Ethereum Developers Make Bold Move to Increase Max Effective Balance

The Ethereum network has always been known for its ability to accommodate global investors and different sets of crypto regulatory policies. It remains a leader in smart contracts adoption, and with the proof-of-stake (PoS) still young under the beacon chain, Ethereum's core developers continuously engage with each other on ways to decentralize the system.

Recently, top Ethereum developers including Mike Neuder, Francesco d’Amato, Aditya Asgaonkar, and Justin Drake proposed to increase the current Max Effective Balance (MaxEB) from 32 ETH to a whopping 2048 ETH per validator.

Why Increase MaxEB?

The current MaxEB is seen as limiting Ethereum's decentralization progress. Increasing the MaxEB will unblock future consensus layer upgrades on the roadmap, improve the performance of the current consensus mechanism and p2p layer, and enhance operational efficiency for both small and large-scale validators.

What's in it for Solo Validators?

Increasing the MaxEB would bring significant benefits to solo validators, allowing instant compounding of ETH rewards by merely leaving them in the existing validator. This means solo stakers can now compete with large entities like Lido, Coinbase, and Kraken that operate liquid staking programs.

What's the Next Step?

The Ethereum researchers want to cap the MaxEB at 2,048 ETH, which would reduce the current number of validators. However, details of the proposal are open for discussion. Validators are scheduled to vote on the way forward.

Market Outlook

The Ethereum network is unarguably the leader in the decentralized financial ecosystem, and it's no surprise that it has a total value locked of about $24.7 billion with ~100 million non-zero addresses. As at the time of writing, Ethereum (ETH) was trading at $1,727 with a total market capitalization of about $208 billion and a 24-hour trading volume of approximately $4 billion.

In conclusion, increasing the Max Effective Balance is a bold move by Ethereum's core developers. Will the validators vote in favor of the proposal? Only time will tell.