What is a validator?

A validator is a participant in a proof-of-stake blockchain who checks transactions and helps add new blocks, having first locked up coins as a security deposit. Validators do the job that miners do on bitcoin, without the energy-hungry computing race.

What does a validator do?

A validator runs the network's software around the clock and has two tasks. When the software selects it, it proposes the next block of transactions. The rest of the time it checks blocks proposed by others and votes on whether they are valid.

Selection is random, but validators with more coins at stake are chosen more often. Once enough validators have voted for a block, the network treats it as settled. This is one type of consensus mechanism.

What is the staking deposit?

To become a validator, an operator must lock up a set amount of the network's coin. This deposit is the stake. On Ethereum, activating a validator requires at least 32 ether, according to ethereum.org, the network's main information site. The deposit acts as collateral, and it cannot be withdrawn instantly.

Many holders do not have that much or do not want to run a machine. They can join staking pools or use services run by exchanges, which operate validators on their behalf and keep a share of the rewards. The guides to crypto staking and Ethereum staking explain how that works. These arrangements are run by third parties and carry their own risks.

How are validators rewarded and punished?

Validators earn newly issued coins and a share of transaction fees, roughly in proportion to their stake. The rate is not fixed. It moves with the number of validators and the level of activity on the network.

Penalties come in two sizes:

• Minor penalties. A validator that goes offline misses rewards and loses a small amount of its deposit.
• Slashing. A validator caught in provable misbehavior, such as signing two conflicting blocks, has part of its stake destroyed and is removed from the network.

People who stake through a pool can share in those losses.

How is a validator different from a miner?

A miner's costs sit outside the system, in hardware and electricity. A validator's cost is the coins it has locked inside the system. That difference is why proof of stake uses far less energy, as set out in proof of work vs proof of stake.

It also draws criticism. Those who hold the most coins earn the most rewards, which can entrench large holders. Much staking runs through a few big services and exchanges, which concentrates influence over which transactions get included. And because many validators are identifiable companies, governments can press them to leave certain transactions out. Supporters answer that the threat of slashing, and of users abandoning a captured network, keeps validators in line.