How staking works on Ethereum

Staking on the Ethereum blockchain is a process that is part of its consensus mechanism, specifically the Proof-of-Stake (PoS) model, which Ethereum transitioned to with the Ethereum Merge. In contrast to the Proof-of-Work (PoW) model, where miners solve complex mathematical problems to validate transactions and create new blocks, the PoS model instead chooses validators based on the number of tokens they are willing to "stake" or lock up as collateral. To become a validator, a network participant must stake a certain amount of Ether (ETH), Ethereum's native cryptocurrency. Currently, this amount is set at 32 ETH. Once a participant has staked their ETH, they can become a validator. Validators are responsible for proposing new blocks to be added to the blockchain and validating transactions. The protocol randomly selects a validator to propose a new block, and the selected validator's proposed block is then checked by other validators. If the majority of validators agree on the validity of the new block, it is added to the blockchain. Validators are incentivized to act honestly and maintain the network's integrity because they risk losing a portion, or even all, of their staked ETH if they try to validate fraudulent transactions or otherwise act maliciously (a process known as slashing). In return for staking their ETH and participating in the validation process, validators are rewarded with additional ETH. These rewards come in the form of new ETH generated by the network's inflation, as well as transaction fees from the blocks they validate.