Why do you need 32 ETH to be a validator in Ethereum 2.0?

graph shows depositor increase in ethereum 2.0

Key facts:
  • That amount is established by a formula in the network protocol itself.

  • With the advancement to more efficient technologies, this amount could be reduced.

The assumed proximity of the merger (The Merge) of the Ethereum network with the new chain, called Ethereum 2.0, has generated a lot of talk about this topic. Thus, several questions also arose, such as why it is necessary to have 32 ethers (ETH) —and not any other amount— in staking to be able to be a block validator in the new network.

As has been explained in previous publications of this medium, the step to Ethereum 2.0 is getting closer in time and involves a substantial change in network operation. Since the merger is completed, in theory thought for the second half of the year according to the latest versions, the blocks of the chain will be validated using the proof of participation (Proof-of-Stake or PoS) instead of proof of work (PoW).

In practice, this means that It will no longer be necessary to have a mining rig to create new ETH units and validate transactions In the net. Instead, it will be enough to run a node and have the amount of 32 ETH in staking to be able to obtain validator powers.

By establishing this requirement to deposit funds to be a validator, Ethereum seeks to prevent dishonest behavior by validators. In case of acting maliciously, the protocol has a way to penalize those validators, as explained in the Ethereum Foundation site.

According to the CriptoNoticias price index, 32 ETH is equal to USD 62,774 at the time of writing this article. Now, this number was not arbitrarily defined without any basis, but has a reason for being.

32 ETH, the requirement to be a validator in Ethereum 2.0

Toghrul Maharramov explained through a thread on the social network Twitter this topic, about which many users have doubts. Maharramov often discloses technical news about this Ethereum, and is also a senior researcher on the Scroll Tech second layer solution, a ZK-type rollup.

This specialist begins his writing stating that the amount of 32 ETH is determined by Gasper, the consensus mechanism used in Ethereum. More precisely, it is done by Gasper FFG, a gadget (gadget) that the protocol uses to end blocks.

Gasper FFG has a quadratic complexity communication, which is governed by a formula that ensures that all nodes must replicate each message to all other participating nodes. This formula also establishes the number of nodes that can participate.

The ideal for the network would be for as many nodes as possible to participate, as this would increase its efficiency, accessibility, and security. However, this cannot be done, so parameters had to be set to determine a maximum.

One of these parameters is 32 ETH. Another was the completion of a block every 768 seconds (64 batches of 12 seconds or 2 epochs of 32 batches each).

If the 120 million ETH in circulation were used to stake Ethereum 2.0, the formula would indicate that 3.75 million nodes should be transmitting each other 9,765 messages per second. In other words, each node should replicate that amount of information (which is a lot) per second.

Realistically, says Maharramov, it is not the total ETH that is used for staking, but 25% of the total. That is, about 30 million ETH. As of today, the ethers accumulated by Ethereum 2.0 validators are 12,668,773, depending on the site beaconcha.inalthough the number continues to increase for a year.

In this way, with 25% of the ethers in stake, the messages per second would drop to 2,440, a much easier amount to tolerate for most internet connections in the world. As internet connectivity becomes more efficient and improvements in hardware and message compression techniques occur, this 32 ETH requirement could be modified, even lowering to 16 or 8, in Maharramov’s opinion.

graph shows depositor increase in ethereum 2.0
Since November 2020, Ethereum 2.0 deposits have only increased. Source: beaconcha.in

In short, everything explained by this expert can be reduced to the fact that the amount of 32 ETH is something arbitrarily established by the developers of Ethereum in order to regulate the formula that determines the communication between nodes. If fewer ethers were needed, there would be more people in a position to have a validator node. With this, there would be more nodes and the communication between them would become much more difficult to process.

Staking pools, an option to participate in Ethereum 2.0

Of course, not everyone has $62,000 to put into the Ethereum 2.0 contract. However, this does not mean that they cannot participate in the validation of network blocks.

For this there are staking pools. These are “participation pools” (as its literal translation) that they allow many users to accumulate ethers among all of them in order to become validators and earn revenue from your collaboration with Ethereum 2.0.

Why do you need 32 ETH to be a validator in Ethereum 2.0?
In this way the almost 400,000 validators of Ethereum 2.0 are distributed. Font: beaconcha.in

As you can see in the image above, beaconcha.in indicates that the main Ethereum 2.0 staking pool is Kraken, at least as of press time, with 35,000 validators (8.81% of the network). It is closely followed by Lido (30,520 validators, 7.68%), followed by Binance (9,394 validators) and Whales (7,239 validators).

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