On June 15, core Ethereum (ETH) developers made a proposal to increase the minimum staking limit on the blockchain from the current 32 ETH to 2048 ETH, representing a breakneck increase of 64-fold. The move would substantially reduce Ethereum’s decentralization as only wealthy investors could afford to become validators.

Minimum Ethereum Staking Limit Could Jump from $55.3K to $3.54M

Solo staking on Ethereum (ETH), the world’s second-biggest blockchain network, may become 64x more expensive shortly. Namely, key Ethereum developers submitted a proposal to raise the minimum amount of staked ETH required to become a validator from 32 to 2048 ETH.

In dollar terms, the minimum amount users are required to stake to be an Ethereum validator is $55,364, based on the coin’s current price of $1,730. If the proposal is passed, that figure will skyrocket to $3.54 million.

The proposal, which emerged during a consensus meeting of Ethereum core developers, was put forward by Ethereum Foundation research specialist Michael Neuder. While the current 32 ETH staking limit makes it significantly easier to join the blockchain as its validator and makes it more decentralized, it also enlarges the validator set size, Neuter noted.

In turn, by drastically raising the limit, the Ethereum network would become more efficient over time, the researcher argued. Neuter also proposed the auto-compounding of validator rewords – a move that would enable validators to make greater profits on their staked Ether.

What is Solo Staking and Why is it Important?

Ethereum solo staking refers to participating in the Ethereum network’s proof-of-stake consensus algorithm as an individual validator rather than joining a staking pool. Through this practice, users can secure the Ethereum network and earn rewards by holding and staking their own Ether, thereby contributing to the decentralization and security of the blockchain.

However, the network will be more centralized if the minimum staking limit sees the proposed dramatic increase. This is because imposing a 2048 ETH staking limit would disproportionately favor wealthy investors while making it financially inaccessible for a significant portion of smaller participants.

Earlier this year, Ethereum fully transitioned from the proof-of-work to the proof-of-stake consensus mechanism following the so-called ‘Shapella upgrade,” which propelled ETH’s price above $2,000 in April. The development brought a series of updates, but most notably, it enabled investors to unstake their locked ETH.

This article originally appeared on The Tokenist

Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.