HomeNewsEthereum's Dencun Upgrade: Slowing Down Staking for a Stable Future

Ethereum’s Dencun Upgrade: Slowing Down Staking for a Stable Future

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  • Ethereum’s Dencun upgrade, slated for October 2023, aims to adjust the validator growth rate.
  • This modification provides a buffer for discussions and research, ensuring the stability and security of Ethereum’s staking dynamics.

In light of the latest Ethereum Improvement Proposals, the community gears up for a significant change to the Ethereum network’s staking model. As detailed in the Ethereum Improvement Proposals, the aim is to transition from an exponential growth in validator numbers to a more linear and controlled growth pattern.

Addressing the Staking Surge

With the anticipation of Ethereum’s deposit queue being full, projections showed that the proportion of ETH staked would surge to an alarming 100% by December 2024. The implications? A situation where staking rewards would be minimal but still enticing due to unpredictable yields from Miner Extractable Value (MEV). Liquid staking tokens (LSTs) further fuel this drive as they offer the convenience akin to unstaked ETH.

This rapid staking scenario posed potential issues. For one, an excessive number of validators could amplify the number of gossip messages and increase the Beacon state’s size. Furthermore, the increment in staked assets doesn’t necessarily translate to proportionate security advantages, creating an uncertain staking landscape.

Within the two-fold Ethereum Cancun-Deneb (Dencun) upgrade, a notable inclusion is EIP-7514. This intends to modify the ‘churn limit’, effectively determining how many validators can enter or leave the network within a set period. The primary motivation? To bestow upon developers the breathing room needed to assess the economic and technological repercussions of liquid staking.

Ethereum core developer Tim Beiko emphasized the intent by stating,

“In essence, this would decelerate the speed of ETH stake growth in extreme scenarios.”

Meanwhile, developer Dankrad Feist brought attention to the unclear trajectory of liquid staking. He added that lowering the churn limit now buys valuable time for the community, averting hurried decisions when faced with unforeseen challenges.

Evolving the Ethereum Staking Landscape

But the Dencun upgrade isn’t just about staking adjustments. Another highlight is EIP-4844, introducing Proto-Danksharding, a preliminary phase leading to complete Danksharding. By leveraging data “blobs”, this upgrade promises reduced gas fees and enhanced transaction rates.

Liquid staking’s popularity in the Ethereum ecosystem is undeniable, with platforms like Lido reigning supreme. Current data from Beaconcha.in reports a staggering 25.4 million ETH staked, equating to an estimated worth of $41.5 billion.

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Marcel Knobloch
Marcel Knobloch
Marcel is the managing partner of ETHNews and is also known as Collin Brown in the crypto community. He is a seasoned Bitcoin investor who entered the crypto scene during its early stages and has since become a veteran trader in both the cryptocurrency and forex markets. His journey began in 2012 when he made his first investment in Bitcoin, marking the beginning of his deep-rooted passion for blockchain technology and digital assets. With a mission to demystify the intricacies of blockchain for the masses, Marcel endeavors to bring the world of cryptocurrencies closer to everyone. His insightful reports are dedicated to shedding light on the latest developments and innovations within the realms of Bitcoin, Ethereum, Ripple (XRP), IOTA, VeChain, Cardano, Hedera, and numerous other cryptocurrencies. Marcel's in-depth analysis and commitment to providing accessible information make him a trusted source for both novice and experienced crypto enthusiasts. Marcel's academic background includes a Master's Degree in Business Education, which has equipped him with a solid foundation in financial markets and investment strategies. Over the past decade, he has amassed invaluable experience working with various startups across the globe, enriching his knowledge and understanding of the ever-evolving cryptocurrency landscape. With his wealth of expertise and dedication to empowering others with crypto knowledge, Marcel continues to be a driving force in the cryptocurrency community. Business Email: marcel.knobloch@hotmail.com Phone: +49 160 92211628