators on the network while also lessen the chances of it being attacked.

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