Increasing the validator balance limit from 32ETH to 2048ETH: Will it cause validator centralization?

Raising the validator balance limit from 32ETH to 2048ETH: Will it lead to centralization?

At the recent Ethereum core developer consensus meeting, Michael Neuder, a researcher at the Ethereum Foundation, proposed increasing the maximum validator balance from 32 ETH to 2048 ETH. Jfab.eth, the marketing director of Metis, interpreted the purpose and impact of this proposal.

One key clarification: validators ≠ full nodes, as a full node can actually have hundreds of validators. Therefore, even without this upgrade, centralization of validators may already exist. This upgrade does not have any effect on centralization or decentralization.

Why is this upgrade necessary? 1. To achieve single-slot finality; 2. To implement proposer-builder separation (ePBS); 3. To relieve the burden on the Ethereum P2P network. Mainly the burden on Ethereum’s P2P network. The fundamental reason why Ethereum was unable to confirm finality within 25 minutes on May 12 was due to the increase in the validator set, which led to high resource utilization on the beacon node.

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The two main benefits are: 1. Democratization of compounding staking; 2. Reduced operational expenses in managing many validators. Some drawbacks of the implementation include the simplicity of the current plan and the consideration of the impact of the committee. However, based on what I’ve read, it seems to be more beneficial than detrimental.

Reference: https://twitter.com/josefabregab/status/1671330856336764929

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