Does Ethereum staking have the guarantee that even if the validator goes down, our ETH stays with us?

Question

It seems that we can use one of the staking platforms for ETH:

https://ethereum.org/en/staking/pools/

For Solana (SOL), there is a feature which is, even if a validator goes down (or the owner of the validator goes to a different country and never comes back), our SOL is still with us and cannot be taken away.

With ETH, does such feature or guarantee exist? Otherwise, we may have to trust the firm well, be it Rocket Pool (which is the first time I hear of it), or Binance, Coinbase, Gemini, and later on Robinhood and Fidelity, and I have to see which one I can trust. For example, if Fidelity has it, I may think that it has the backing of its whole stock investment department and its 75+ years of reputation behind it, so it may be more solid to keep our hard earned money.

Answer 1

There are basically three ways to stake:

1. Staking through a centralized entity, such as Coinbase. You can stake also small amounts.

2. Staking through a decentralized staking pool, such as RocketPool. You can stake also small amounts.

3. Solo staking with your own equipment. You have to have at least 32 Eth.

As for your question, I think the last one is pretty easy: if your validator disappears, it starts to get penalties for being offline. After some (long) time all of the 32 Eth is gone.

I'm not very familiar with decentralized staking pools. But they have to have some equipment for staking and it might be difficult to decentralize that hardware. I don't know what would happen if the whole service disappears - possibly they have documented some sort of escape hatches, through which users can withdraw their Ethers in the case of an emergency (once withdrawals are activated).

Technically speaking, centralized staking services can just disappear. Your Eth is of course still somewhere, but it may be difficult to get it back, since it is (or was) fully controlled by the centralized entity. In the worst case their equipment goes offline and all customers' staked Ethers start gathering penalties and there's nothing you can do about it.

As for any blockchain assets: not your keys, not your assets. So if someone else manages your stake, you can't be sure you'll ever get it back.

Solo staking is the best, trust-wise. That way nobody can just "take" your assets. It, of course, has its own challenges.

Answer 2

There's no way to withdraw/unstake from a specific validator if they're offline like on Solana and choose not to withdraw. Lauri mentioned that solo staking is the most sure way to ensure that you cannot get slashed, decentralized staking services like Lido and Rocketpool aren't too bad either.

With Rocketpool, validators need to place a bond of Rocketpool tokens, and 4 eth of their own tokens into the validator to ensure that incentives are aligned. Since the withdraw is controlled by the protocol in the form of a smart contract, they can't take their 4 ETH out without allowing others to withdraw alongside them.

With Lido, withdrawals can be controlled by the Lido DAO, so theoretically Lido tokenholders could tamper with withdrawals – but this is highly unlikely. Otherwise, the rest is done via smart contracts, with validators specially vetted to ensure that they have good uptime and validate properly. This is in contrast with Rocketpool where the bonding process means that their validator set is permissionless.

Answer 3

Ethereum staking does not provide a guarantee that your ETH will stay with you if a validator goes down. When you stake your ETH in a validator, you are giving them the ability to validate transactions on the Ethereum network and earn rewards for doing so. However, if the validator goes down or becomes inactive, your staked ETH may be at risk of being lost or stolen.

Additionally, if you are using a staking pool, you are entrusting your staked ETH to the pool's operator. If the pool operator is dishonest or the pool becomes compromised, your staked ETH may be at risk.

That being said, it is worth noting that Ethereum 2.0 will have a new mechanism called "slashing" which is a way to penalize a validator who is found to be behaving badly, such as going offline, double signing or doing other misbehaviours. This mechanism aims to incentivize validators to behave honestly and to avoid malicious behavior.

It is important to thoroughly research and evaluate the reputation and security of any validator or staking pool before staking your ETH, and also to be aware of the risks involved. It is also important to have a good understanding of how Ethereum staking works and the potential risks associated with it, before committing your ETH to stake.

Answer 4

So if you were to self-stake (32 ETH) and not get slashed by being inactive or any other way, you get rewarded some ETH. With the upcoming update there are 2 kinds of withdrawals.

One is where the rewards that are in excess of 32 ETH is forwarded to an address of your choosing.

The other is you unstake and exit the beacon chain.

https://notes.ethereum.org/@launchpad/withdrawals-faq#Q-What-are-the-two-types-of-withdrawals does a better job explaining the update.