Ethereum, the second-largest blockchain by market capitalization, could be on the cusp of a significant operational change. At the last Ethereum core developer consensus meeting, a key agenda item being discussed was a proposal to increase the maximum validator limit.
If implemented, this adjustment would see the limit skyrocket from the current 32 ETH to 2,048 ETH per validator. Currently, validators on the Ethereum network maintain a balance cap set at both a minimum and a maximum of 32 ETH.
Therefore, those running large-scale staking operations need to establish multiple validators to gain yield beyond this limit. As such, the result is a significant growth in the number of validators, with the current number reaching 600,000 active validators and an additional 90,000 pending.
Streamlining for Optimization
Michael Neuder, a researcher at the Ethereum Foundation and a leading advocate for this change, says the proposed increase would alleviate the pressures caused by expanding the size of the set of validators.
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Neuder pointed out that the current validator cap supports decentralization, but simultaneously leads to inflation in the size of the set of validators. This growing size ultimately improves system performance by speeding up finding in a solitary Ethereum slot.
Additionally, Neuder highlighted the prospect of self-compounding validation rewards brought about by this change. Given current restrictions, any rewards earned above the 32 ETH cap must be diverted to other locations to generate staking return.
With a raised cap, these rewards could be compounded instantly, allowing validators to reap greater benefits from their staked ETH.
Impact on large operators and associated risks
The proposal also aims to address procedural challenges faced by major node managers, such as exchanges like Coinbase, which currently oversee a multitude of validators due to the permanent constraint of 32 ETH per validator.
If the cap were to be raised, these operators could handle fewer validators with higher stakes, potentially simplifying operations. However, Neuder warned of the risks associated with this proposed change.
For example, the increase could potentially lead to stiffer penalties for inadvertent double attestations or submissions, also known as “slashing.” This highlights the importance of considering all possible implications on the path to improving network efficiency and validator rewards.
In particular, aAs Ethereum continues to evolve, this potential validator limit change serves as a critical talking point in the larger conversation about the future of the platform.
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Meanwhile, Ethereum is down 1% in the past week in the current state of the industry. The second-largest crypto asset by market capitalization recorded downward movement, also dropping 1.1% in the past 24 hours.
At the time of writing, ETH is trading above $1,700 after breaking below this price range to trade in the $1,600 region last week. ETH trading volume has plummeted over the past 7 days, from over $7 billion last Monday to under $4 billion over the past 24 hours, indicating a decline in trading activity.
Featured image from Shutterstock, chart from TradingView