Thanks to dapplion, Maxim Merkulov, Mikhail Kalinin, and P2P.org’s Ethereum team for reviewing and providing valuable feedback.
Written by Pavel Iashin, a researcher at P2P.org.
If you have any questions or comments, feel free to reach out to me on X.
Table of Contents
- TL;DR
- Intro
- About the writing
- EIP-7251 in a nutshell
- Autocompounding and Consolidation
- About Slashing
- Essentials
- Pectra Slashing Penalty Changes
- Why does slashing usually happen?
- Slashing Risks Under Consolidation
- Cluster Case
- Delegator Case
- Closing notes
TL;DR
- Due to the decrease in the initial slashing penalty, the total slashing penalty will be significantly reduced in Pectra. The MEB Increase will allow consolidating multiple 32 ETH validators up to 2048 ETH ones.
- The slashing penalty will be the same for any consolidation design, given that the same amount of stake was slashed.
- However, consolidation is riskier for small stake clusters* of validators:
- Consolidation increases the expected stake affected by slashing, and hence the slashing amount for small clusters. However, for large clusters**, the difference between consolidated and nonconsolidated designs tends to disappear.
- Consolidation introduces a higher uncertainty (variance) over slashed amounts; this effect also tends to decrease for large clusters.
- From the delegator's perspective:
- Consolidation doesn’t introduce significantly higher risk if a delegator stakes inside a large cluster.
- Consolidation of other delegators inside the same cluster increases the expected slashing amount for a specific delegator, but the effect is smoothed if it happens inside a large cluster.
Putting it even more shortly: it’s all about the number of validator keys.
*A cluster is a set of nodes/keys united by the same operational environment/setup and hence exposed to the same risk. In the context of this writing, this, more often than not, will mean the set of keys sharing the same key management solution.
**Here, a large cluster is loosely thought to be larger than 2048 keys of 32 ETH validators, or 32 keys of 2048 ETH validators, or just larger than 65k ETH in total. This is the point where full consolidation won’t introduce significant changes in the risk profile. Significance is quite subjective, though; make your own judgment before action.
Intro