Validator

Blockchains exist as records of transactions spread across decentralized networks of computers, with each copy of the ledger identical to the next. To achieve agreement on which version is valid, these networks make use of a consensus mechanism: a system by which each node of the network can reach agreement. On Proof-of-Stake networks like Ethereum and Solana, this process relies on validators.

These entities run a specialized piece of software that allows them to process blocks and verify transactions on the network. Validators are selected to propose new blocks, which are then verified by other validators. Before doing this, they typically must stake a certain amount of the network’s native token — 32 ETH minimum, in the case of Ethereum. This acts as collateral to ensure that validators behave honestly and efficiently.

Validators earn rewards in return for helping to secure the network. These are usually also paid out in the blockchain’s native token, often a combination of freshly minted tokens plus a percentage of transaction fees paid by network users. Total rewards depend on the network, how much the validator has pledged and how well they have performed. Ethereum validators receive a staking yield of around 2.5% APY.

If a validator goes offline for sustained periods, they can miss out on these rewards. In more serious cases, the assets pledged by the validator can be slashed, meaning a permanent cut in their staked cryptocurrency. This is typically only done in cases where a node shows malicious or erratic behavior, such as attempting to validate conflicting transactions. This makes the cost of interfering with normal network operation prohibitively expensive, thereby securing it from malicious actors.