If you stake ETH, you might know that Ethereum regularly undergoes network updates. While many of these changes take place ‘under the hood’, one such update, named Pectra, will directly affect your staking experience.
Planned for the end of the first quarter of 2025, Pectra will now let you to stake up to 2048 ETH on a single validator, trigger a withdrawal independent of your validator operator, and reduce the time between a validator’s deposit and their activation.
This blog is to help you understand the full implications of these changes, and how it will affect your ETH staking operations.
Raising The Maximum Staking Balance
Ever since the Beacon Chain’s launch in December, 2020, staking has been bound to increments of 32 ETH. Today, over one million validators are active, each one committing this amount individually. Many of these are run by professional staking operators, who run multiple validators on behalf of entities who may have balances equal to or higher than 32 ETH. Yet as the number of validators has grown, so too has protocol traffic and the level of compute carried out by nodes, adding to network overheads.
Pectra aims to reduce the number of validator nodes needed to secure Ethereum, while maintaining the same level of security.
To do this, Pectra will increase the amount of ETH you can stake to a single validator with EIP-7251.
Currently, any amount above 32 ETH on a validator does not receive rewards. After the update, 32 ETH will become the minimum, while 2048 ETH will be the maximum effective balance (maxEB) you can stake. You will also no longer be obliged to stake in 32 ETH increments. If you stake near the 2048 ETH cap, rewards will accrue until this maximum balance is reached. Any amount over this will be pushed to your withdrawal address as before. If you run many validators, you can also consolidate these to a single one, without exiting or missing rewards.
A new validator prefix, 0x02, will be introduced to support these changes. This is distinct from the current 0x01 type. This new validator address type also supports auto-compounding. However, while rewards will now auto-compound, you will not receive them automatically. You’ll be required to manually skim rewards, triggering a gas cost.
Although the number of Ethereum validators needed will likely decrease following Pectra, it should be noted that your rewards will not be affected if you choose to roll your stake to a single one. The amount of ETH you secure from staking one validator with 64 ETH, for example, will remain the same as though you were running two separate validators, each with a balance of 32 ETH.
We understand that our institutional customers have different preferences regarding the trade-off between the auto-compounding benefit and the need for a manual process to manage the balance level and withdraw rewards. This is why we will continue to support the 0x01 format, and provide more detailed guidance on recommended setups in the future.
For both the old and the new types of validators, the cost of slashing will be significantly reduced. The initial slashing amount is supposed to decrease by 128x from 1/32 of your balance to 1/4096 of your effective balance.
Downtime penalties and missed rewards remain the same as before and scale linearly with your effective balance independent of the validator type.
Withdraw ETH Independent of Your Node Operator
No matter which type of validator you choose, you’ll be able to withdraw your ETH or exit your validator completely independent of your staking operator.
This change, introduced by EIP-7002, will let you trigger a withdrawal or exit with a transaction on the execution layer, giving you more control over your principal and rewards. This transaction will incur a gas fee, and the withdrawal is visible as a normal transaction in the body of the block it is included in, simplifying tracking and reporting.
Previously, to withdraw your ETH meant relying on a ‘pre-signed exit message’ provided by your validator operator. Now, you don’t need to manage these to comply with business continuity compliance needs. The ability to withdraw your stake will be fully independent of your validator operator.
Shorter Time to Validator Activation
Pectra will also reduce the time your deposit transaction is submitted and processed from hours to minutes.
This is achieved by changing how deposits are processed on the Consensus Layer.
As mentioned, 32 ETH minimum is needed to become a validator.
With Pectra’s EIP-6110, validator deposits will be appended directly into the Execution Layer block structure. This reduces deposit processing time to minutes, rather than hours, as these transactions are processed as soon as they appear in Execution Layer blocks.
Conclusion
Once successfully implemented, Pectra will deliver net benefits to the protocol while also improving your staking experience.
Fewer validators improve network efficiency, with the side effect of strengthening small, traditional stakers via auto-compounding.
Blockdaemon will offer our institutional customers both the old and the new validator types and also add support for customer triggered withdrawals. These improvements will be ready at Pectra’s go-live, or very shortly after once the fork has stabilized.
Your validators will run on the same reliable infrastructure, use the same clients, and be subject to entry and exit queues as always, no matter which option you choose.
Feel free to reach out to a member of our team if you have any questions, or sign up to the Blockdaemon Ethereum Newsletter for ongoing updates as we approach the Pectra upgrade.
