Vitalik Buterin proposes two-tier model to address 'centralization challenges' in Ethereum staking – CryptoSlate

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The primary concern addressed in Buterin’s proposal revolves around the limitations of the current staking system.
John Phillips / TechCrunch / CC BY 2.0 / Wikimedia. Remixed by CryptoSlate
Ethereum’s founder, Vitalik Buterin, unveiled an innovative proposal this week aimed at refining the platform’s staking mechanism.
As the world’s second-largest blockchain by market capitalization, Ethereum’s continued evolution is crucial for its vast user base, and these proposed changes aim to bolster decentralization, efficiency, and security.
The primary concern addressed in Buterin’s proposal revolves around the limitations of the current staking system.
Notably, he pinpoints decentralization issues surrounding the selection process for node operators across various staking pools and identifies inefficiencies in the current Layer 1 (L1) consensus mechanism.
Presently, the constraints of solo staking combined with issues surrounding liquid staking mean that the platform can only process between approximately 100,000 to 1 million BLS signatures per slot.
A further complication arises from the need for accountability in signing, which demands a participation record for each signature. If Ethereum scales up globally, using full danksharding for storage might still fall short, with a mere 16 MB per slot accommodating around 64 million stakers.
Drawing inspiration from models implemented by Rocketpool and Lido, Buterin suggests adopting a two-tiered staking system. In this structure, Node Operators and Delegators emerge as central figures.
To rectify this, Buterin suggests a two-tiered staking model:
This model would involve the modification of the validator balance cap and implementing a balance threshold to categorize validators into these tiers.
Buterin elaborates on potential roles for small-stakers:
The roles envisioned for small-stakers are characterized by their sporadic participation and non-slashable nature. Importantly, these roles tackle the significant issue of a potential 51% node operator majority attempting transaction censorship.
Buterin also contemplates these solutions in the context of staking pool features. He suggests protocols allowing validators to designate two staking keys: a persistent key and a temporary one, which, when combined, influence the block finalization process.
Buterin’s proposal isn’t just technical fixes; it’s a vision for Ethereum’s future. By decentralizing the staking process further and integrating safety nets, he aims to:
By diffusing the staking process and embedding safeguards, the objectives are clear: to empower those who traditionally lack the means for solo staking by offering them a meaningful way to participate and alleviate the transaction processing strain on Ethereum’s consensus layer. This ensures a more accessible platform for everyone intending to run a validating node.
The proposed refinements underscore the pressing need for minimal, strategic protocol modifications, all pointing towards a balanced, decentralized, and high-functioning Ethereum network.
AJ, a passionate journalist since Yemen’s 2011 Arab Spring, has honed his skills worldwide for over a decade. Specializing in financial journalism, he now focuses on crypto reporting.
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Ethereum is a decentralized, open-source blockchain platform that enables the creation of smart contracts and decentralized applications (DApps).
Vitalik Buterin is the creator of Ethereum, the community-run technology powering the cryptocurrency ether (ETH) and thousands of decentralized applications.
Lido is a provider of liquid staking solutions for staked assets and Ethereum.
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