Ethereum is gearing up for the Pectra upgrade set to take place in early 2025, and a recent research report released by Liquid Collective and Obol has shed light on various associated risks.
The report emphasizes the significance of diversity among clients, operators, and cloud providers, as well as expresses concerns about the limited adoption of distributed validator technology (DVT).
In a conversation with Cointelegraph, Matt Leisinger, the chief product officer at Alluvial, a software development company supporting Liquid Collective, shared insights on the matter. Despite reaching out to the Ethereum Foundation, Cointelegraph did not receive a response prior to publication.
Client and operator risks were highlighted in the report, cautioning about the possibility of “substantial slashing penalties and network instability” resulting from a major bug in a dominant client. Staking through a single node operator was also flagged as a potential risk, exposing staked assets to downtime and slashing risks.
The report stressed the importance of operator diversity to maintain network health and avoid single points of failure. Leisinger reiterated this point, emphasizing the significance of diversity.
Cloud diversity concerns were also raised in the report, noting the necessity of a widespread geographical spread of validators and cloud providers in light of recent outages at companies like Hetzner and AWS. The report suggested that DVT can play a crucial role in enhancing validator resilience by reducing correlated risks.
The upcoming Pectra upgrade for Ethereum, which combines the Prague and Electra upgrades, is expected to bring changes to the network’s execution and consensus layers. Scheduled to go live in the first quarter of 2025, the upgrade will include the Ethereum Improvement Proposal (EIP)-7251 and allow staking providers to consolidate their stake into fewer validators by increasing the maximum effective balance to 2,048 ETH.
This adjustment in the staking limit aims to reduce the number of validators needed and alleviate pressure on Ethereum’s communication layer.