Introduction

How does staking work?

Staking is only possible via the proof-of-stake consensus mechanism, which is a specific method used by certain blockchains to select honest participants and verify new blocks of data being added to the network. By forcing these network participants – known as validators or “stakers” – to purchase and lock away a certain amount of tokens, it makes it unattractive to act dishonestly in the network. If the blockchain was corrupted in any way through malicious activity, the native token associated with it would likely plummet in price, and the perpetrator(s) would stand to lose money.The stake, then, is the validator’s “skin in the game” to ensure they act honestly and for the good of the network. In exchange for their commitment, validators receive rewards denominated in the native cryptocurrency. The bigger their stake, the higher chance they have to propose a new block and collect the rewards. After all, the more skin in the game, the more likely you are to be an honest participant.The stake does not have to consist exclusively of one person’s coins. Most of the time, validators run a staking pool and raise funds from a group of token holders through delegation (acting on behalf of others) – lowering the barrier to entry for more users to participate in staking. Any holder can participate in the staking process by delegating their coins to stake pool operators who do all the heavy lifting involved with validating transactions on the blockchain.

What is layer2?

layer 2 is a collective term used to describe blockchain scaling solutions. These solutions are built on top of the layer 1 blockchain and help improve the network's scalability and transaction processing speed. They are merely an extension of the base layer.

What is Lido and Lido ETH Staking?

Operating on its own native blockchain, Lido is a platform offering liquidity for staked assets. Further, Lido provides Ethereum staking facilities across multiple networks as a staking solution for Ethereum 2.0. At present, this includes the Ethereum 2.0 network and the Terra network, with Solana and Aave also soon to be available. Offering a non-custodial service, users can take advantage of liquid ETH staking features. By simply staking ETH, users receive staked ETH tokens (stETH) in return. Users can then use the stETH tokens within the Lido ecosystem, including various popular decentralized finance (DeFi) platforms. Lido provides an opportunity for traders to earn rewards on smaller ETH deposits, with no minimum staking requirement.

The Lido staking app, the Lido decentralized autonomous organization (DAO), and the native LDO token together provide a solution for staking ETH and earning rewards. The project aims to offer fully decentralized ETH staking services. However, the team recognizes this is not yet possible sustainably. Therefore, a DAO is in place to ensure governance and upkeep of the platform. Also, all decisions, proposals, and updates from the DAO will be completely transparent.

As we can see in the daily chart, the amount of ethereum stake was in an upward trend, then reached its peak in April, and then I was in a downward trend, which reached its lowest point in May.

Conclusion

Comparing the two charts related to etherum Stake and the daily chart of etehrum, it can be seen that the price is directly related to the amount of ethereum staked, so that with the increase in the price of ethereum, the amount of ethereum Stake has also increased, which is mostly related to the month. It is April.

Thanks for reading

All data used are from Flipside Crypto.
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