Ethereum staking with Luno, coming soon

To note: Ethereum staking will only be available to customers in South Africa, for now, due to varying regulatory requirements in different regions.

The Shanghai upgrade is the most anticipated Ethereum upgrade since the Merge last year, also known as the Paris upgrade, when the network completed its switch from proof of work to proof of stake. Shanghai will allow stakers, referred to as validators, to unstake funds that have been locked since work started on this switch in December 2020. It’s a big deal. For Ethereum, for Luno, and for you.

Soon after Shanghai has been activated on the network sometime in April, you will be able to stake Ethereum through Luno and get rewarded in Ethereum for helping validate transactions and securing the network.

When you stake cryptocurrency, you become what’s known as a validator. To qualify as a validator on a cryptocurrency network that uses proof of stake (POS), validators must lock up, or stake, a certain amount of cryptocurrency as collateral.

What does it mean to stake cryptocurrency?

Think of staking as being a contributor to a group project where everyone is responsible for making sure the project is completed successfully. In Ethereum staking, validators work together to validate transactions and create new blocks in the blockchain. As a reward for validating transactions and helping to secure the network, validators are awarded with crypto payouts.

Validators are fundamentally important to Ethereum. The more validators staking, the more secure the network is, seeing that it becomes more difficult for any single validator or group of validators to force an invalid transaction.

Soon you will be able to join this group of validators by safely staking your cryptocurrency with Luno.

How does staking with Luno work?

Luno has partnered with a leading staking service provider to stake cryptocurrency in the Luno Staking Wallets. To get started, you can easily transfer Ethereum into your Staking Wallet.

The crypto you’ve added to your Staking Wallet is moved into a special blockchain address that’s dedicated to verifying transactions. It may take a few days before your Ethereum starts earning rewards, but when active, these rewards will be paid out every five days and added to the principal amount in your Staking Wallet.

You can send any amount of Ethereum to the wallet and increase payouts by doing so. The same goes for unstaking. You can unstake your coins whenever you want to, but it may take a few days before the request is actioned on the blockchain and your Ethereum is unstaked. Remember, staked coins can’t be accessed until they are unstaked.

Due to the technical nature of the Shanghai upgrade and the various unknowns at this stage, it’s uncertain how long it will take for staked Ethereum to start receiving payouts. The same goes for how long validators will have to wait for their coins to unstake.

Are there any risks involved with staking my Ethereum?

Ethereum relies on validators for its security, so it’s very important they keep their end of the bargain. For a job well done, they are rewarded accordingly in Ethereum payouts. On the other hand, if they do a bad job of validating the network, say, by going offline or making mistakes when verifying transactions, the network takes a percentage of their staked coins as penalty.

Luno has partnered with one of the most trusted staking services providers in the industry with a track record of 99.9% uptime to date. Their validator node is monitored 24/7 with backup nodes on standby should anything happen. Due to these security mechanisms, slashing very rarely occurs, but in the unlikely event that your staked crypto is slashed, our staking provider has processes in place to review and remediate slashing penalties where it is commercially reasonable to do so. We’ll communicate the steps you can follow in the very unlikely event of this ever happening.

We have taken every precaution to minimise your risk, but it’s important to note that downtime and slashing can be caused by events outside of Luno’s control. Only stake your crypto if you are comfortable with this risk.

Can I stake Ethereum without Luno?

Yes, there are other staking providers, and if you have the technical know-how and enough Ethereum (32 ETH) you can even set up your own validator node. But with the Luno Staking Wallet you can easily, and securely, stake any amount of Ethereum, large and small, using the trusted Luno app.

How much do I get in rewards?

It depends on the amount of stakers on the network but the annual percentage payout for staking Ethereum has in the past averaged around 4% of the amount staked.

How many validators are there on Ethereum?

There are about 561,360 validators securing the Ethereum network, with 14.9% of all Ethereum in circulation currently staked. Experts expect this number to increase as Shanghai removes a lot of the uncertainty around staking on Ethereum.