Inside Ethereum staking: validators, rewards and exits

Lesson 8 introduced proof of stake. This lesson goes one level deeper into Ethereum staking: what a validator does, where the rewards come from and what it takes to get your ETH back out.

What a validator does

A validator is software that holds staked ETH and helps run the network. It has two duties:

• Proposing. Now and then it is chosen at random to build the next block.
• Attesting. The rest of the time it checks other validators' blocks and votes on them.

A validator needs at least 32 ETH to start. Since the Pectra upgrade on 7 May 2025, one validator can hold anywhere from 32 to 2,048 ETH. Before that, each was capped at 32.

Where the rewards come from

• New ETH created by the network, paid for attesting and proposing
• Tips from users whose transactions the validator includes in a block
• Extra payments from traders who want their transactions placed in a particular order

The first is steady. The other two are irregular and depend on luck and on how busy the network is.

Why the rate changes

The network adjusts what it pays according to how much ETH is staked. The more ETH is staked, the lower the rate for each validator.

In October 2026 about 44 million ETH was staked, roughly 35% of the supply, and the rate was about 2.5% a year. It has been higher when less was staked and may be lower in future.

The reward is paid in ETH. Its value in dollars rises and falls with the price of ETH.

Penalties

• Being offline. A validator that misses its duties loses small amounts, roughly what it would have earned in that time.
• Slashing. A validator that provably cheats, for example by signing two conflicting blocks, has part of its stake destroyed and is removed from the network.

Slashing does not need bad intent. Running the same validator on two machines at once makes it sign twice, and that is enough.

Two keys

Staking uses two separate sets of credentials.

• The signing key stays online with the validator and performs its duties. Someone who steals it can get the validator slashed. They cannot take the ETH.
• The withdrawal address is where the ETH goes when it leaves. Each validator can be given only one, and it cannot be changed afterwards.

This split is what lets someone else run a validator for you without being able to walk off with the stake. The next lesson uses it.

Getting ETH out

Staked ETH could not be withdrawn at all until 12 April 2023. Since then there are two kinds of withdrawal.

• Rewards. On older validators, any balance above 32 ETH is sent to the withdrawal address automatically every few days. Newer validators can instead keep rewards staked so that they compound.
• A full exit. The validator stops its duties, waits in an exit queue and then has its whole balance paid out.

The queue exists so that too many validators cannot leave at once. When few are leaving, an exit takes days. When many leave together, it takes longer, and nobody can promise how long.

What this means for you

Staked ETH is not cash. Whatever route you use to stake, somewhere behind it is a validator that earns a changing rate, can be penalised, and can only return the ETH through a queue. The next lessons look at the routes.