The rapid increase in Validator count on the Ethereum blockchain serves as a prime example of the network’s growth. However, the recent Shapella Upgrade in April of last year has raised concerns regarding centralization and technical capacity. This prompted Fidelity Digital Assets to publish a research paper on Thursday.
Fidelity notes that with the decrease in risk due to increased liquidity, the active validator count has risen by 74%. They also mention that future roadmap upgrades will become more challenging with this larger set now available.
The Shapella Upgrade marked a significant milestone as it allowed for the withdrawal of staked Ethereum (ETH) for validators, who play a crucial role in securing and verifying transactions on the blockchain.
The number of validators has become a pressing issue as bandwidth and latency are vital in a network with a large validator set. Each validator must independently download the latest data and verify state change proposals within a short time frame. Analyst Daniel Gray adds that the larger the block (data), the more computing power is needed to process and re-execute transactions before the next slot.
Moreover, Fidelity notes that each new validator adds a second connection to the network, increasing the bandwidth required to maintain consensus. Gray raises concerns that with the growing bandwidth requirements, self-hosted nodes may drop from the network, leading to increased centralization over time. This is because only institution-owned data centers may have the hardware to keep up with the network’s demands.
Although the size of validator sets has decreased in recent years, it is unclear how the situation will be in the future. The report states that the possibility of rapid growth could pose a problem due to centralization and bandwidth risks.
Increasing the number of validators has always been a challenge, but it is also a good problem as it represents growth in adoption and security for the Ethereum blockchain. However, accurately predicting staking demand in the future is impossible, making it a difficult situation to navigate.
