Valid Points: What Eth 2.0 Validators Can Expect After the 'Altair' Upgrade

As Ethereum developers prepare for their 11th backward-incompatible, system-wide upgrade, or “hard fork,” Ethereum 2.0 developers are getting ready to release their first one ever.

Named after the brightest star in the northern constellation of Aquila, the “Altair” upgrade is tentatively scheduled for activation this summer, either in July or August. 

Around this time is also when Ethereum’s 11th hard fork, dubbed “London,” is expected for release. One of the goals will be to line up Altair and London for around the same time so that validators can upgrade their Ethereum and Eth 2.0 software in one go, rather than on two different occasions. 

The London upgrade is expected to contain controversial code changes such as Ethereum Improvement Proposal (EIP) 1559, which dramatically alters Ethereum’s fee market. The Altair upgrade, on the other hand, will make minor revisions to the dynamics of Eth 2.0. 

The Altair upgrade ups the ante on validator responsibilities. 

Currently, fully inactive validators lose roughly 11.8% of their staked ether balance. After the upgrade, they’ll lose about 15.4%. In addition, validators who are slashed by the network for malicious behavior such as double-signing or double-proposing blocks will get fined 0.5 ETH after hard fork activation instead of 0.25 ETH. 

The aim here is to bring network penalty values for validator inactivity and misbehavior closer to what was originally set out in the Eth 2.0 protocol. These values were intentionally reduced to encourage early user participation in the network at its most experimental and nascent phase.

Now that the Eth 2.0 Beacon Chain has been running smoothly and successfully for more than six months, the Altair upgrade will ensure the network isn’t as forgiving of offenses by increasing the slashing and penalty parameters. 

It’s not all bad news for validators, however. 

The Altair upgrade also corrects a slight imbalance in the distribution of rewards. The vast majority of earnings for validators comes from votes and attestations of the correct block. Only 3% of overall rewards is earned from proposing the next block in the Eth 2.0 Beacon chain. 

After Altair, block proposal rewards will jump up to about 12.5% of overall validator rewards so that the earnings for different validator responsibilities becomes more evenly split. 

Altair is considered a “warm-up upgrade” meant to prepare Eth 2.0 protocol developers for a much higher-stakes upgrade upcoming later this year or early next. This latter upgrade expected to follow Altair will permanently fuse the Ethereum blockchain with the Eth 2.0 Beacon Chain and fully transition Ethereum to a PoS protocol.

Since our January write-up of what we expected in the Altair hard fork, the contents of the upgrade have changed somewhat. 

While the upgrade still adds simplifications to the Eth 2.0 protocol, making it easier for users and developers of the network to track validator participation rates, rewards and penalties, it will not include code designed to enforce a specific development timeline for the network. 

On Ethereum, the development timeline for making the transition to a proof-of-stake (PoS) consensus protocol is enforced through the “difficulty bomb” feature. The difficulty bomb is code designed to kick in at a certain block number that makes the production of new blocks beyond that point exponentially more difficult to mine and slow to produce. 

Since the merge of Ethereum and Eth 2.0 is expected to happen at the end of this year, the London hard fork will delay activation of the difficulty bomb and the “ice age” that follows until December. 

There was debate among Eth 2.0 developers over whether a similar incentive should be baked into the Eth 2.0 protocol as an additional motivator for activating the merge in accordance with a set timeline. 

Ultimately, they did not deem it necessary in light of other stronger motivators at play for Eth 2.0 development. One such factor is the nearly $16 billion worth of ether locked in the protocol as of May 18. 

Developers have also affirmed the creation of validator “sync committees” through the Altair upgrade. In January, they decided creating these sync committees was an important step toward building out new Eth 2.0 software clients that can run with low computation and data costs. 

These new software clients, called “light clients,” are envisioned to run at a fraction of the cost that would typically be required of a Eth 2.0 validator. Light clients are aimed at empowering more users to independently verify the Eth 2.0 blockchain, potentially from inside their own web browser, as opposed to through a centralized third party such as Infura. 

There have been two versions of the Altair upgrade released thus far for review and iteration by Eth 2.0 developers. The plan is to complete code specifications for the upgrade this Friday, May 21. They will then spend the month of June activating the code on various public test networks to ensure Altair is ready for a main network launch in July. 

Speaking to the significance of the Altair upgrade overall, Eth 2.0 client developer Ben Edgington said in a Mapping out Eth 2.0 podcast:

“It’s time to take the training wheels off a little. We’ve still got some stabilizers but … it’s a good sign that we’re moving in the right direction.”

Feel free to reply any time and email christine.kim@coindesk.com with your thoughts, comments or queries about today’s newsletter. Between reads, chat with me on Twitter.

Valid Points incorporates information and data directly from CoinDesk’s own Eth 2.0 validator node in weekly analysis. All profits made from this staking venture will be donated to a charity of our choosing once transfers are enabled on the network. For a full overview of the project, check out our announcement post. 

You can verify the activity of the CoinDesk Eth 2.0 validator in real time through our public validator key, which is: 

0xad7fef3b2350d220de3ae360c70d7f488926b6117e5f785a8995487c46d323ddad0f574fdcc50eeefec34ed9d2039ecb. 

New episodes of “Mapping Out Eth 2.0.” with Christine Kim and Consensys’ Ben Edgington air every Thursday. Listen and subscribe through the CoinDesk podcast feed on Apple Podcasts, Spotify, Pocketcasts, Google Podcasts, Castbox, Stitcher, RadioPublica, IHeartRadio or RSS.