Several related concerns have been identified in a recent study report released by Liquid Collective and Obol as Ethereum gets ready for the Pectra upgrade in early 2025. The research expresses worries about the low adoption of distributed validator technology (DVT) and emphasizes the significance of variety in clients, operators, and clouds. Matt Leisinger, the chief product officer of Alluvial, a software development business that assists Liquid Collective, stated in an interview with Cointelegraph: “Our most recent report with Obol emphasizes how critical it is to address the associated risks and protocol-level penalties associated with Ethereum staking.”
Prior to publishing, they contacted the Ethereum Foundation but never heard back.The paper issued a warning on consensus and execution clients, stating that “substantial slashing penalties and network instability” could result from “a significant bug in a dominant client.” A key component of Ethereum’s consensus process, staking via a single node operator carries a risk of downtime and reducing returns for staked assets.”Operator diversity is crucial for maintaining network health and avoiding single points of failure,” the paper stated in reference to staking. In the report, Leisinger reaffirmed this assertion, telling Cointelegraph: “To prevent potential risks, even from trusted node operators, every stakeholder and service provider must rigorously assess correlation, diversity, and risk mitigation.”A large geographic distribution of validators and cloud providers is also critically examined in the paper, which also mentions “recent outages, such as those at Hetzner and AWS.” It went on to say that DVT can greatly aid with this tactic by improving “validator resilience by reducing correlated risks.” Leisinger went on, “Staking configurations must prioritize node operator and validator diversity for long-term resilience and institutional adoption.”
The Prague and Electra upgrades are combined into the next Ethereum Pectra upgrade, which focuses on modifications to the consensus and network execution levels, respectively. Petra is anticipated to launch with the Ethereum Improvement Proposal (EIP)-7251 in the first quarter of 2025. “By raising the maximum effective balance to 2,048 ETH, the Pectra upgrade will allow staking providers to consolidate their stake into fewer validators,” the paper states. By lowering the staking limit, Ethereum’s communication layer will be under less strain and require fewer validators overall.