Ethereum’s core developers are actively discussing a proposal to increase the maximum validator balance from 32 ETH to 2,048 ETH per validator, aiming to address operational concerns and improve network efficiency. The proposal, which was first introduced by Ethereum developers Francesco D’Amato, Mike Neuder, Justin Drake, and Aditya Asgaonkar, suggests raising the cap on validator stake while keeping the minimum at 32 ETH.

ETH validators

The existing limit of 32 ETH has resulted in a significant increase in the validator count, with more than 600,000 validators currently active and an additional 90,000 validators awaiting activation.

Large-scale staking operations have been forced to create multiple validators to earn yield on amounts exceeding the cap. This situation has prompted the consideration of raising the cap to reduce the need for numerous validators.

Michael Neuder, an Ethereum Foundation researcher and supporter of the proposed change, emphasized that while the existing cap promotes decentralization, it unintentionally inflates the validator set size. By increasing the cap, the expansion of the active validator set could be slowed down, thereby improving the network’s efficiency in achieving finality within a single Ethereum slot.

By raising the validator cap, the proposed change opens up the opportunity for auto-compounding validator rewards. Presently, rewards exceeding the 32 ETH cap need to be redirected elsewhere to generate staking yield. However, if the cap is increased, validators would gain the ability to instantly compound their rewards, thereby enhancing their earnings from the staked ETH.

In an effort to address the concerns of larger node operators, including exchanges like Coinbase, the proposal seeks to raise the maximum effective validator balance. This adjustment would enable these operators to manage fewer validators with higher stakes, potentially reducing operational complexity.

However, the proposal does come with associated risks, such as the potential for higher penalties for accidental double attestations or proposals, commonly known as “slashing.” The core developers continue to debate the implementation details of the proposal, and discussions are taking place on social platforms like ETHMagicians and Discord.

The current waiting time for users to run a validator node on Ethereum has exceeded one month due to the low validator limits. The proposed increase in the limit aims to alleviate this issue and accommodate the significant interest in setting up Ethereum validator nodes. The rise in demand for validators is likely driven by large ether holders seeking to earn passive income rather than immediately cashing out.

While the proposal is still under debate and not actively being worked on, it has generated significant attention within the Ethereum community. The outcome of these discussions will have implications for Ethereum’s staking ecosystem and its overall network efficiency.