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add eth2 post
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Sagiv Ofek
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layout: post
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layout: post
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title: Make passive income using Etherum 2.0
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title: Make passive income using Ethereum 2.0
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description: Learn how to become eth2 validator and earn staking fees
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description: Learn how to become eth2 validator and earn staking fees
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categories: [Crypto]
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categories: [Crypto]
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keywords: [Etherum, ETH, ETH2, Metamask, Digitalocean, crypto]
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keywords: [Ethereum, ETH, ETH2, Metamask, Digitalocean, crypto]
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Etherum is one of the leading crypto projects (second to bitcoin). In December 2020 Etherum released the first stage of Etherum 2.0. The biggest difference is that there is no need for an expensive calculation to validate blockchain transactions, miners can earn money only by staking their coins. This is a shift from proof-of-work to [proof-of-stake](https://ethereum.org/en/eth2/staking). You can read more on the vision [here](https://ethereum.org/en/eth2/vision).
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Ethereum is one of the leading crypto projects (second to bitcoin). In December 2020 Ethereum released the first stage of Ethereum 2.0. The biggest difference is that there is no need for an expensive calculation to validate blockchain transactions, miners can earn money only by staking their coins. This is a shift from proof-of-work to [proof-of-stake](https://ethereum.org/en/eth2/staking). You can read more on the vision [here](https://ethereum.org/en/eth2/vision).
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### What does it mean for you?
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### What does it mean for you?
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If you want to "mine" eth you don't need to invest in an expensive server farm anymore, all you need is to stake at least 32ETH and run the eth2 clients for as little as $10/month. In return you will earn passive income - currently, [around 10%](https://docs.google.com/spreadsheets/d/15tmPOvOgi3wKxJw7KQJKoUe-uonbYR6HF7u83LR5Mj4/edit#gid=842896204). The more people stake their eth the lower the interest rate will be. You can find the latest rate [here](https://launchpad.ethereum.org).
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If you want to "mine" eth you don't need to invest in an expensive server farm anymore, all you need is to stake at least 32ETH and run the eth2 clients for as little as $10/month. In return you will earn passive income - currently, [around 10%](https://docs.google.com/spreadsheets/d/15tmPOvOgi3wKxJw7KQJKoUe-uonbYR6HF7u83LR5Mj4/edit#gid=842896204). The more people stake their eth the lower the interest rate will be. You can find the latest rate [here](https://launchpad.ethereum.org).
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In case you have at least 32ETH and you are OK to stake it for at least a year, probably more, until Etherum reach their [next phase](https://docs.ethhub.io/ethereum-roadmap/ethereum-2.0/eth-2.0-phases), you can use this guide to learn how to do it.
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In case you have at least 32ETH and you are OK to stake it for at least a year, probably more, until Ethereum reach their [next phase](https://docs.ethhub.io/ethereum-roadmap/ethereum-2.0/eth-2.0-phases), you can use this guide to learn how to do it.
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This solution is great if you want to hold your ETH coins for 1-2 years and earn passive income by doing so.
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This solution is great if you want to hold your ETH coins for 1-2 years and earn passive income by doing so.
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**This guide is for educational purposes only.**
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**This guide is for educational purposes only.**
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### Install Metamask
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### Install Metamask
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We will use Metamask as our etherum wallet. You can install it from [here](https://metamask.io). Do not lose the password and paraphrase for your wallet.
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We will use Metamask as our ethereum wallet. You can install it from [here](https://metamask.io). Do not lose the password and paraphrase for your wallet.
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After you finished installing your wallet, make sure you select the `goerli` (test) network.
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After you finished installing your wallet, make sure you select the `goerli` (test) network.
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### Get Goerli
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### Get Goerli
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You will be asked to choose a validator password. Do not lose this password, you will need it to get your money back at some point. **This is not your wallet password**, select a new password just for the validator client. After selecting the password you will get a seed phrase to store in case you lost your validator password. Store the seed phase in a secure location as well.
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You will be asked to choose a validator password. Do not lose this password, you will need it to get your money back at some point. **This is not your wallet password**, select a new password just for the validator client. After selecting the password you will get a seed phrase to store in case you lost your validator password. Store the seed phase in a secure location as well.
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If everything went well you should see a hippo(?) image.
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If everything went well you should see a hippo(?) image.
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Open the folder with the keys. In this folder you will find a few files:
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Open the folder with the keys. In this folder you will find a few files:
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`deposit_data-[some number].json` - this is the information for your deposit.
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`deposit_data-[some number].json` - this is the information for your deposit.
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`keystore-[some number].json` - you will have one or more files based on the number of validators you selected.
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`keystore-[some number].json` - you will have one or more files based on the number of validators you selected.
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In this stage, you have all you need to install the local clients. Keep this window open, we will get back to it after we install the clients.
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In this stage, you have all you need to install the local clients. Keep this window open, we will get back to it after we install the clients.
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### Etherum client components
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### Ethereum client components
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Now that you staked your eth, you will need 3 nodes to become ETH 2.0 validator:
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Now that you staked your eth, you will need 3 nodes to become ETH 2.0 validator:
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- **ETH 1.0 client**: this client will listen to the Etherum 1.0 network. You can either run a local client or use a free 3rd party node. To save resources and keep this post simple, I'm using a free [alchemyapi.io](https://dashboard.alchemyapi.io/signup?referral=5f4b22ad-1a24-46af-ab1c-4475e8fe177d) node. You can find more 3rd party options [here](https://ethereumnodes.com).
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- **ETH 1.0 client**: this client will listen to the Ethereum 1.0 network. You can either run a local client or use a free 3rd party node. To save resources and keep this post simple, I'm using a free [alchemyapi.io](https://dashboard.alchemyapi.io/signup?referral=5f4b22ad-1a24-46af-ab1c-4475e8fe177d) node. You can find more 3rd party options [here](https://ethereumnodes.com).
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- **Beacon node**: etherume 2.0 client.
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- **Beacon node**: ethereume 2.0 client.
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- **Validator client**: to validate eth2 transactions.
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- **Validator client**: to validate eth2 transactions.
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### Create eth1 client
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### Create eth1 client
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You can either create a local eth1 client or use a 3rd party node instead. Let's use a 3rd party today. Open a free [alchemyapi.io](https://dashboard.alchemyapi.io/signup?referral=5f4b22ad-1a24-46af-ab1c-4475e8fe177d) and [create an app](https://dashboard.alchemyapi.io/apps). Make sure you select the `Goerli` network for your eth1 node.
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You can either create a local eth1 client or use a 3rd party node instead. Let's use a 3rd party today. Open a free [alchemyapi.io](https://dashboard.alchemyapi.io/signup?referral=5f4b22ad-1a24-46af-ab1c-4475e8fe177d) and [create an app](https://dashboard.alchemyapi.io/apps). Make sure you select the `Goerli` network for your eth1 node.
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After the app has been created go to the app's page and click on `VIEW KEY`, you will need to copy the HTTP URL for the beacon node.
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After the app has been created go to the app's page and click on `VIEW KEY`, you will need to copy the HTTP URL for the beacon node.
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### Hosting your beacon node and validator client
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### Hosting your beacon node and validator client
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You can run your beacon node and validator client on a local computer. Beacon nodes are intended to be high-performance, highly available platforms that can support connections to numerous validator clients and maintain ongoing p2p connectivity with other beacon nodes. As such, their hardware requirements are anticipated to be server-grade CPU/SSD/networking connections.
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You can run your beacon node and validator client on a local computer. Beacon nodes are intended to be high-performance, highly available platforms that can support connections to numerous validator clients and maintain ongoing p2p connectivity with other beacon nodes. As such, their hardware requirements are anticipated to be server-grade CPU/SSD/networking connections.
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Your server needs to be available 24/7 or you will accrue penalties and lose ETH. This is why I prefer running my nodes on a hosted cloud server. In this tutorial, I choose [Digitalocean](https://m.do.co/c/29d9028f31d1). After playing with multiple specs, I've found that you can run your beacon node and validator client for just \$10/month. Use [this link](https://m.do.co/c/29d9028f31d1) to sign up for digitalocean and get $100 credit! This should cover your Etherum staking expenses a while :)
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Your server needs to be available 24/7 or you will accrue penalties and lose ETH. This is why I prefer running my nodes on a hosted cloud server. In this tutorial, I choose [Digitalocean](https://m.do.co/c/29d9028f31d1). After playing with multiple specs, I've found that you can run your beacon node and validator client for just \$10/month. Use [this link](https://m.do.co/c/29d9028f31d1) to sign up for digitalocean and get $100 credit! This should cover your Ethereum staking expenses a while :)
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### Creating a digitalocean Droplet
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### Creating a digitalocean Droplet
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From your Digitalocean account, create a [new droplet](https://cloud.digitalocean.com/droplets/new).
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From your Digitalocean account, create a [new droplet](https://cloud.digitalocean.com/droplets/new).
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Choose the `Ubuntu` droplet. This will create a UNIX server running Ubuntu. 
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Choose the `Ubuntu` droplet. This will create a UNIX server running Ubuntu. 
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Select the $10/mo plan. The \$10/month spec is the bare minimum you should choose. If you want to choose a stronger instance go for it.
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Select the $10/mo plan. The \$10/month spec is the bare minimum you should choose. If you want to choose a stronger instance go for it.
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Setup SSH access under the `Authentication` section. This is important to be able to access your server from your terminal.
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Setup SSH access under the `Authentication` section. This is important to be able to access your server from your terminal.
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You can leave the other settings as-is.
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You can leave the other settings as-is.
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Once your droplet setup is completed copy the ip address from the dashboard.
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Once your droplet setup is completed copy the ip address from the dashboard.
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### Setting up your cloud server
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### Setting up your cloud server
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By now you have a cloud server running a beacon node and validator client. You should wait 5-10 hours until your beacon node is fully synced. Once your node is synced it's time to finish the transaction by sending 32ETH to the validator contract.
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By now you have a cloud server running a beacon node and validator client. You should wait 5-10 hours until your beacon node is fully synced. Once your node is synced it's time to finish the transaction by sending 32ETH to the validator contract.
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Go back to the launchpad site you left open and move to the next step. You will be requested to upload your `deposit-data-[timestamp].json` file. Upload the file that contains your validator public key so it can be registered in the network.
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Go back to the launchpad site you left open and move to the next step. You will be requested to upload your `deposit-data-[timestamp].json` file. Upload the file that contains your validator public key so it can be registered in the network.
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The next step is to pay the ETH.
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The next step is to pay the ETH.
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On the next screen, you will be requested to connect your local wallet. I'm using Metamask in this tutorial.
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On the next screen, you will be requested to connect your local wallet. I'm using Metamask in this tutorial.
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Once you connected your Metamask wallet you will be prompted to transfer eth to the contract address. **Validate that you are on the Goerli Test Network before sending any coins**. Also double-check the contract address and once you're comfortable, click Confirm.
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Once you connected your Metamask wallet you will be prompted to transfer eth to the contract address. **Validate that you are on the Goerli Test Network before sending any coins**. Also double-check the contract address and once you're comfortable, click Confirm.
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If you selected more than one validator you will be prompted for each one of them.
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If you selected more than one validator you will be prompted for each one of them.
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Wait a few seconds (minutes?) until the transaction is confirmed.
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Wait a few seconds (minutes?) until the transaction is confirmed.
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Once confirmed, you can move to the last page - [congrats](https://pyrmont.launchpad.ethereum.org/congratulations)!
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Once confirmed, you can move to the last page - [congrats](https://pyrmont.launchpad.ethereum.org/congratulations)!
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You can click on "View The Checklist" to complete the Staker Checklist.
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You can click on "View The Checklist" to complete the Staker Checklist.
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Congrats, you've finished everything you need to start earning passive income and participate in the ETH2 network.
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Congrats, you've finished everything you need to start earning passive income and participate in the ETH2 network.
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This post walks you through creating **test** clients. I highly recommend doing it a few times before going live. In case you want to stake real money on the mainnet network you will need to:
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This post walks you through creating **test** clients. I highly recommend doing it a few times before going live. In case you want to stake real money on the mainnet network you will need to:
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1. use the [live etherum launchpad](https://launchpad.ethereum.org).
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1. use the [live ethereum launchpad](https://launchpad.ethereum.org).
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2. change the `--network` flgas from `pyrmont` to `mainnet`.
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2. change the `--network` flgas from `pyrmont` to `mainnet`.
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3. Make sure your `--eth1-endpoints` points to live eth1 nodes.
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3. Make sure your `--eth1-endpoints` points to live eth1 nodes.
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4. Use your `Mainnet` Metamask address when transferring money.
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4. Use your `Mainnet` Metamask address when transferring money.
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