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Intro

There is no official roadmap for Ethereum, as it is predicated more on rough community consensus. However, a high-level, noncontroversial plan stretching into 2023-24 is generally regarded as the agreed-upon path for the project. A more technical roadmap with the progress of each step filled in was updated by Vitalik Buterin in December 2023. Specific developments are tied to future upgrades and are always subject to change. A high-level diagram of the roadmap can be seen below.

Unofficial Ethereum roadmap (with progress bars) spanning into 2023. Source

Beyond that, the roadmap can be broken up into the following informal stages:

• The Merge: Merging consensus and execution layers, removes PoW.
• The Surge: introducing sharding, ~2023.
• The Verge: Optimise for storage and state size.
• The Purge: Reduce congestion and improve storage.
• The Splurge: Miscellaneous optimizations.

Source: Coinbase

With the transition to PoS, withdrawals enabled, and the rollout of blobs behind us, the Ethereum community turns its attention to Pectra, the next upgrade that is currently targeting a Q1 2025 release. One aspect of Pectra is MaxEB. Let's dig in.

EIP-7521

EIP-7521, also known as MaxEB, encompasses several proposed upgrades aimed at enhancing Ethereum's Proof-of-Stake (PoS) mechanism. While the specific features and functionalities are still being finalized, the main components likely to be included are:

1. Increasing MAX_EFFECTIVE_BALANCE: The upgrade proposes raising the MAX_EFFECTIVE_BALANCE from 32 ETH to 2,048 ETH. This change does not affect the minimum balance of 32 ETH required to activate a validator. However, it increases the balance that can influence rewards and penalties for validators. Currently, Ethereum caps effective balance calculations at 32 ETH, meaning validators do not earn additional rewards for having more than this amount. With the new cap, validators can benefit from having higher balances, potentially increasing their likelihood of being chosen for specific duties, such as block proposals.

2. Reducing Initial Slashing Penalties: The initial slashing penalty may be reduced from 1/32 of a validator’s balance to 1/4096. This change aims to lower barriers for higher balance validators. High penalties have deterred some from staking more ETH, as slashing penalties are proportional to the validator’s balance. Research indicates that higher balance validators could face disproportionate penalties, making this adjustment necessary.

3. Consolidating Existing Validators: The ability to consolidate existing validators is under discussion. This could be triggered by the consensus layer (CL), validator keys, or the execution layer (EL), possibly using withdrawal credentials. Consolidation would streamline the management of validators, making it easier for users to handle multiple stakes.

4. Setting Custom Thresholds for Automatic Sweeps: A proposed feature is setting a custom threshold to automatically sweep ETH from the validator to the withdrawal address. This functionality might be separated into its own EIP, potentially included in the upcoming Prague+Electra ('Pectra') upgrade.

EIP-7002: Execution Layer Partial Withdrawals

EIP-7002, a separate but related upgrade, addresses the execution layer partial withdrawals. Increasing MAX_EFFECTIVE_BALANCE to 2,048 ETH would result in automatic withdrawal sweeps occurring less frequently, only taking place when a validator’s balance exceeds 2,048 ETH. To provide flexibility, EIP-7002 would enable manual triggering of partial withdrawals.

The Rationale for Including EIP-7521 in Pectra

Ethereum's network faces significant overhead with nearly 1 million validators and around 10,000 nodes. Testing has shown issues when the validator set approaches 2 million. To manage this, EIP-7514, part of the Deneb+Cancùn (Dencùn) upgrade, slows validator growth by capping the activation rate at eight validators per epoch. EIP-7521 aims to address these scalability challenges by optimizing validator mechanics.

Timeline for the Pectra Upgrade

The Pectra upgrade, including EIP-7521, is anticipated toward the end of the year, although the exact timing remains uncertain.

Implications for Ethereum Stakers

Stakers need not take immediate action but should be aware of new options and changes in staking rewards behavior. Key points to consider include:

1. Partial Rewards Sweep: Partial rewards will now occur at 2,048 ETH, with the ability to trigger partial withdrawals from the execution layer (EL). Details are pending, but it's likely that keys associated with the funding address will trigger these withdrawals.

2. Validator Consolidations: Consolidations appear to be EL-triggered, similar to partial withdrawals. The specifics will be released, but consolidations are expected to be manageable through the funding address keys.

3. Compounding Rewards: Validators opting not to act will see their stakes compound. As balances exceed 32 ETH, rewards for attestations increase, and the likelihood of block proposal selection improves, up to a balance of 2,048 ETH.

4. Staking Flow Considerations: The potential to deposit more ETH into existing validators might allow token holders to bypass the activation queue by adding to current validators rather than creating new ones. Manual withdrawals from the EL and the benefits and drawbacks of consolidation must be considered.

Conclusion

EIP-7521, or MaxEB, represents a significant advancement in Ethereum’s validator mechanics, aimed at optimizing network performance and providing stakers with new opportunities for rewards. By increasing the maximum effective balance and adjusting slashing penalties, the upgrade offers increased flexibility and strategic options for ETH stakers. As Ethereum evolves with these changes, stakers should remain informed and prepared for the impact on their holdings, recognizing that these proposals are subject to ongoing refinement within the Ethereum community.