Main risks identified in the report – Crypto News BTC

As Ethereum prepares for the Pectra upgrade in early 2025, a recent analysis report published by Liquid Collective and Obol revealed several related risks.

The report highlights the importance of consumer, operator and cloud diversity, as well as issues related to limited adoption of distributed validator expertise (DVT).

Speaking to Cointelegraph, Matt Leisinger, chief product officer of Alluvial, a software development company supporting Liquid Collective, said:

“Our latest report with Obol highlights the growing importance of addressing the dangers associated with Ethereum staking and sanctions at the protocol level.”

Cointelegraph reached out to the Ethereum Foundation but did not receive a response prior to publication.

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Dangers for the consumer and the operator

Regarding consensus and execution buyers, the report warns that “a major bug in a dominant buyer” can result in “substantial penalties and community instability.”

As an elementary part of Ethereum's consensus mechanism, staking via a single node operator can expose staked assets to downtime and mintage risks.

Regarding staking, the report warns that “operator diversity is essential to maintaining community well-being and avoiding single drivers of failure.”

Leisinger reinforced this claim in the report, telling Cointelegraph:

“Every responder and repair provider must rigorously evaluate threat correlation, variety, and mitigation to prevent potential harm, even from trusted node operators.”

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Cloud Variety Issues

The report also criticized the need for broad geographic distribution of validators and cloud providers, citing “recent outages, such as those at Hetzner and AWS.”

He explained that TVP can significantly help this strategy, improving “validator resilience by decreasing correlated risks.”

Leisinger added:

“For long-term resilience and institutional adoption, it is essential that staking configurations prioritize the variety of node operators and validators.”

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Pectras are getting better

The upcoming Ethereum Pectra upgrade combines the Prague and Electra upgrades, specializing in adjustments to the community execution and consensus layers respectively.

Petra is expected to go live in Q1 2025 and adopt Ethereum Improvement Proposal (EIP)-7251.

According to the report, “the Pectra upgrade will allow staking providers to consolidate their stake in fewer validators by raising the most effective balance to 2,048 ETH.”

The change in staking limit will reduce the number of validators required and ease pressure on Ethereum's communication layer.

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