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Ethereum Consensus Staking Rewards
Most Ethereum stakers are uncertain about the advantages of utilizing a liquid staking protocol like NodeDAO. To eliminate any confusion and to provide clarity on rewards for stakers, we have created this post to explain the different incentives available.
Protocol rewards and the staking principal are securely stored in individual wallet contracts for each validator. This ensures users' full control over their funds and prevents HashKing or any third party from accessing them.
MEV (Maximal Extractable Value) and priority tips are directed to a vault managed by HashKing. The wallets linked to Validator NFTs are authorized to withdraw from this pool.
On a high level, there are two types of rewards:
- Consensus layer rewards
Consensus layer rewards are distributed to validators who participate in the network by validating blocks and adding them to the blockchain. The rewards are paid out in the form of newly minted Ether and are designed to incentivize validators to act in the best interest of the network.
- Execution layer rewards
The execution layer is responsible for executing transactions and smart contracts on the Ethereum network. In a staking protocol, validators (also known as stakers) are responsible for securing the network by processing transactions and creating new blocks.
Validators are rewarded with ETH for their work. The amount of ETH they receive as a reward is determined by several factors, including the number of transactions they process, the gas fees associated with those transactions, and the current price of ETH.