Ethereum Core Developers Introduce Proposal to Slow ETH Staking
Ethereum core developers have included EIP-7514 in the upcoming Dencun upgrade to address the rapid growth of Ether (ETH) staking on the network. The proposal aims to buy time for the community to develop a more practical reward scheme for stakers.
Exponential Growth in Validator Sets
In Ethereum’s Proof-of-Stake (PoS) version, validators are randomly selected to confirm transactions and create consecutive blocks known as epochs. Each epoch lasts about 6.4 minutes and consists of 32 slots, with each slot allocated 12 seconds. However, the increasing number of validators poses challenges.
The growing number of validators could strain Ethereum’s networking infrastructure and complicate efforts to achieve single-slot finality. With over 795,000 active validators and projections suggesting that staked ETH could reach 100% of total supply by the end of 2024, Ethereum faces technical and economic concerns.
Potential Uncharted Waters
Ethereum Foundation researcher Dankrad Feist warns that if liquid staking tokens exceed the remaining unstaked ETH market cap, it could lead to an untested economic regime. This scenario may result in similar liquidity and utility in DeFi, even with minimal staking yields. Currently, approximately 25.8 million ETH has been staked, representing 21% of all ETH in circulation.
Conclusion
Ethereum’s inclusion of EIP-7514 demonstrates its commitment to addressing the challenges posed by the rapid growth in ETH staking. By slowing down staking and allowing time for long-term solutions, Ethereum aims to ensure sustainable growth and stability for its network.
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