One year after the historic merger of the Ethereum mainnet with the Ethereum 2.0 Beacon Chain, developers are still addressing challenges that emerged post-merge. One such challenge is the issue of validator sprawl, which has prompted the proposal of a new Ethereum Improvement Proposal (EIP) called EIP-7514.
Validator sprawl refers to the phenomenon where the number of validators on the network increases significantly, leading to various issues such as decreased network performance, increased centralization risks, and higher costs for network participants. This problem arose after the merge due to the narrative that anyone could become a validator simply by staking their Ethereum and running a validator node.
While the decentralization of validators is a crucial aspect of a secure and robust blockchain network, an excessive number of validators can have detrimental effects on its overall health. Addressing this issue has become a priority for Ethereum developers, who have proposed EIP-7514 as a potential solution.
EIP-7514 aims to tackle validator sprawl by introducing a mechanism called “Economic Dissuasive Protocol” (EDP) that encourages validators to consolidate their resources and form validator pools. The proposal suggests that these validator pools should be governed by a committee of elected representatives, which would make decisions related to pool management and distribution of rewards.
The EDP mechanism implemented through EIP-7514 introduces a sliding scale for validator rewards based on the size of the validator pool. Smaller pools with a limited number of validators receive a higher reward percentage, while larger pools face diminishing returns. This approach incentivizes validators to join existing pools and discourages the creation of new ones.
By consolidating validators into larger pools, EIP-7514 aims to improve network efficiency and reduce the overall number of validators. This consolidation is expected to lead to better performance, increased security, and a more equitable distribution of rewards within the network. Additionally, it helps mitigate the centralization risks associated with a high number of validators, as the power is distributed among a limited number of pools instead of individual validators.
The proposal of EIP-7514 reflects the continuous evolution of the Ethereum protocol to address emerging challenges and ensure the network’s long-term sustainability. However, it is important to note that any changes to the Ethereum protocol require careful consideration and community consensus. EIP-7514 is currently under review and open for feedback from the Ethereum community before it can be implemented.
Validator sprawl was an unforeseen consequence of the merge, but with the introduction of EIP-7514, developers are actively working to find a solution. By striking a balance between decentralization and network efficiency, Ethereum aims to create a more sustainable ecosystem that can support its growing user base and evolving needs.