Ethereum’s core developers proposed increasing the maximum validator balance cap from 32 ETH to 2,048 ETH to improve network efficiency.
At present, Ethereum validators can deposit up to 32 ETH into a smart contract to begin staking. However, in a recent Consensus Layer meeting, developers contemplated increasing the maximum balance cap to 2,048 ETH.
Michael Neuder, the author of the proposal, said the 32 ETH cap was initially created to promote the decentralization of the Ethereum network. According to him, the low balance limit has led to a significant rise in the number of validator nodes, with over 600K active validators and 90K stuck in the waiting queue.
Neuder claimed the 32 ETH restriction forces large node operators to coalesce their rewards over more validators to increase profits. He argued this raises the firm's operational expenses in addition to increasing the stress on the Ethereum blockchain.
The developer noted that raising the threshold balance cap to 2,048 ETH will allow auto-compounding of rewards for solo-stakers and large-scale node operators. Moreover, the adjustment will also increase the efficiency of the Ethereum network by reducing the number of active validators.
Neuder clarified that the proposal seeks to increase only the maximum threshold limit while leaving the minimum validator cap unchanged. In his words,
“Critically, we do not propose increasing the 32 ETH minimum required to become a validator, or requiring any sort of validator consolidation (this process would be purely opt-in).”
He also highlighted the risks associated with implementing the proposal. Since slashing losses are proportional to the weight of a validator, raising the max balance cap can also expose stakers to much higher slashing penalties.
Written by
Ayush Pande
Ayush Pande is a hardware, gaming, and crypto writer based in India. He's a tech enthusiast who's fascinated by the potential of blockchain technology.
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