What is ETH2?

What is Ethereum 2.0?

Ethereum 2.0 (ETH2) is an upgrade to the Ethereum public mainnet that aims to improve the network’s security and scalability. The upgrade includes a change in Ethereum’s mining model from (“Proof-of-Work”) to a staking model (“Proof-of-Stake”). ETH2 represents ETH holdings that are staked in support of the Ethereum upgrade. Once ETH2 is staked, it is locked and must remain staked for an indefinite amount of time until the Ethereum 2.0 upgrade is deemed complete by the Ethereum network’s developers (the “lock-up period”).

What is staking?

Staking is part of the proof-of-stake consensus mechanism for processing transactions and creating new blocks in a blockchain.

What is Staked ETH vs ETH2?

There are several names used across the crypto industry, but Abra has chosen ETH2 as the standard name to represent the ETH2 asset on the Abra platform (i.e., Staked ETH = ETH2). 

What is the difference between ETH2 and ETH?

When you stake your ETH, it converts into ETH2 on the Abra platform and in return you generate in-kind rewards from the Ethereum network.

What will happen to Ethereum 1.0?

Once the Ethereum network upgrade is complete, the two networks (Ethereum 1.0 and its ETH and Ethereum 2.0 and its ETH2) will merge into one chain that will continue using ETH as its native token.

What is the difference between ETH2 and Interest Earning ETH?

ETH2 and Interest Earning ETH are two different products offered by Abra. Both ETH2 and Interest Earning ETH enable users to generate interest from their crypto; however, there is one key difference between the two products: ETH2 funds are not redeemable during the lock-up period, while Interest Earning ETH can be redeemed at any time. 

What are the rewards from ETH2?

You may generate yield on all ETH that you stake (ETH2), which is the reward you receive for helping to secure the Ethereum network. ETH2 rewards are distributed based on how much ETH is validated and what the Ethereum network is offering as rewards over a given period of time. When less ETH is staked across the network, the protocol rewards will be larger as an incentive for more ETH to be staked. Similarly, as an increasing amount of ETH is staked across the network, the reward is reduced. Rewards will accrue, but will not be paid out until a time to be determined post-merge.

Are there risks associated with ETH2? 

ETH2 is experimental and involves risks, including but not limited to possible network failure. Please ensure you independently assess and understand the related risks before deciding to stake your ETH.

As just one example, an important risk to be aware of is the possibility of losing your staked ETH due to slashing. Slashing is a penalty enforced by the Ethereum network at the protocol level associated with a network or validator failure.

Is there a staking minimum or maximum?

There are no minimums to stake ETH2 on Abra.