This Ethereum Network Update Is Extremely Important


Here’s why EIP-7514, a recent upgrade to the Ethereum network, is so important to all investors: it changes the game.

Let’s start by defining an EIP. It is an acronym for an upgrade that is intended to improve Ethereum. EIP-7514 is one specific one that is a part of the Ethereum Dencun update. What was the major objective? to reduce the rate at which users stake their Ethereum (ETH), giving the community more time to decide how to best reward those who do so.

why does staking take longer? We might reach a stage where half of all ETH is staked by May 2024, three-quarters by September 2024, and – hold your breath — 100% by December 2024 if everyone hurries to stake their ETH. Although it could seem positive, that is not the case. The network may get overloaded if there is too much staking, which is not always better for security. Additionally, stake benefits may diminish to the point where they are not worthwhile.

The modification alters the number of additional validators (users who process transactions and add new blocks to the network) that can be added. This number may have increased exponentially in the past, but it will now rise at a more regulated, linear rate. This is significant since adding more validators would require handling more messages and data, which may slow down the process.

But what about staking rewards? That is still debatable. The optimal incentives for encouraging users to stake their ETH are hot topics of discussion in the Ethereum community. This update allows time for such discussions to take place and for experts to look into more effective alternatives.

So what should we conclude? Similar to using the “pause” button, EIP-7514. It offers the Ethereum community an opportunity to take a breath, reflect, and make future choices with greater knowledge. And a moment of reflection is not only nice, it is crucial for a network that has experienced rapid growth and development since its start.


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