Ethereum Co-founder Vitalik Buterin Shares Thoughts on Staking System Changes
In a recent blog post, Ethereum co-founder Vitalik Buterin discussed potential changes to the staking system of Ethereum. Buterin explored various protocols including ERC-4337, ZK-EVMs, private mempools, code precompiles, and liquid staking, and examined the trade-offs associated with incorporating them into Ethereum’s code. The goal of his article was to develop a framework for identifying possible targets where certain features could be enshrined in the protocol.
Buterin expressed a stronger inclination towards incorporating certain protocols like ERC-4337 while being more cautious about others such as private mempools. He acknowledged that each protocol presents complex trade-offs that will evolve over time.
Buterin’s Concern About Staking Concentration
One specific concern mentioned by Buterin was the concentration of power among Ethereum’s liquid staking providers. Lido, a prominent liquid staking pool, currently controls over 32% of the staked ether on Ethereum. Buterin highlighted the need for more robust safety mechanisms and proposed exploring additional solutions to enhance safety and decentralization.
He suggested tweaking the Ethereum protocol itself to encourage diversification of staking providers. This could involve refining RocketPool’s approach or granting enhanced governance rights to a randomly sampled committee of small stakeholders. These measures could contribute to a more decentralized and resilient Ethereum ecosystem.
Liquid Staking Providers Implement Self-Limit Rule
Several prominent liquid staking providers have implemented or are in the process of implementing a self-limit rule to address concerns over centralization. The rule ensures that these providers will not own more than 22% of the Ethereum staking market.
Rocket Pool, StakeWise, Stader Labs, Diva Staking, and Puffer Finance have committed to the self-limit rule. However, Lido Finance has decided not to commit to this rule.
Hot Take: Vitalik Buterin’s Vision for a More Decentralized Ethereum
Vitalik Buterin’s recent blog post highlights his concerns about the concentration of power among Ethereum’s staking providers. He explores potential changes to the staking system and suggests tweaking the Ethereum protocol itself to encourage decentralization.
By incorporating certain protocols and implementing safety mechanisms, Buterin envisions a more robust and resilient Ethereum ecosystem. The self-limit rule adopted by some liquid staking providers is a step towards addressing concerns over centralization.
As Ethereum continues to evolve, it will be essential to strike a balance between innovation and maintaining a decentralized network.
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