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Ethereum: New developments and market volatility call for…

2min Read

Ethereum developers plan to make changes to the validator set. Consequently, the number of validators on the protocol rise despite growing market volatility and depleting liquidity.

Ethereum: New developments and market volatility call for...

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  • Ethereum developers proposed increasing the validator set to reduce the churn limit.
  • The number of validators on Ethereum continued to rise. 

Over the past quarter, Ethereum [ETH] experienced significant volatility due to various events in the crypto sector. But despite market fluctuations, Ethereum’s progress remained on track, and the protocol was actively pursuing further developments in the future.


Realistic or not, here’s ETH’s market cap in BTC’s terms


New proposals made

In the recent developers call, developers brought up possibly reducing the validator churn limit, which determines how fast validators can join or leave the Beacon Chain. The aim was to slow down the growth of the validator set size and implement the change in time for the Deneb/Cancun (Dencun) upgrade.

Ethereum aims to avoid a large validator set size to prevent strain on the peer-to-peer networking layer. A large validator set also makes it challenging to implement future code changes.

The proposed solution by developers is to cap the churn limit at 12 validator entries and exits per epoch. This limit would effectively slow down the growth rate of the validator set, providing more time to explore other ideas for managing validator set growth in the long term.

The proposed change is intended as a short-term measure while further solutions are developed.

At press time, there were 672,507 validators on the Ethereum network. According to Staking Rewards’ data, over the last month, this number has grown by 9.26%.

Source: Staking Rewards

Even though validators were showing optimism toward Ethereum, things could take a turn for the worse for ETH, going forward.

What should buyers and sellers do?

According to Greeks.live’s data, cryptocurrencies experienced a V-shaped market. This was indicated when ETH initially dropped below $1,875 but quickly rebounded during Asian trading hours to recover its value. Surprisingly, the options market did not show a significant reaction to these movements.

In their previous market analyses, Greeks.live pointed out that the crypto market is losing liquidity, making it vulnerable to sudden spikes and V-shaped movements. Even small momentum can lead to widespread price changes.


Is your portfolio green? Check out the Ethereum Profit Calculator


According to their analysis, in the current market, sellers should prioritize static protection and have a risk control plan for holding options until expiration.

On the other hand, buyers should take profits promptly and consider using futures to hedge their options dynamically, which can be a more favorable approach.

Source: Greeks.live

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Himalay is a full-time journalist at AMBCrypto. A Computer Science graduate, Himalay writes about crypto with a special focus on the latest coin-based updates. He is a fan of gonzo journalism, transgressive fiction, heavy metal, and Manchester United.
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