What impact will Ethereum's new upgrade Pectra bring?
Ethereum is expected to launch an upgrade called Pectra in early 2025, aiming to make the staking process more flexible and efficient. According to relevant proposals, Pectra will introduce multiple EIPs (Ethereum Improvement Proposals) to improve the current validator activation, reward system, and provide participants with greater autonomy. Therefore, we will deeply analyze the three major changes that staking will face after the Pectra upgrade.
1. Faster and more flexible validator activation mechanism
Since December 2020, the rule of locking 32 Ether as a single validator quota has continued to this day, while there are also restrictions on queuing delays during activation. To address this pain point, Pectra has made two main changes:
First is EIP-6110, which shortens the validator approval process from potentially several hours to a few minutes. This means that if you want to deploy a new validator node, the processing after submitting the deposit will be more immediate, and you do not need to wait for a long multi-voting period of about 7 hours to start staking.
Furthermore, the EIP-7251 in Pectra introduces a new concept of 'maximum effective balance' (maxEB), allowing each validator to stake up to 2,048 Ether at once. The previous rule of only being able to stake 32 Ether as one 'unit' will change to customizable staking scales, meaning that if users have a larger amount of Ether, they can also combine it under the same validator, reducing the number of nodes and alleviating network burden.
2. Auto-compounding rewards and cost reduction adjustments
Another significant change in Pectra is the Auto-Compounding feature. In the future, new validators with a 0x02 prefix will be added, supporting automatic incorporation of earned rewards into the principal, resulting in a compounding effect. However, the rewards accumulated from compounding will not be automatically withdrawn; if withdrawal is needed, Gas fees will apply.
Moreover, in the past, if a validator suffered from so-called 'Slashing' (penalty for violations), their balance would initially be deducted by 1/32 at once. According to Pectra's proposed changes, the initial penalty will be significantly reduced to 1/4096, which is originally 1/128. This way, while maintaining the severity of penalties, it also significantly reduces the economic loss for first-time offenders. As for offline or missed block penalties, they will still be the same as before, increasing based on the validator's effective balance ratio.
3. Independent exit rights outside of the operator
Currently, there are many delegated staking services on the market, but if users want to exit early, they often need the service provider to pre-sign exit information, making the process cumbersome and controlled by others. Pectra will change this situation through EIP-7002, allowing users to initiate an active exit through the Execution Layer without relying on the operator's 'pre-signed exit information'.
In other words, even if you are staking on an exchange or third-party platform, once Pectra is in effect, you have the opportunity to trigger the exit process yourself, safely withdraw your Ether and rewards back to your private wallet, thus better protecting user sovereignty. In addition, this can also avoid the risk of users' assets being restricted in the event of operator bankruptcy or issues.
Overall, the three major changes of the Pectra upgrade demonstrate the continuous efforts of the developer community and the Ethereum Foundation to improve the staking experience, which will also bring more reasonable liquidity and optimized network operations.
For large participants, the new proposal can simplify the number of nodes and achieve better compound interest benefits;
For small stakers or those using third-party services, the release of the exit mechanism also increases their sense of security.
Overall, Pectra will move Ethereum towards a PoS system that is 'more flexible and secure'. As the official launch date in early 2025 approaches, the Ethereum community continues to pay attention to the final details of Pectra, hoping to enhance the staking experience for a broader user base.
'What will happen after the Ethereum Pectra upgrade? Will staking be more user-friendly? Check out the three major advantages at once!' This article was first published in 'Crypto City'
