Ethereum developers have proposed a new update called EIP-7514, which aims to reduce overload on the Ethereum consensus. The proposal was put forward by Dapplion and Tim Beiko and will be included in the upcoming Dencun update.
EIP-7514 is a proposal to update the maximum validator growth rate from exponential to a linear increase by limiting the epoch churn limit. This comes in response to the rapid increase in Ethereum staking, which has now reached 27 million ETH and accounts for 22.53% of the total ETH supply.
32.26% of these are staked through the cryptocurrency platform Lido, indicating a high level of centralization.
Ethereum co-founder Vitalik Buterin warned against overloading the Ethereum consensus in a blog post last May.
The proposal aims to reduce the churn limit to 8, giving more time to deal with the economic and technical consequences of liquid staking. This will extend the time until more than 50% of ETH is staked and allow for a new hard fork after Dencun. It is estimated that by reducing the Churn Limit, approximately one year can be gained before reaching the 50% threshold.
*This is not investment advice.