Proof-of-stake is a consensus mechanism which Ethereum uses to choose which blocks should be included in the canonical chain. Proof-of-stake replaces the existing Proof-of-Work consensus mechanism which Ethereum has been using since its launch in 2015. Proof-of-stake replaces the energy-intensive miners with validators, which is predicted to result in a 99.98% reduction in Ethereum’s energy consumption. Ethereum’s upgrade to proof-of-stake will be the biggest ever upgrade to a live blockchain and will pave the way for other blockchains (e.g. Bitcoin) to migrate towards a cleaner future.

Staking is the process of participating in the proof-of-stake consensus mechanism. This involves producing your own blocks, verifying other blocks and voting to determine which blocks should and shouldn’t be included in the chain.

In order to stake in Ethereum, users must temporarily lock an amount of ETH in the protocol in order to become a validator. This ETH becomes the validators “stake”. If validators perform their duties well, they will be rewarded by the protocol. Validators who act provably, dishonestly or faulty may lose some or all of their stake through penalties or slashing.

Staking doesn’t require the user to be physically present at their computer in order to perform their duties, their duties are performed automatically by an Ethereum Consensus Client like Lighthouse and an Ethereum Execution Client. Therefore, it is the duty of staking users to ensure that their consensus and execution clients are functioning and connected to the Internet.

As a part of the upgrade to proof-of-stake, Ethereum has created a logic division in the protocol:

• Execution: processing the transactions inside a block and maintaining the “world state” of contract and account balances.
• Consensus: choosing which blocks should and should not be included in the canonical chain.

Execution clients are upgraded versions of existing Ethereum clients like Besu, EthereumJS, Erigon, Geth and Nethermind. These clients have had the proof-of-work components removed and now rely upon a Consensus Client to perform the functions of a consensus mechanism.

Consensus Clients are new pieces of software that have been created specifically for proof-of-stake Ethereum. They include Lighthouse, Lodestar, Nimbus, Prysm and Teku. They perform all the duties of a validator and process the messages of other validators to determine which blocks are included in the canonical blockchain whilst deferring any transaction processing logic to the Execution Client.

A full “Ethereum Node” after the proof-of-stake upgrade must consist of both an Execution and Consensus client.

We recommend you start your Ethereum journey at the Ethereum Foundation Upgrades page. It will introduce you to the key concepts, the client implementations (Lighthouse included) and point you towards additional material.

If you’re already familiar with Ethereum and would like to get started with Lighthouse, check out the Lighthouse Book, especially the Become an Ethereum Consensus Mainnet Validator page.

Whilst staking has rewards, it also has significant risks. In the worst case, failure to properly manage your private keys can result in full loss of funds. Having your validators go offline due to hardware, internet or software failure can result in penalties and partial loss of funds.

Always do your research before engaging in staking, even with Lighthouse. The Ethereum Launchpad Validator FAQs are a good place to start.

No, Lighthouse is free and open-source. We are funded by grants programs and donations from companies, organisations and individuals.