Validators play a crucial role in maintaining the security and operation of a blockchain network. Users need to stake a certain amount of tokens to become a validator and will receive rewards for completing their dutie
What is a Validator?
A validator (or validator node) is an online server that runs node software on a Proof of Stake (PoS) blockchain to earn rewards. Depending on the consensus mechanism of each blockchain, nodes may have different names. Nodes in a PoS blockchain are called validators, while nodes in a Proof of Work (PoW) blockchain are called miners.
Validators are responsible for verifying and adding new blocks of transactions to the blockchain, helping to maintain its security and integrity. In return, they are required to stake a minimum initial amount of tokens, as required by the blockchain, to be eligible to become a validator.
In simpler terms, a validator can be seen as a component within the blockchain network that is authorized to check the validity and authenticity of new transactions before they are recorded in blocks on the blockchain.
The Importance of Validator Nodes in Blockchain
First, it’s important to understand that a blockchain is a system that operates on a network of nodes distributed globally.
- Nodes are responsible for validating transactions and proposing new blocks to the blockchain. When nodes collectively validate a block and reach consensus, that transaction is recorded on the blockchain and finalized.
- Each node must hold a copy containing all transaction information on the blockchain and continuously communicate with other nodes to ensure consistency between the information on the copies when new transactions are added.
- Nodes in a blockchain that use the Proof of Stake (PoS) consensus algorithm are called validators.
Therefore, validators are considered the “backbone of the blockchain” as they play many important roles in operating and maintaining the network, including:
- Verifying the validity of transactions: When validating transactions, validators must check and ensure that the transactions comply with the rules and protocols of the blockchain network. If a transaction is invalid, validators will reject it to ensure the integrity of the system.
- Proposing and creating new blocks: Validators collect a number of valid transactions, form a new block, and propose that block to the other validators in the network.
- Maintaining security: Validators prevent fraudulent transactions from being added to the blockchain (e.g., double-spending), ensuring the integrity and security of the network.
- Ensuring decentralization: A blockchain has a large number of validators operating and monitoring the system simultaneously. Each validator has equal value and can control each other, ensuring fairness and decentralization within the network. The number of validators required varies depending on the rules of the blockchain.
- Participating in network governance: Validators have voting rights on proposals within the blockchain, contributing to decision-making regarding changes in the blockchain system.
How do validators verify transactions?
First, to become a validator, users need to stake a certain amount of tokens as required by the blockchain. The blockchain will select validators based on the amount and duration of their stake. Accordingly, the more and longer the stake, the higher the chance of being selected as a validator.
When a user makes a transaction on the blockchain, it is checked, validated, and added to the blockchain by validators through the following process:
- Receiving the transaction: The system selects a random number of validators to participate in validating that transaction. The number of validators validating a transaction varies depending on the blockchain.
- Checking the validity of the transaction: Validators verify transaction information such as the sender’s digital signature, the number of tokens, etc., to ensure the transaction is valid.
- Proposing a new block: Validators record valid transactions into a new block along with their identifying signature to authenticate that block. This block is then sent to all other validators in the network.
- Synchronizing data: Other validators update and add information about the new transaction to their copies to ensure consensus on the blockchain.
- Completing the transaction and receiving rewards: At this point, the user’s transaction is completed, and the validator receives a reward in the form of transaction fees.
3 Things to Know When Becoming a Validator
How to become a validator is a topic of great interest in the crypto market, as validators can earn money from the blockchain in all market conditions, regardless of whether the trend is up, down, or sideways.
If users are considering becoming a validator on a blockchain, it is crucial to research and understand its requirements, rewards, and risks.
Requirements
The requirements for becoming a validator vary depending on the operating mechanism of the blockchain. Basically, they are divided into three main steps:
- Choose a blockchain network based on research and individual needs.
- Invest in software, hardware, and stake assets as required by the blockchain.
- Run and maintain the node.
Among these, the step of preparing software, hardware, and staking assets is relatively simple, as you just need to follow the available instructions of the blockchain. The image below summarizes some of the requirements to become a validator for popular blockchains
In addition, to run a node, validators need to have some knowledge and understanding of the technical aspects of computer networking, cybersecurity, troubleshooting, and blockchain protocols.
However, in the current crypto market, there are many projects and services that meet the staking and profit-making needs of users without requiring them to become validators or have computer technical knowledge. In other words, users only need to prepare tokens for staking and delegate to a third party to perform the validator’s duties.
Some services have emerged to serve the above needs, including: Liquid Staking, Validator as a Service, Solo Staking…
Rewards
The rewards earned by validators are transaction fees on the blockchain. Typically, validator rewards are calculated and distributed after each epoch. However, blockchains have different regulations regarding the duration of each epoch. For example:
- For Ethereum, an epoch is the period during which a validator validates 32 blocks, approximately 6.4 minutes.
- For Solana, an epoch lasts about 2 days.
In addition, users can utilize websites with validator reward calculators to estimate the rewards they would earn as a validator.
The Staking Rewards website is a useful tool for validators and users interested in staking on the blockchain.
It is a browser that aggregates all validator data across blockchains, including: total global staking market cap, average annual staking rewards, net staking value over 7 days, the most staked tokens & validators on the blockchain along with specific related data…
At the same time, users can also calculate the rewards received when staking assets by entering the token name, project, and staking amount.
Risks
Besides receiving rewards for validating transactions and maintaining the blockchain network, users also face significant risks and need to consider them carefully before deciding to become a validator.
- Slashing: This is a penalty mechanism for validators who violate the protocol’s rules, such as validating two blocks simultaneously, going offline for a period of time, manipulating the network, or validating invalid blocks. Depending on the blockchain, validators may have a portion or all of their initially staked tokens confiscated, be removed from the validator pool for a period or permanently, etc.
- Token Price: The tokens staked by validators will be locked and inaccessible. Therefore, validators cannot sell their assets when the price drops or rises sharply.
- Costs: Validators have to pay for hardware, software, and electricity/internet costs to run a node, which can amount to thousands of dollars
