Ethereum’s co-founder, Vitalik Buterin, shared concerns in his latest blog post. He warned of centralization risks in Ethereum’s proof-of-stake system. Large stakers dominate, while smaller ones join bigger pools.
As per the post, this may lead to a 51% attack or transaction censorship. Buterin pointed out two severe issues: block construction and staking capital provision. The giants will gain more from MEV extraction.
They also use liquid staking tokens (LST) to make financing rules lighter. However, these are the two trends that threaten decentralization. At the moment, two actors control 88% of Ethereum blocks, and the fear of market manipulation is high.
To fight against such issues, Buterin proposed the inclusion lists, where a choice of transactions is left to validators, instead of builders. The other approach in this regard is to distribute block production in BRAID among many proposers. These are countermeasures for centralization reduction while scaling the balance.
Buterin’s 2023 roadmap, “The Scourge,” outlines the remaining steps. The overriding objectives are to mitigate centralized censorship risks in staking and block building and decrease extreme value extraction. Executable plans include block construction optimization and reducing market manipulation risks by actors like MEVBoost.
Also, Buterin spotted the scenario of multi-block MEV, where auction winners obtain profit from consequent slots. He suggested amendments to “inclusion lists” in the chart, but the equilibrium among them remains confusing. Contrastingly, encrypted mempools may be the solution to some of the attacks, yet they require further testing and improvement.
Staking Growth and Potential Risks of Over-Staking Ethereum
The post also discusses the development of Ethereum staking. Buterin made a remark that if too much ETH is staked, risks could increase. Overstaking penalties like capping or introducing two-tiered staking features might be useful. However, updating Ethereum’s issuance curve may be the best option.
Lastly, Buterin mentioned hardware requirements and solo staking issues. By making staking more accessible, decentralized apps like Dappnode and Obol’s squad staking could help the people who are staking. These suggestions are about decentralizing staking and, therefore, about protecting small actors from the big ones.
Nevertheless, Ethereum advances along its path to a more democratic system. Buterin’s observations demonstrate the problems and methods of securing its future in this.
