Ethereum's Pectra upgrade doesn't pose a threat to decentralization

Pectra, Ethereum’s most extensive network upgrade since the Merge took place in September 2022, allows validators to stake as much as 2,048 ETH, up from the previous limit of 32 ETH. The new standard has brought up community concerns about the risks of centralization on the network.

However, according to Mallesh Pai, senior research director at blockchain software firm Consensys, Pectra is cleaning up the backend "busy work" currently handled by validators and doesn't pose a threat to decentralization.

During a May 9 Cointelegraph X Space, Pai said a validator’s chances of proposing a block or earning rewards remain tied to how much ETH they hold, and that larger validators don't gain any new advantages under the upgrade:

"The way that the economics of the protocol work out, if you have more ETH, you'll get more chances to propose a block and earn rewards. That's how the protocol is defined and designed to work."

Pectra is also rolling out a total gas limit lower than the usual 10 million gas limit, Pai noted, adding that this will lower gas fees for users.

"We're trying to get to about 30,000 validators, but right now we have about a million technical validators, but many of them aren't distinct. For example, a large validator might have 10 or 20 keys on a single physical machine. But with Pectra, we're seeing those keys get consolidated to about 30,000 validators in the best case."

Pai explained that Pectra has taken "a bunch of busy work that the network was doing behind the scenes and removed it."

"For example, there used to be a block proposer who was randomly selected by the chain to propose a block, but now that role is given to the validator who has the highest balance at the time. So the busy work of randomly selecting a block proposer is no longer needed."

According to Pai, this consolidation will reduce auxiliary work and enable network stakeholders to focus on what matters, such as lowering gas limits.

"We're also seeing that the total gas limit is lower than usual, usually 10 million gas, but with Pectra it's lower, which will lower gas fees for users."

New Pectra staking limit paves the way for institutions

The new limit could pave the way for institutions to stake ETH, according to Artemiy Parshakov, vice president of institutions at Ethereum staking service P2P.org.

"EIP-7002 makes institutional staking much easier to integrate without taking too much risk. For example, if an institution wants to stake 10,000 ETH, they can set up 32 validators themselves, but the process is complicated and they might encounter difficulties. But if the limit is raised to 2,048 ETH, they can simply create a few validators to manage the funds."

Ether staking within exchange-traded funds has been a hot topic in 2025. BlackRock has said that the successful Ether ETFs are less perfect without staking, and multiple financial institutions have filed for amendments to their Ether ETFs to allow for staking.

If approved, investors might be more inclined to buy into the ETFs, as they could receive yield. The SEC has yet to rule on staking amendments.

According to Bloomberg ETF analyst Eric Balchunas, if staking were to be approved for Ether ETFs, it would have “a little impact” on inflows.

"The bigger problem with Ethereum is performance, it just doesn't ever go on a nice long rally," Balchunas recently forecasted in a podcast interview.