0x02 ETH validator balance management

0x01 Validators (pre-Pectra)

Before Pectra, there were only 0x01 validators, which strictly hold a balance of 32 ETH. When 0x01 validators earn rewards (increasing their effective balances above the 32 ETH max), these excess rewards are periodically “swept” into the withdrawal address without compounding. 0x01 validators can still be used for staking. If you still use 0x01 validators, Figment can help you migrate.

0x02 Validators (post-Pectra)

In May 2025, Ethereum implemented the Pectra upgrade. This upgrade introduced “0x02 validators”. 0x02 validators can have balances of 32 to 2,048 ETH, allowing for more flexible staking. Consensus Layer rewards auto-compound for better staking reward rates. 0x02 validators have two new actions:

1. “Top-ups” or deposits to existing validators, and
2. Partial withdrawals, which allow for withdrawals from a validator without a full exit

Creating a new 0x02 validator

Creating a new validator is basically the same as before, now with an 0x02 prefix in the withdrawal credentials, and an amount between 32 and 2048 ETH. Transactions go to the Ethereum’s Beacon Deposit Contract now, and Figment will release a batch contract soon.

0x02 validator management

Stakers can now choose a target balance for each validator based on what they’re optimizing for:

1. Higher balance: Slightly higher rewards, better liquidity for partial withdrawals, fewer validators to manage.
2. Lower balance: Slightly lower slashing risk, longer compounding period

The new slashing penalty starts at 1/4096 of a validator’s effective balance, which is significantly smaller than pre-Pectra.

Most customers opt for something in the middle: a “set and forget” approach to reap compounding benefits with minimal balance management for N years, while retaining a higher balance to increase rewards. They use the table below:

Top ups and partial withdrawals

Stakers can “top-up” existing validators with ETH by interacting with the same Beacon Deposit Contract as for new validators. The activation queue now churns by ETH amount instead of validator count, so top-ups are still subject to the activation period.

Partial withdrawals are also possible (as long as the validator’s balance doesn’t fall below 32 ETH) by interacting with Ethereum’s new Withdrawal Contract Withdrawals that don’t exit the validator are currently faster than exiting since there is a shorter sweep delay given the small percentage of 0x02 validators on the network.

Managing multiple validators

• Deposit to lower balance validators, withdraw from higher balance validators
• Transaction cost gas and should be minimized wherever possible
• Monitoring for validators with 2048 ETH balance

When using 0x02 validators, you must keep track of each of their validators’ effective balances. This is not a requirement with 0x01 validators, which can only ever have an effective balance of 32 ETH.

Validator balances max out at 2,048 ETH. Rewards earned by validators with 2,048 ETH will be swept to your withdrawal address, thus no longer compounding. This is where choosing your target balance is important. Once a validator reaches 2048 ETH, you can withdraw the excess of your target balance to a new validator.

When staking ETH to your 0x02 validator set, add stake to validators with lower balances to keep as many validators as possible with higher balances to increase SRR. When unstaking ETH to your 0x02 validator set, withdraw stake from validators with higher balances for the same reason. Since exiting a validator requires a longer period for ETH to be withdrawn, you should aim for partial withdrawals from existing validators as often as possible.

ETH rewards that are earned on the Execution Layer are not held on the validator and are instead transferred to your withdrawal address. You will need to deposit ETH that accrues to your withdrawal address into one of their validators to enable auto-compounding.

Deposit and withdrawal actions are not immediate. In addition to validator balances, you will want to keep track of the statues of all of the validators. You can check validator statuses via the Get Validators endpoint .

Summary

In summary, 0x02 validators allow for autocompounding ETH accrued to the consensus layer. This can significantly improve the staking reward rate for your ETH validators over time. Using 0x02 validators reduces the need for rounding to the nearest 32 ETH multiple, making your staking operation more efficient.