Vitalik Buterin, co-founder of Ethereum, has extended his weeklong discussion on enhancing the blockchain network’s Proof-of-Stake (PoS) mechanism with a new essay titled “Possible Futures of the Ethereum Protocol, Part 3: The Scourge.”
In this essay, Buterin elaborated on the necessity for Ethereum to develop in order to preserve decentralization while confronting security challenges.
Addressing Centralization Risks in Ethereum Staking
According to Buterin, the Scourge presents a proposed enhancement designed to mitigate the risk of centralization in Ethereum’s staking system. He indicated that elements like block construction centralization, economic motivations, and the requirement of a 32 ETH minimum for staking all contribute to these risks. Moreover, the hardware demands for participation exacerbate the issue.
“One of the major threats to Ethereum L1 is the centralization of proof-of-stake due to economic pressures. If participating in fundamental proof of stake mechanisms results in economies of scale, larger stakers will inevitably dominate, pushing smaller stakers to either join large pools or withdraw,” Buterin stated.
Buterin’s approach within the Scourge phase involves deconstructing the block production process. This revision would transfer the task of selecting transactions from builders to stakers, allowing builders to focus solely on organizing transactions and including a small number of their own.
Read more: A Comprehensive Exploration of the Ethereum Network
“The primary solution is to further dissect the block production task: we assign the responsibility of selecting transactions back to the proposer (i.e., a staker), while builders can only control the ordering and add a few transactions of their own. This is the intention behind inclusion lists,” explained the Ethereum co-founder.
Buterin also considered other potential solutions like the Multiple Concurrent Proposers (MCP), which introduce frameworks such as BRAID. He remarked that MCP methodologies distribute the block creation process among multiple entities, thereby lowering participation barriers and making it more difficult for a single entity to monopolize staking.
Confronting Over-Staking Issues
Buterin has also expressed worries regarding the possibility of “over-staking” within the Ethereum network. Presently, approximately 30% of the total ETH supply is staked. He warned that if this percentage increases substantially, staking could become a near-compulsory requirement for ETH holders, leading more stakers to centralized services.
To mitigate this, Buterin proposed modifications to Ethereum’s issuance curve. By doing so, staking rewards would decrease if the overall amount of staked ETH surpasses a certain limit. This adjustment would hinder a small cluster of large stakers from wielding undue influence over the network.
Read more: Staking Crypto: A Guide to Coin Staking and Income Growth
Ultimately, Buterin’s recommendations in the Scourge phase emphasize his commitment to preserving Ethereum’s decentralization as it scales. By tackling the centralization threats in both staking and block production, he seeks to protect the long-term security and openness of the Ethereum blockchain.
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