Update the maximum validator growth rate from an exponential to a linear increase by capping the epoch churn limit.
This proposal aims to mitigate the negative externalities of very high level of total ETH supply staked before a proper solution is implemented. In other words, this proposal accepts the complexities of changing the rewards curve and is meant only to slow down growth.
In the event that the deposit queue stays 100% full, the share of ETH supply staked will reach 50% by May 2024, 75% by September 2024, and 100% by December 2024. While rewards decrease as the validator set size increases, at 100% of ETH supply staked, yearly consensus rewards alone (excluding MEV/transaction fees) for validators still represent ~1.6% of their stake. This small yield does not necessarily dissuade additional capital staking due to the often much higher and unpredictable yields from MEV. As such, the equilibrium point of the validator set size can be close to its maximum possible. Liquid staking tokens (LSTs) also contribute to this, given stakers can use them as they use unstaked ETH.
As the levels of ETH staked increase, more strain is put on the consensus layer. A larger number of validators leads to an increase in gossip messages, as well as a growing Beacon state size. Additionally, as the amount of stake grows, it's unclear how much marginal security benefits come from additional economic weight.
The Beacon Chain validator reward function was chosen before its launch in 2020. PoS research and reward curve design were performed in a pre-MEV world. Much has changed since then, including the Beacon chain achieving unprecedented success, beyond the original intended targets of stake rate. In light of this, it is worth discussing whether Beacon chain validator rewards should be adjusted to better match today's reality, potentially to discourage staking past a certain point.
This EIP does not attempt to do this, but to allow more time for the community to have these discussions. By limiting the epoch churn limit now, the time to reach critical milestones of total ETH supply staked are significantly delayed. This allows more time for research into more comprehensive solutions, and for community consensus around them to emerge.
| Name | Value |
|---|---|
MAX_PER_EPOCH_ACTIVATION_CHURN_LIMIT | 8 |
This requires no changes to the Execution Layer.
get_validator_activation_churn_limit with upper bound MAX_PER_EPOCH_ACTIVATION_CHURN_LIMITprocess_registry_updates to use bounded activation churn limitThe full specification of the proposed change can be found in /specs/deneb/beacon-chain.md.
MAX_PER_EPOCH_CHURN_LIMIT valueDepending on the specific constant selection the churn can decrease at the activation fork epoch. The Beacon chain spec can handle this without issues. During 2023 Q4 (projected Dencun activation) the churn value will range 14-16. The table below compares the projected validator set assuming a continuous full deposit queue.
MAX_PER_EPOCH_CHURN_LIMIT activation date: Dec 01, 2023| Max Churn Limit | 50% ETH staked | 75% ETH staked | 100% ETH staked |
|---|---|---|---|
| inf | May 28, 2024 | Sep 25, 2024 | Dec 18, 2024 |
| 16 | Jul 23, 2024 | Apr 10, 2025 | Dec 26, 2025 |
| 12 | Oct 09, 2024 | Sep 21, 2025 | Sep 04, 2026 |
| 8 | Mar 15, 2025 | Aug 18, 2026 | Jan 21, 2028 |
| 6 | Aug 19, 2025 | Jul 14, 2027 | Jun 08, 2029 |
| 4 | Jun 29, 2026 | May 05, 2029 | Mar 12, 2032 |
MAX_PER_EPOCH_CHURN_LIMIT activation date: Apr 01, 2024| Max Churn Limit | 50% ETH staked | 75% ETH staked | 100% ETH staked |
|---|---|---|---|
| inf | May 28, 2024 | Sep 25, 2024 | Dec 18, 2024 |
| 16 | Jul 01, 2024 | Mar 18, 2025 | Dec 04, 2025 |
| 12 | Aug 01, 2024 | Jul 14, 2025 | Jun 26, 2026 |
| 8 | Oct 01, 2024 | Mar 05, 2026 | Aug 08, 2027 |
| 6 | Dec 01, 2024 | Oct 26, 2026 | Sep 20, 2028 |
| 4 | Apr 02, 2025 | Feb 07, 2028 | Dec 15, 2030 |
Assuming that the earliest the next fork can happen is at the start of 2024 Q3, a value of 8 provides a significant reduction in projected size without causing a big drop in churn at a projected Dencun fork date. A value of 8 prevents reaching a level of 50% ETH staked for at least 1 full year even with a delayed dencun fork.
This EIP introduces backward incompatible changes to the block validation rule set on the consensus layer and must be accompanied by a hard fork.
Test cases for this EIP can be found in the deneb test suite of the consensus-specs repository.
This EIP breaks the symmetry between the validator entry and exit queues, where the former is bound by MAX_PER_EPOCH_ACTIVATION_CHURN_LIMIT while the latter isn't.
Copyright and related rights waived via CC0.