Introduction
Ethereum’s upcoming Pectra (Prague/Electra) upgrade aims to improve the efficiency, security, and scalability of the network.
For users of all MetaMask Staking products, this upgrade requires no action—your staking feature will remain exactly the same after the Pectra upgrade. However, several Ethereum Improvement Proposals (EIPs) included in Pectra will bring technical enhancements that may influence the staking landscape moving forward. In this post, we’ll explore the Pectra EIPs that are most impactful for Ethereum validators and stakers, explaining their implications and benefits.
Key Staking & Validator-Related EIPs
The Pectra upgrade bundles several proposals that optimize staking operations, validator performance, and protocol efficiency, including:
EIP-7251: Increase the MAX_EFFECTIVE_BALANCE
EIP-6110: Supply Validator Deposits on Chain
EIP-7002: Execution Layer Triggerable Exits
EIP-7549: Move committee index outside Attestation
EIP-7251: Increase the MAX_EFFECTIVE_BALANCE
Currently, every Ethereum validator’s effective balance is capped at 32 ETH, meaning any ETH that exists on a validator’s balance beyond this amount does not earn staking rewards and is unproductive. For validators with a 0x01-type withdrawal credential, any ETH in excess of 32 ETH is periodically and automatically “swept” (i.e. partially withdrawn) from their validator balance to the Ethereum address defined by their withdrawal credential.
EIP-7251 raises this cap on a validator’s effective balance to 2048 ETH, making it possible to stake any amount of ETH between 32 and 2048 ETH in a single validator. Further, it exempts validators who opt-in from the automated “sweep” process, so these validators’ balances can grow in excess of 32 ETH. Importantly, validators who opt-in to EIP-7251 can still manually trigger partial withdrawals, but this will no longer happen automatically.
Opting in to this feature is not required, and any validators who prefer the current system can continue staking in 32 ETH increments without any change. Operationally, adopting this feature and increasing a validator’s max effective balance requires updating the validator’s withdrawal credential from either the 0x00 or 0x01-type withdrawal credentials, to a new 0x02-type withdrawal credential.
Implications for stakers
This EIP allows large stakers, staking pools, and validator operators to consolidate as many as 64 validators into a single validator, reducing their operational costs. For solo stakers and smaller operators, opting in means any staking rewards in excess of their original 32 ETH deposit will now contribute to their total stake and earn additional rewards. The ability to compound staking rewards provides more incentive to keep these rewards staked, rather than withdrawing them to be used elsewhere. (See here for a detailed breakdown of ETH staking withdrawals).
However, there is an important nuance: the Ethereum protocol does not recognize increases to a validator’s effective balance continuously, even as the validator earns rewards and its balance grows. Instead, a validator’s effective balance increases in discrete 1 ETH steps, but only when the validator's true balance exceeds the next increment by 0.25 ETH. (Read more on hysteresis here).
For example, consider a validator with a 32 ETH balance that has opted into EIP-7251 by updating its withdrawal credential to a 0x02-type credential. Since this validator is exempt from the protocol’s automated partial withdrawals, its balance continues to grow as it earns staking rewards. When its balance reaches 33 ETH, its effective balance remains 32 ETH according to the protocol. Only upon reaching 33.25 ETH does the protocol recognize the increase, updating the validator’s effective balance to 33 ETH and adjusting rewards accordingly.
In short, this change improves the capital efficiency of staking while maintaining Ethereum’s decentralization.
Implications for the Ethereum network
Considering the Ethereum network more broadly, adoption of this feature by large stakers and staking pools will reduce the number of active Ethereum validators, and make P2P messaging between validators across the network more efficient. Overall network congestion will decrease, as fewer validators now need to communicate to reach consensus on the state of the chain.
Implications for MetaMask staking users
For users of MetaMask Staking products, this EIP requires no immediate action—your validator(s) or stake will continue earning rewards as expected. While MetaMask may offer Validator Staking users the option to consolidate their validators in the future, this feature will not be immediately supported when Pectra goes live.
EIP-6110: Supply validator deposits onchain
EIP-6110 shifts validator deposit processing from Ethereum’s Consensus Layer (CL) to the Execution Layer (EL), reducing complexity, improving deposit security, and increasing the speed of activation for newly deposited validators by ~48 hours.
Today, depositing 32 ETH to activate a validator involves sending 32 ETH, along with a payload of other data, to Ethereum’s deposit contract; a smart contract deployed on Ethereum’s EL. From here, this deposit information needs to make its way to Ethereum’s CL, where validators exist and perform the duties expected of them (i.e. block attestations and proposals). Currently, this transfer of deposit data relies on Eth1Data voting. In general, this is the means by which Ethereum’s CL comes to agreement on a common view of Ethereum’s EL, and the deposit contract in particular.
Eth1Data voting is a complicated process that can introduce delays and require multiple confirmations before a newly deposited validator enters the activation queue. (See here, or Ben Edgington’s book for more detail).
EIP-6110 eliminates Eth1Data voting and instead supplies validator deposits directly within Execution Layer blocks. Once this EIP is implemented, deposit transactions will be parsed from EL logs, removing the need for block proposers (i.e. validators on the CL) to track deposits manually.
Implications for stakers and the Ethereum network
EIP-6110 will reduce validator deposit processing time from hours to minutes, eliminate risks and complexity associated with Eth1Data voting, and simplify both client software and the validator deposit UX.
Implications for MetaMask staking users
For users of MetaMask Staking products, this EIP requires no action – your validator(s) or stake will continue earning rewards as expected. For new users of MetaMask Validator Staking (i.e. those who deposit after the Pectra upgrade goes live), the time it takes to activate your validator will be ~48 hours less than it is today (assuming equivalent activation queue lengths).
EIP-7002: execution layer triggerable exits
EIP-7002 allows validator exits to be triggered from Ethereum’s Execution Layer (EL), giving stakers—especially those who delegate the operation of their validator to a third-party—greater control over when their validator exits the network. Additionally, this EIP provides validators who opt-in to EIP-7251 the ability to manually trigger partial withdrawals.
As described in the EIP, Ethereum validators have two keys:
a private key (i.e. active or hot key), which is used on a regular basis to sign attestations and perform validator duties, and
a withdrawal credential, which defines the EOA or smart contract address where a validator’s exited/withdrawn balance is sent. Ultimately, the withdrawal credential is the key that owns the staked ETH and rewards that comprise a validator’s balance.
Today, exiting an Ethereum validator requires using the validator’s private key to sign a voluntary exit message (VEM), which is then submitted to Ethereum’s Consensus Layer (CL) via a CL client. When one delegates the operation of their validator to a third-party operator (e.g. a staking-as-a-service provider, or a staking pool), they entrust that operator with ownership of their validator’s private key, and thereby trust the operator to exit their validator upon request. As a workaround, some non-custodial staking providers like Consensys Staking offer their customers the ability to obtain pre-signed VEMs, giving them the ability to exit their validators unilaterally. However, this is not the case for all providers and is a cumbersome UX for stakers.
EIP-7002 provides an in-protocol improvement to the trust assumptions inherent in delegated staking setups. Once implemented, this EIP enables a validator’s withdrawal credentials (i.e. the EOA or smart contract address defined by the staker) to trustlessly trigger a validator exit. In other words, this EIP adds a new mechanism that allows validators to trigger exits from their Execution Layer (EL) withdrawal credentials. Functionally, these new EL exit messages are appended to an EL block, and processed by the CL.
Implications for stakers
In general, this EIP reduces the trust assumptions inherent in all delegated Ethereum staking setups, and improves redundancy by providing an alternative way to exit a validator in the case of a lost validator private key.
Once prominent staking pools like Lido’s curated module support this EIP, stETH holders will no longer be reliant on the underlying set of permissioned node operators to exit validators to facilitate stETH to ETH redemptions. Rather, the Lido DAO (who controls the staking pool’s withdrawal credentials) can initiate a validator exit directly from Ethereum’s EL. While this presents a risk that the DAO, if corrupted or acting maliciously, could force exit validators and gain control of the staked ETH underlying stETH, Lido's proposed dual governance model (wherein stETH holders can timelock malicious proposals and exit the system before they pass) should mitigate this risk. Note that Lido does not plan to support EIP-7002 immediately when Pectra goes live, and will not support it until dual governance is implemented.
Implications for MetaMask staking users
For users of MetaMask Staking products, this EIP requires no action—your validator(s) or stake will continue earning rewards as expected. The current validator exit flow will still be supported after the Pectra upgrade, so there is no impact to your stake or ability to exit.
EIP-7549: move committee index outside attestation
Lastly, EIP-7549 removes a field—the committee index—from the signed part of the attestation message submitted by Ethereum validators when casting their votes. This allows a reduction in the number of BLS signatures required to validate all votes in an epoch by a factor of 64.
Another outcome of this EIP is that on-chain attestations can now be packed more efficiently into CL blocks, which allows inclusion of 8 slots worth of votes in a block, compared to 2 today, without increasing the block size in bytes. As the EIP states, “in other words, a network with only 1/8 proposers online can still potentially include all votes on-chain”.
Implications for the Ethereum network
While all Ethereum clients can benefit from this EIP, ZK circuits proving Casper Fast Finality Gadget (FFG) consensus are likely to see the most benefit.
Implications for MetaMask staking users
For users of MetaMask Staking products, this EIP requires no action – your validator(s) or stake will continue earning rewards as expected.
Summary
The Pectra upgrade will have a significant impact on Ethereum validators and stakers, introducing EIPs that streamline validator management, reduce network congestion, improve validator deposit efficiency, and empower stakers with more control over validator exits. While MetaMask Staking users do not need to take any immediate action, these EIPs offer exciting opportunities to consolidate stakes, improve capital efficiency, and enjoy faster validator activations.