Liquid Collective and Obol report that there are multiple risks associated with the Pectra upgrade planned for early 2025 on Ethereum, including key issues related to clients, operational nodes, and cloud diversity.
Pectra Upgrade Overview
The Pectra upgrade will combine the Prague and Electra upgrades, making significant changes to Ethereum’s execution layer and consensus layer. Expected to launch in the first quarter of 2025, this upgrade will include Ethereum Improvement Proposal EIP-7251. The purpose of this proposal is to increase the maximum effective balance to 2048 ETH to integrate staking, reducing the number of validators required and easing the pressure on Ethereum’s communication layer.
Client and Operational Node Risks
The report focuses on risks related to consensus and execution clients. It warns that significant vulnerabilities in major clients could lead to severe penalties and network instability. As staking is the foundation of Ethereum’s consensus mechanism, relying on a single node operator could expose staked assets to downtime and penalty risks. The report emphasizes the importance of node operator diversity to maintain health and prevent single points of failure.
Cloud Diversity Issues
The report also highlights the necessity of geographic diversity between validators and cloud providers. It cites recent downtime events from major providers like Hetzner and AWS to illustrate the importance of cloud diversity. Decentralized Validator Technology (DVT) is emphasized as a key strategy to enhance validator flexibility and reduce related risks, considered crucial for institutional adoption.
These issues have long been discussed in the Ethereum community, with Vitalik, ETH Taipei, and related topics exploring the next steps for the Ethereum Cancun upgrade and addressing centralization risks in PoS staking.