Ethereum Core Devs Weigh Pros and Cons of Raising Validator Threshold From 32 ETH to 2,048 ETH

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Ethereum’s core developers are engaged in discussions about raising the validator threshold from 32 ETH to 2,048 ETH. This proposal, put forward by Michael Neuder, a researcher from the Ethereum Foundation, aims to address concerns related to decentralization, inflation, and the size of the validator set. Neuder acknowledges that the existing threshold promotes decentralization, but he also highlights the drawbacks of inflation and the substantial number of validators that it entails.

Ethereum Developers Want to Raise the Validator Threshold

During the latest Ethereum core developer consensus meeting, a gathering of ETH software engineers and researchers, an intriguing notion emerged for elevating the validator threshold from 32 ether to 2,048 ether. As it stands, aspiring validators must possess roughly 32 ETH to commence the validation process, but this proposed adjustment would amplify the threshold by 64-fold.

The individual behind this idea is Michael Neuder, a researcher from the Ethereum Foundation, who presented his proposal titled “Increase the Max_Effective_Balance.” In addition to this proposition, Neuder delved into the realm of auto-compounding validator rewards, stimulating further contemplation and dialogue among the attendees.

“Without a validator set contraction, single-slot finality is not feasible using the currentdesigns,” Neuder’s proposal details. “Without single-slot finality, we believe that enshrined PBS is also not viable. Additionally, the current p2p layer is heavily burdened by the artificially large and rapidly growing validator set (see this thread from Potuz outlining what happened during the May 12 non-finality event). We see a validator set contraction as a must-have for a sustainable and upgradable Ethereum consensus layer.”

According to the researcher, implementing this increase would not only enhance Ethereum’s overall efficiency but also alleviate the rapid expansion of the validator set. He insists the proposal holds the potential to address the finality issues that plagued the Beacon chain in May 2023. Subsequently, numerous individuals took to the ethresear.ch web portal to voice their thoughts on the proposed escalation of the validator threshold.

The Move Could Potentially Marginalize Home Stakers

The divergent opinions expressed on this matter underscore the existing divide among Ethereum advocates and researchers, revealing a compelling discourse within the community.

“This would significantly decrease ‘real’ decentralization by effectively raising the 32 ETH solo staking floor to whatever the new EB value would be,” the Cookie Lab stated in response to Neuder’s proposal. “Sure while one can still spin up a validator with 32 ETH, its influence would be one of a second-class citizen when compared to one with ‘maxed out’ EB.” Others favored the concept of auto-compounding rewards.

“The benefit of compounding rewards for solo stakers is pretty large, and their chance of proposing doesn’t fall due to a change in Max EB, only an increase of ETH being staked by others,” another person wrote.

Neuder’s proposal is anticipated to spark prolonged debates among the core developers, as they have chosen to delve deeper into this concept on Discord. A notable faction contends that embracing the idea may inadvertently foster centralization within the Ethereum network, exacerbating the preexisting challenges faced by the validator set.

Amidst the varied opinions, one individual expressed affinity for the proposal but raised a pertinent concern, emphasizing, “[My] main concern with the proposal as currently written is that it seems to degrade the UX for home stakers.” This consequential move could potentially marginalize home stakers, resulting in a landscape where corporate entities and affluent individuals dominate the network, leaving behind an altered power dynamic.

What are your thoughts on the proposed increase in Ethereum’s validator threshold? Share your views and opinions about this subject in the comments section below.