How do Ethereum staking rewards, penalties and withdrawals work?

Where this lesson starts

Module 2 explained what validators do. To run your own on Ethereum, you need at least 32 ETH, and one validator can hold up to 2,048 ETH.² This lesson is about the money: what a validator earns, what it can lose, and how long it takes to get out.^1,3

Rewards

ethereum.org says validators are rewarded for votes that agree with the majority of other validators, for proposing blocks, and for taking part in sync committees.¹ Each reward is worked out from a "base reward".¹

The base reward rises with a validator's effective balance, and falls as the number of validators grows.¹ So when more ETH is staked, each validator's slice of the new ETH gets smaller.¹ That is one reason the staking rate keeps moving.

A validator picked to propose a block also gets fees and MEV, paid to an address it chooses.² Lido's documentation notes that priority fees can rise with network demand, so this part of the reward can change with how busy Ethereum is.⁴

As of 24 October 2026, ethereum.org's staking page showed 43,948,738 ETH staked, 35% of all ETH, and a current APR of 2.5%.² APR is a yearly rate without compounding; Lesson 5 explains it.⁵

Penalties for missing work

Missing votes costs money. A validator that misses its "source" and "target" votes loses the same amount it would have earned for them.¹ There is no penalty for missing a turn to propose a block. The validator simply doesn't get that reward.¹

ethereum.org says rewards depend on how much of the time a validator is online. Downtime penalties grow with how many other validators are offline at the same time, but downtime alone does not cause slashing.⁶

There is an emergency rule too. If too many validators go offline for the chain to finalise blocks, the inactivity leak slowly drains their stake until the active validators hold more than two-thirds of it.¹

Slashing

Slashing is the punishment for provable cheating, such as signing two different blocks for the same slot.¹ It removes the validator from the network and takes some of its staked ETH.¹

ethereum.org gives the numbers. For a 32 ETH validator, 0.0078125 ETH is burned at once, scaled in line with the balance, and a 36-day removal period begins.¹ On day 18 a second penalty, the correlation penalty, is added. It grows with how much other stake was slashed in the 36 days before.¹

So one validator slashed alone loses a small part of its stake. But if many are slashed around the same time, the maximum loss is their entire effective balance.¹

Getting ETH out

How withdrawals work depends on the validator's type.³

• Type 1 (0x01): anything above 32 ETH is sent automatically to the validator's withdrawal address, every few days.³
• Type 2 (0x02): rewards stay in and compound, up to 2,048 ETH. Taking some out means sending a transaction, which costs gas.³

To get all of it back, a validator must exit. How long that takes depends on how many others are exiting at the same time.³ Starting works in a similar way: ethereum.org says new validators wait in a queue that can take anything from hours to weeks.²

Once a validator has exited, its balance is swept to the withdrawal address automatically. Up to 16 withdrawals are processed in each block.³ The withdrawal address can be set only once. It can never be changed afterwards.³