Key Risks in Ethereum's Pectra Upgrade
According to findings from Liquid Collective and Obol, Ethereum's upcoming 2025 upgrade named Pectra harbors significant risks.
Key Risks in Ethereum's Pectra Upgrade. Image: Bloomberg
Research conducted by Liquid Collective and Obol highlights various risks associated with Ethereum's next major upgrade, Pectra, slated for early 2025.
Matt Leisinger, Product Director at Alluvial, the software development company supporting Liquid Collective, shared with Cointelegraph:
"Our latest report with Obol underscores the importance of addressing correlated risks for Ethereum and protocol slashing penalties."
The Ethereum Foundation has not yet commented on this report.
Risks from Client Software and Node Operations
The research team identifies that a critical bug in a client application could lead to slashing penalties and network disruption.
Slashing involves the Proof-of-Stake network penalizing and seizing assets from validators exhibiting malicious behavior, violating validation principles, or posing risks to the system.
Moreover, staking through a single node operator can result in downtime and slashing risks for staked assets. Therefore, network operator diversity is crucial to maintaining network health and mitigating single-point failures.
According to the report, if 1.1% of the network faces slashing, 0.1% of the stake will be lost. Correspondingly, if 33.4% of the network faces slashing, the entire stake could be at risk.
Simulated scenarios illustrating slashing consequences. Source: Liquid Collective
Leisinger comments:
"Every staker and service provider must rigorously assess correlation and diversity to minimize potential risks, even when using reliable node operation software."
Concerns over Cloud Provider Diversity
The study also addresses the need to expand geographical scope for validators and cloud providers. Recent service interruptions by Hetzner and AWS serve as examples.
Decentralized verification technology (DVT) could enhance validator recovery capabilities by reducing correlation risks.
Geographical distribution map of Ethereum validators supporting Proof-of-Stake consensus mechanism. Source: ETH2 NodeWatch
Leisinger adds:
"For long-term resilience and widespread adoption, staking configurations must prioritize operator and validator diversity."
Overview of the Pectra Upgrade
Pectra represents Ethereum's next significant upgrade following the success of Dencun in March.
Pectra will integrate Prague and Electra upgrades, focusing on network execution changes and consensus layer improvements. Scheduled for Q1 2025, Pectra will also include Ethereum Improvement Proposal (EIP) - 7251.
The Pectra upgrade will consolidate staking service providers' ETH quantities by raising the available cap to a maximum of 2,048 ETH, up from the current 32 ETH per validator. This aims to reduce the number of required validators and alleviate burdens on Ethereum's communication layer.
