An Upgrade to Slow Down Ethereumย (ETH) Staking
Developers of the Ethereumย (ETH) ecologicalย system have announced that an upcoming upgrade, known as Ethereumย (ETH) Cancun-Deneb (Dencun), will introduce a mechanism to adjust the network staking rate. The upgrade, scheduled for late October 2023, is divided into two parts: Deneb, focusing on the Consensus Layer, and Cancun, targeting the Execution Layer. As part of this upgrade, a proposition wasย known EIP-7514 will modify the โchurn limitโ function to set an upper bound. The churn limit controls the number of validators allowed to join or exit the network within a specific timeframe. By reducing the churn limit, developers intendย to address the economic and technical consequences of liquid staking more effectively.
โThis proposition intendsย to mitigate the negative externalities of very highย degree of total Ethereumย (ETH) supply staked before aย suitable solution is implemented.โ
The core developers believe that slowing down theย expansion rate of staked Ethereumย (ETH) is necessary. Core developer Tim Beiko describes that this change will slow down the percentage increase of Ethereumย (ETH) stake in the worst-case scenario. Dankrad Feist, another developer, outlines that reducing the churn limit will provide more time for research and implementation of solutions related to liquid staking.
Ethereumย (ETH) Staking Outlook
The Ethereumย (ETH) Cancun-Deneb upgrade likewise includes EIP-4844, which introduces Proto-Danksharding as a transitional phase towards full Danksharding. Thisย function is expected toย lower gas fees and increase transaction throughput by utilizing data โblobs.โ Since April, the validator activation queue has consistently remained full after Ethereumย (ETH) withdrawals were introduced.
Liquid staking has gained wholeย lotย of popularity in the Ethereumย (ETH) ecologicalย system, with Lido dominating as it holds approximately one- third of all staked Ethereumย (ETH). According to Beaconcha.in, theย present total amount of Ethereumย (ETH) staked is 25.4 Million, valued at around $41.5 billion.
Hot Take: Ethereumย (ETH) Upgrade Aims to Address Staking Concerns
The upcoming Ethereumย (ETH) Cancun-Deneb upgrade introduces changes to the networkโs staking rate and churn limit to mitigate theย capacity negative effects of high levels of staked Ethereumย (ETH). Developers recognize the need for a slower growth rate in staked Ethereumย (ETH) to allow time for research and implementation of solutions related to liquid staking. The upgrade likewise includes features like Proto-Danksharding, which aims toย lower gas fees and increase transaction throughput. With the popularity of liquid staking on the rise, it isย importantย to address these concerns proactively to secure the stability and sustainability of the Ethereumย (ETH) ecosystem.
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