How Ethereum’s censorship resistance helped validator count jump in Q1

• OFAC-compliant blocks have reduced thanks to the rise in validator count.
• Ethereum’s development team seemed prepared for the upgrade and was preparing for its next phase.

The number of Ethereum [ETH] validators from the beginning of 2023 to the end of the first quarter (Q1) rose by over 67,000. According to ETH 2.0 block explorer BeaconScan, the validator count was 495,024 on 2 January. However, the figure had increased to 562,236 as of 1 April.

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Validators attached by rejection

The validators, who are the spotlight participants on the Ethereum consensus protocol by depositing 32 ETH, reached 500,000 in January. But the process of staking the altcoin for rewards has been started around December 2020 on the Beacon Chain.

Source: BeaconScan

The Beacon Chain handles the conduct and coordination of ETH staking before validators confirm blocks as valid and the network as secure. With annual rewards of 5.2%, these stakers are only days away from activating withdrawals, as the Shanghai Upgrade has been fixed for 12 April. 

However, as the event nears, Ethereum stakers have upped their game in opposing censorship. Recall that the SEC has remained resolute in labeling Proof-of-Stake (PoS) assets as securities. But this allegation could only pass as a fact if blocks were compliant with the requirements of the Office of Foreign Assets Control (OFAC).

Complaint blocks mean that the U.S. OFAC could sanction them. But at press time, Ethereum’s OFAC-compliant blocks had reduced to 27% in the last seven days. As of November 2022, this rate was as high as 77%.

Source: MEV Watch

The decrease, therefore, means that validators have vehemently worked against a regulatory tag on their entities. Interestingly, a number of these speakers who contributed to this emerged as whales, some from Lido Finance [LDO] and others from exchanges. 

Another call after the exit and success 

As per Glassnode, the way there have been jumps in validator participation is the same way some have used, pulled out. Details from the on-chain market intelligence platform showed that voluntary exit count had notable spikes in the month of March.

The metric refers to the total number of validators that have left the staking pool. On 16 March, there were 183 exits, while 29 validators retreated on 29 March.

Source: Glassnode

However, the Ethereum team has their last All Core Developers Execution (ACDE) call before the upgrade on 30 March. According to the information provided by Galaxy Research, the developers discussed several points. 

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While the focus was on the upgrade, there were also talks about the implementation of the EIP-4788. 

This is the part that seeks to expose the Beacon Chain accessible to smart contracts applications. In conclusion, Tim Beiko noted that the next ACDE call would occur at 10 a.m. E.T. on 13 April. This would be after the Shanghai upgrade has been confirmed successful.