How Much Will The Ethereum Validators Earn After The Merge?


✍️ 12 September, 2022 - 20:58 👤 Editor: Jakub Motyka

  • It is already possible to stack ETH to be a validator in the post-merge Ethereum blockchain.
  • A Twitter analyst calculated the estimated rewards for Ethereum validators. Will it be profitable? What will happen to the price of Ethereum?
  • The latest news about cryptos, in our Telegram channel.

On the eve of the long-awaited Merge of the Ethereum blockchain many are wondering about validators, the profitability of proof of stake (PoS). Let's remember that the network is about to carry out an update that will replace the consensus method from PoW to PoS.This will make mining no longer a necessary process for safeguarding the network, depending on the the validators that stake ETH.

Pintail, a renowned Ethereum (ETH) analyst, made an estimate of the rewards that staking validators could receive. Previously, he has performed other detailed analyzes on the economic effects of the implementation of EIP-1559. Other of his works have been based on Altair and Medalla upgrades, and various Uniswap (UNI) Yield Farming strategies.

Will Being A Validator For The Post-Merge Ethereum Network Be Profitable?

According to Pintail data, the rewards shared between the participants of the Ethereum network will come from the same “Maximum Extractible Value” (MEV). This is a variable that indicates the profit that miners can extract per transaction, and it will not change much once the Merge update is implemented.

On the other hand, Pintail tracked the MEV variable for the last six months. Related to this, he calculated that the average return for Ethereum validators post Merge will be around 6.1%. That is, this could range between 5.3% and 7.3% depending on different factors, such as the number of validators present in the network.

How To Optimize Your Earnings As An Ethereum Validator?

According to the model based on the level of MEV, some validators of Ethereum post Merge could see that their annual returns are more variable than others. Pintail explains that this can be fixed by running multiple validators or "bundling" with other peers on the network. For example, stacking ETH as a liquidity provider for a larger exchange or platform.

Finally, it should be clarified that the earnings of an Ethereum validator, will depend on the amount deposited in the staking pool, and the conditions of the platform that offers the service. In turn, those who have deposited their ETH to be validators, will not be able to withdraw their funds (or profits) until the Shanghai update.

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