Ethereum Transaction Validation (Consensus)

At launch, Ethereum used Proof-of-work (POW) to validate transactions like Bitcoin. As of 2022, Ethereum now uses a much less energy-intensive means of consensus called Proof-of-stake (POS).

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Ethereum Validator

To participate as a validator of transactions, you need to have 32 ETH to deposit into a deposit contract and run a few pieces of software: an execution client, a consensus client, and a validator (it is also possible to participate in consensus pools without an ETH requirement).

After depositing the 32 ETH, the validator must wait in an activation queue that limits the rate of new validators joining the network. 

On activation, the validator receives new blocks from peers on the network. The transactions contained in a block are re-executed and have their signatures checked to ensure the block is valid. At that point, the validator proposes to include the block in the blockchain. 

Blocks in Ethereum are timed based on 12-second slots and epochs (32 slots). The protocol chooses one validator at random to propose a block per slot. Additionally, every slot has a committee of validators that vote for the legitimacy of the block proposed. 

The system currently rewards validators with 4% APR based on the amount of ETH they have staked.

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  1. Proof-of-stake (POS). ethereum.org. (n.d.). Retrieved October 28, 2022, from https://ethereum.org/en/developers/docs/consensus-mechanisms/pos/
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