Ethereum Developers May Increase Validator Limit: What Does This Mean?

• Ethereum core developers are considering increasing the validator balance from the current 32 ETH to 2,048 ETH per validator.
• Currently, Ethereum validators are subject to a minimum and maximum effective balance limit of 32 ETH.
• There are currently 600,000 active validators and an additional 90,000 validators waiting to be activated.

Ethereum core developers aim to increase the validator balance to improve the efficiency of the network.

ETH Developers Want to Increase Validator Limit

Ethereum core developers are considering increasing the validator balance from the current 32 ETH to 2,048 ETH per validator.

Currently, Ethereum validators are subject to a minimum and maximum effective balance limit of 32 ETH. This requires launching multiple validators when large-scale staking operations want to achieve returns in amounts greater than this.

Unsurprisingly, this practice has led to a significant increase in the number of validators. There are currently 600,000 active validators and an additional 90,000 validators waiting to be activated.

Michael Neuder, an Ethereum Foundation researcher and one of the leading advocates of the proposed change, highlighted the necessity of this increase during the latest Ethereum core developer consensus meeting held last Friday. Neuder noted that the current validator limit encourages centralization but unintentionally leads to an increase in the size of the validator set.

Neuder stated that increasing the limit could slow down the expansion of the active validator set and ultimately improve the efficiency of the network in achieving finality in a single Ethereum slot.

Automatic Compound Validator Rewards in Ethereum

The proposed increase would allow for the automatic compounding of validator rewards. Currently, rewards earned beyond the 32 ETH limit must be redirected elsewhere to earn staking returns. If the limit is removed, these rewards can be immediately compounded, providing validators with a more effective way to earn higher profits from their staked ETH.

The proposal also claims to address operational concerns of larger node operators, including exchanges like Coinbase, which currently have tens of thousands of validators due to the current 32 ETH per validator limit.

Increasing the maximum effective validator balance could allow such operators to manage fewer but higher staked validators, potentially resulting in less complexity. However, Neuder also highlighted the risks associated with this change, such as the possibility of higher penalties for accidental double-signing or invalid proposals, also known as “slash”.