Ethereum core devs consider raising limit on maximum effective validator balance
A proposal currently under debate by the Ethereum core developer team highlights the constant balancing act between decentralization and efficiency.
Ethereum’s core developers are currently considering a proposal that would significantly raise the maximum effective validator balance cap from 32 ETH to 2,048 ETH, while retaining the minimum staking amount at 32 ETH.
This proposal, if adopted, would have far-reaching implications on the Ethereum network’s operations, particularly in the context of network decentralization and validator set size.
Michael Neuder, a researcher at the Ethereum Foundation and a leading advocate for this change, has argued that the existing validator cap, while ostensibly promoting decentralization, has the unintended consequence of incentivizing operations to set up more and more validators.
Neuder originally posted the proposal, in addition to sharing his perspective during the latest Ethereum core developer consensus meeting held last Friday.
This would be a pivotal change that could redefine the operational dynamics of Ethereum’s network by adjusting the balance between decentralization and efficiency—the balance that is always at stake in an intentionally decentralized blockchain ecosystem.
MAX_EFFECTIVE_BALANCE (abbreviated as MaxEB) is a rule that limits the effective balance of Ethereum validators to 32 ETH. The effective balance is a value derived from the validator’s balance and prior effective balance. This means if a validator stakes more than 32 ETH, any amount over that would not earn them extra yield.
This incentivizes validators to set up additional “validator spots” for each extra 32 ETH they want to stake—in other words, single entities are incentivized to set up multiple validators, making the true measure of decentralization in the network difficult to assess.
Proponents argue that increasing MaxEB would unblock future upgrades on the consensus layer, enhance the performance of the current consensus mechanism and the peer-to-peer (p2p) layer, which is the network of nodes that Ethereum runs on, and improve operational efficiency for validators, regardless of their size.
While arguments in favor of the proposal center around streamlining network growth and validator management, Neuder acknowledges that critics could argue that the upgrade may introduce unnecessary complexity to the ecosystem or open Ethereum to new potential security risks. Nevertheless, the proposal also responded to such potential criticisms by expressing confidence that such eventualities were manageable.