The deposit contract for staking ETH on the Beacon Chain. The staked ETH is used to participate in the network's Proof-of-Stake (PoS) consensus model.
With Ethereum 2.0, the blockchain relies on a set of validators to create and validate the blocks of transactions that are added to the distributed ledger. The protocol is designed to be resistant to manipulation up to one-third of validators. Economic staking mechanisms are in place to try and keep dishonest validators under one-third control. Since validators have to stake some ETH, they may be slashed and lose their stake if they are dishonest. The process of staking ETH is handled by the Eth staking deposit contract.
To become a validator on Ethereum, users must first hold at least 32 ETH. A user sends a transaction on Ethereum to deposit some ETH by calling the deposit function of the smart contract. Validators are assigned to produce blocks at random and are accountable for double-checking and confirming any block they do not produce.
The risk of becoming a validator is the user won't be able to withdraw their staked ETH or rewards until transfers are enabled on an unknown date (likely around late-2023). The validators' stake is penalized or slashed if they act maliciously and ETH is lost proportional to the amount of damage done to the network. Validators must also ensure their node is always online or they can lose a small amount of ETH. Lastly, there could be any software bugs in the code that could result in lost of funds as well.