Ethereum Pectra Upgrade: What it means for stakers
Pectra upgrade marks one of the largest upgrades in Ethereum history. The upgrade fundamentally changes the economics of staking by enabling compounded rewards and earning more rewards over time. The Holesky testnet is currently being deployed as of Feb 24 and testing as of March 7, 2005. The Mainnet release is set for sometime in mid-April.
As one of the world’s leading staking pool companies, we are working to provide you with the best user staking experience in leveraging the Pectra upgrade. Our team is prepared to upgrade the thousands of validators on mainnet and launch a set of features to support Pectra features.
What’s new for stakers?
The Pectra Upgrade brings 11 Ethereum Improvement Proposals (EIPs) to make Ethereum more affordable, efficient, user-friendly, and scalable. These are the key EIPs impacting staking and validators:
EIP-7251: Increase the MAX_EFFECTIVE_BALANCE
- What: Boosts the maximum effective balance to 2048 ETH, enables compounding, and allows balance top-ups.
- Why: Streamlines consensus with fewer, higher-balance validators.
- How: Use a smart contract to consolidate or upgrade validators.
EIP-6110: Onchain Validator Deposits
- What: Process deposits directly on the Execution Layer via smart contract.
- Why: Shrinks deposit wait times from 12 hours to about 13 minutes.
- How: Stake onchain contract.
EIP-7002: Execution Layer Triggerable Withdrawals
- What: Let stakers trigger onchain exits and partial withdrawals, reducing reliance on Stakefish-initiated actions.
- Why: Perfect for protocol projects and a step away from traditional exit messages.
- How: Submit a withdrawal request with your desired amount.
Impact on Compounding rewards
Pectra compound validators is an opt-in process that stakefish will provide on our staking dashboard. For existing validators, you can expect it to work exactly the same: The maximum effective staked is 32 ETH, and partial withdrawals are automatically sent to your wallet.
On the new dashboard, you can opt-in for a compound validator or consolidate an existing validator into a compound validator. The maximum staking is 2048 ETH, and excess of that will be automatically withdrawn. In order to take advantage of compounding, we recommend each validator up to 1900 ETH, leaving room for rewards to accumulate. New rewards will become part of the new effective reward, and generate you compound rewards over time.
There’s one caveat: The hysteresis effect, which defines how effective balance is updated based on a hysteresis upward multiplier. Based on the upward multiplier of 5, and increment of 0.25, there is a minimum 1.25 ETH required in the balance before the effective balance increment up by 1 ETH. eg. From 32 ETH, a balance of 33.25 ETH is required to have 33 ETH effective balance to earn the compounding of 1 ETH.
Due to the hysteresis effect and how long it takes 32 ETH to accumulate 1.25 ETH, you will not see the compounding for another year. If you are staking more ETH like 320 ETH or 1600 ETH, you will see this compound effect more apparent.
Below is an estimated projection, actual results may varies.
1-Year Table:
2-Year Table:
Upcoming features with stakefish
Our team is testing the new validator client in Holesky to ensure that it operates at the highest level of performance. Following the mainnet in Mid-April, our team will release the following improvements to the staking dashboard:
- Launch compound staking up to 2048 ETH per validator.
- Launch onchain staking support to speed up staking activation up to 13 minutes.
- Launch top-up feature for compound validator.
- Add partial withdrawals for compound validator
- Launch updates to our mev/fee smoothing pool to support compound validators.
- Launch feature to consolidate existing validator into compound validator.
Common Questions
1. How can I create a compound validator?
Existing validators are either 0x0 (BLS) or 0x1 (ETH1) withdrawal credentials. The new compound validator uses a 0x2 (COMP) withdrawal credentials. There are two ways: create a new compound validator OR merge the existing validators together to form a single compound validator.
2. How do I withdraw rewards for compound validator?
Non-compound validators are capped at 32 ETH, which automatically sweep rewards. Compound validators are capped at 2048, which also automatically sweep rewards over 2048 ETH. Full withdrawals work the same way. However, on compound validators, you can partially withdraw rewards as long as there is a minimum 32 ETH staked. stakefish will provide this functionality.
3. How can I add more ETH to a compound validator (top up)?
stakefish will provide a new way to stake to an existing validator (eg top up). Effective balance requires a minimum 1.25 ETH in addition to your existing effective balance and up to any whole ETH. The effective balance reflects how much ETH will be earning rewards both on consensus and execution rewards.
4. Is the compound validator optional?
Yes, it’s completely optional and must be opt-in via new staking or explicit merge from your wallet. In some cases, it may be more preferred to keep it that way - the choice is yours.
5. What are limitations to merging validators?
Validators that merge must share the same withdrawal credentials (same type, and same address). For example, you can not merge SAFE wallet credentials with regular wallet credentials or EigenPod credentials. At this time, we don’t recommend merging EigenLayer validators together until we have more guidance from the EigenLayer Foundation.
Why stakefish?
The Pectra upgrade opens new doors for the staking experience, and stakefish is here to help you make the most of it. From compounded rewards to lightning-fast deposits, our upgraded dashboard and expert support ensure you’re ready to thrive.
Visit stake.fish/stake to get started.
