tl;dr
The Ethereum blockchain has experienced a significant increase in the active validator set following a system upgrade last year, which has led to concerns about technical capacity and centralization. This rise in validators, while typically seen as a positive sign of increased adoption, poses challe...
The Ethereum blockchain has experienced a significant increase in the active validator set following a system upgrade last year, which has led to concerns about technical capacity and centralization. This rise in validators, while typically seen as a positive sign of increased adoption, poses challenges related to bandwidth and potential network centralization. The increased computational power required for a larger validator set could lead to certain nodes being unable to keep pace with the network, resulting in a risk of centralization over time. The uncertainty of future staking demand and the potential for rapid growth further complicates this issue.
The rapidly rising validator count on the Ethereum blockchain following the Shapella upgrade in April last year is causing concerns about technical capacity and centralization, Fidelity Digital Assets wrote in a research report on Thursday. Fidelity noted that “with the lowered risk from increased liquidity, the active validator count has risen by 74%,” and said “future roadmap upgrades will become more difficult” with this larger set. A large validator count is a concern because “bandwidth and latency are critical in a large validator set network, where each validator must independently download the latest data and verify state change proposals within a small time frame,” analyst Daniel Gray wrote, adding that "the larger the block (data), the more computing power needed to process and re-execute the transactions before the next slot." Every new validator adds a further connection to the network which increases the overall bandwidth that is needed to maintain consensus, the note said. While the growth in the size of the validator set has slowed recently, it's unclear what the situation may be in a year from now, the report said; therefore, the possibility of rapid growth could be a problem due to centralization and bandwidth risks.
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