Ethereum Network Hits 1M Validators with $114B Staked

Data from a Dune Analytics dashboard created by Hildobby, which tracks Ethereum staking progress, shows that the total number of validators on the Ethereum blockchain reached the one million mark on March 28. These validators have staked over 32 million of Ether, valued at approximately $114 billion based on current market prices. This amount constitutes about 26% of the total ETH supply.

Over 9.6 million ETH, which is roughly 30% of the total, is staked using the Ether staking pool Lido, a liquid staking platform for proof-of-stake (PoS) cryptocurrencies. Coinbase is in second position with 14%, 4.5 ETH and 141,000 validators. Binance secures the third spot with 39,000 validators staking 1.24 million ETH, representing 3.9% of the total supply. Staking pools remain popular because they allow individuals with smaller amounts of Ethereum to pool their assets and participate.

Validators on Ethereum play an important role in maintaining the security of the blockchain by monitoring malicious transactions, such as double-spending. They do so by staking 32 ETH in return for staking rewards.

Are More Validators Good for Ethereum?

While more validators generally enhance blockchain security, some community members believe too many validators could pose a problem. Evan Van Ness, formerly the “Chief Decentralization Officer” at the Ethereum Foundation, said there’s arguably already “too much” staked. Gabriel Weide, the operator of a staking pool, stated that too many validators could conceivably lead to failed transactions.

Nr. of validator is issue (too many can ultimatively lead to failed transactions). But the max. effective staking amount (>32ETH) should mitigate that risk.

— Gabriel Weide (@AlphapingG) March 27, 2024

Meanwhile, the head of engineering at Coinbase Wallet, Peter Kim, said while the number of validators is “impressive,” it’s “artificially inflated by the 32 ETH cap.” However, he suggested that it would change soon.

Kim was referring to the imminent Pectra upgrade that will increase the maximum amount of staked ETH per validator to as high as 2,048 Ether. This is anticipated to occur by the end of 2024 and will probably reduce the number of validators.

As the number of validators continues to grow, Ethereum co-founder Vitalik Buterin has proposed a plan to boost Ethereum’s decentralization. In a March 27 blog post, Buterin suggested penalizing validators in proportion to their average failure rate. He said failure from multiple validators controlled by the same entity could receive a higher penalty. This approach could reduce the advantage of large ETH stakers over smaller ones, according to Buterin.