Fidelity Digital Assets says Ethereum’s growing number of validators is raising concerns.

The number of validators on the Ethereum blockchain is rapidly increasing. Chapella Fidelity Digital Assets said in a research note on Thursday that the upgrade in April last year had raised concerns about technological capabilities and centralization.

Fidelity noted that “the number of active validators has increased by 74% due to reduced risk due to increased liquidity,” and that this larger set will “make future roadmap upgrades more challenging.”

that much Chapella For the first time, a withdrawal-enabled upgrade is available for validators who stake Ethereum (ETH) to secure and verify transactions on the blockchain.

“A large validator count is a concern because bandwidth and latency are critical in networks with large validator sets where each validator must independently download the latest data and confirm state change proposals within a short period of time,” said analyst Daniel Gray. added. “The larger the block (data), the more computing power is required to process and re-execute the transaction before the next slot.”

Every new validator adds an additional connection to the network, increasing the overall bandwidth needed to maintain consensus, the note said.

“The potential concern is that as bandwidth requirements increase, validators who cannot keep pace will disappear from the network. Falling validators are more likely to be self-hosted nodes,” Gray wrote. “If the average household struggles to keep up with the network, there is a risk of increased centralization over time, as the only hardware that can survive may be within institutionally owned data centers,” he added. .

While growth in validator set size has been slowing recently, it is unclear what the situation will be a year from now, the report said. “So the potential for rapid growth could be problematic due to centralization and bandwidth risks.”

Increasing the number of validators has always been considered a “good problem” as it means increased adoption and security of the Ethereum blockchain. “It is still impossible to accurately predict future staking demand,” the report added.