UPDATE (Feb. 3, 12:31 UTC): This article has been updated with information about CoinDesk’s validator node which is now being hosted on Amazon Web Services, not with staking-as-a-service provider Bison Trails.
CoinDesk just snagged a front-row seat to a seminal event in the crypto industry. Ticket price: 32 ETH.
As a media outlet covering nascent technologies, we believe we can sometimes chronicle their development more effectively by participating in them. To that end, we’re spinning up a validator for the upcoming launch of Ethereum 2.0 as part of a fact-finding mission. This required us to acquire the minimum amount of ETH (for about $15,000) to stake on the new network.
The goal is to deepen CoinDesk’s editorial coverage to better serve our readers. Running our own validator will give us a direct, real-time window onto Ethereum’s transition to a proof-of-stake (PoS) consensus mechanism. We will gain an unvarnished perspective on the network at its most untested and potentially vulnerable phase of development, gleaning vital insights about the process for our audience.
The launch of Ethereum 2.0 marks the beginning of the network’s transformation into the world’s largest proof-of-stake (PoS) protocol by market capitalization. The pivot to PoS is intended to radically improve network scalability, which throughout Ethereum’s history has been an ongoing pain point for both users and developers.
To be clear, this is not the start of a day-trading division within our newsroom (and for the record, we have strict limitations on such activity). All profits from running the validator will be donated to a charity of our choosing once transfers of ether are enabled in phase 1.5 of the network’s development, roughly a year and a half from now.
We’re also paying out a cut of our staking rewards in modest fees to host our infrastructure on Amazon Web Services. There were a number of security considerations that made it more feasible and reliable for us to run this set-up on the cloud as opposed to our own hardware – the realities of a remote workforce in time of global pandemic being one of them.
You can follow us on our staking journey as an Ethereum 2.0 validator by signing up for our free, limited-run newsletter, Valid Points. Each week, starting the week of the Ethereum 2.0 launch (expected around early December), our emails will feature high-level statistics and charts illustrating the health of our validator and network operations. We’ll also discuss the wider ramifications of the network’s development progress for industry stakeholders (no pun intended) and investors.
Sign up for Valid Points today.
Getting into investors' heads
Crucially, this is not just a story about code and network design. This is also an investor story.
We believe having skin in the game puts us in a unique position to adopt the mindset of existing and prospective investors. That’s important because the decision to stake or not involves a trade-off. Should I tie up my funds in a validator node or should I earn interest on them via a decentralized finance (DeFi) lending app?
The pros and cons of such decisions will vary due to a host of factors. We are looking forward to exploring the ever-shifting cost-benefit analysis that investors go through in this environment by putting ourselves in their shoes.
Many questions remain, including how exactly Ethereum will merge into Ethereum 2.0, what impact the merger will have on Ethereum’s growing DeFi ecosystem and the extent to which Ethereum 2.0 will solve the platform's congestion issues over the long run.
It's going to be a fascinating ride, and you're invited to join us.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.