Vitalik Buterin Reveals The Flaws In Ethereum Staking

Vitalik Buterin, the co-founder of Ethereum, recently raised concerns about what he perceives as one of the biggest risks to the blockchain: the centralization of staking. In a blog post published on October 18, 2024, Buterin elaborated on potential dangers and proposed solutions as part of the upcoming "Scourge" update for the network.

Key Takeaways

• Centralization of staking poses significant risks to Ethereum.

• Only two entities currently control about 88% of Ethereum blocks.

• Proposed solutions include encrypted memory pools and inclusion lists.

• Buterin suggests limiting the amount of Ether that can be staked.

• Upcoming fork "Pectra" aims to enhance network efficiency.

Centralization Of Staking: A Major Risk For Ethereum

Vitalik Buterin identifies the centralization of staking as a critical threat to Ethereum Layer 1. This issue manifests at two primary levels: block construction and the provision of staking capital.

Currently, just two players select the content of approximately 88% of Ethereum blocks, increasing the risk of transaction censorship. This centralization could undermine the decentralized ethos of the blockchain, making it vulnerable to manipulation.

Proposed Solutions To Combat Centralization

To address this alarming trend, Buterin has proposed several innovative approaches:

1. Encrypted Memory Pools: This would make it more challenging for block proposers to censor specific transactions.

2. Inclusion Lists: Stakers would provide a list of transactions that builders must include in the next block, promoting transparency and fairness.

Reforming The Staking System

Regarding the provision of staking capital, Buterin notes that 30% of Ethereum's total supply is currently staked. While this percentage is adequate to protect the network against 51% attacks, a significant increase could lead to various risks, including:

• Diminished effects of reduction.

• Excessive issuance of Ether.

To mitigate these issues, Buterin suggests:

• Limiting Staking Amounts: Restricting the quantity of Ether an individual can stake.

• Two-Tier Staking: Dividing staked Ether into two parts: a reducible portion and a non-reducible portion.

Preparing For The Future: The Pectra Fork

These considerations are part of a broader initiative aimed at balancing fees between Layer 1 and Layer 2 of the network. The upcoming Pectra fork, scheduled for late 2024 or early 2025, aims to create a cohesive Ethereum ecosystem capable of handling increased traffic without sacrificing accessibility or decentralization.

Conclusion

Vitalik Buterin's proposals to counteract the centralization of staking reflect Ethereum's ongoing commitment to addressing the challenges of mass adoption. The successful implementation of these solutions will be crucial for maintaining Ethereum's position as a leading blockchain platform and ensuring its sustainability in the ever-evolving crypto landscape.

Sources

• Crypto : Vitalik Buterin dévoile les failles du staking Ethereum, Cointribune.

• Crypto: Vitalik Buterin revela las fallas del staking de Ethereum – Cointribune, Cointribune.

• Crypto: Vitalik Buterin Reveals The Flaws Of Ethereum Staking, Cointribune.