Lawrence Damilola
Ethereum co-creator Vitalik Buterin has proposed several changes to address centralization concerns in Ethereum’s staking and block production.
In an X post yesterday, Buterin emphasized that staking centralization poses one of the most significant risks to Ethereum, as economies of scale are pushing smaller staking pools to join larger ones. He expressed concern that two entities, Beaverbuild and Titan Builder, built 88% of all Ethereum blocks in just the first two weeks of October.
Possible futures of the Ethereum protocol, part 3: The Scourgehttps://t.co/mtzH1ZxTak
— vitalik.eth (@VitalikButerin) October 20, 2024
(I tried my best to be fair to all sides of the debates here!)
Buterin explained that while 30% of Ether (ETH) is currently staked, which is sufficient to protect the network from 51% attacks, further centralization could lead to additional risks. “One of the biggest risks to the Ethereum L1 is proof-of-stake centralizing due to economic pressures,” Buterin wrote, warning that if nearly all Ether were staked, the process could become less profitable and impose more obligations on holders.
He also cautioned that staking could weaken Ethereum’s slashing mechanism, which penalizes improper actions in staking. Buterin raised the concern that a liquid staking token could take over Ether’s role as a dominant network asset. To prevent these issues, he recommended placing a cap on the amount of Ether a user can stake and limiting penalties for stakers to 12.5% of the amount staked. He suggested a two-tier system that includes both “slashable” (risk-bearing) and “unslashable” (risk-free) options.
Block Production Centralization Concerns
In addition to staking, Buterin discussed the centralization of block production. He noted that the current system, which separates block builders from proposers, has led to the concentration of block-building power among a small number of entities. Ethereum researcher Toni Wahrstätter recently highlighted that Beaverbuild and Titan Builder constructed 88.7% of Ethereum blocks during the first two weeks of October.
Over the past two weeks, two block builders, Beaverbuild and Titan Builder, have produced 88.7% of all blocks.
— Toni Wahrstätter ⟠ (@nero_eth) October 17, 2024
This trend is primarily driven by the rise of private order flow (XOF), sold exclusively by certain apps. XOF reduces genuine competition among builders in the block… pic.twitter.com/6o96iLQLCv
Buterin warned that this concentration of block production could lead to a higher risk of transaction censorship and longer wait times for transactions to be included in blocks. He pointed out that users could experience delays of up to 114 seconds, compared to the current six seconds, as a result of centralization in block production.
To address this issue, Buterin proposed the “fork-choice-enforced inclusion lists,” which would return the responsibility of choosing transactions to proposers while allowing builders to focus on transaction ordering. Another proposed solution is “BRAID,” which would split block production across multiple actors, ensuring that no single entity could dominate the process.
Read More
- Buterin Proposes Standards for Ethereum Alignment
- Vitalik Buterin Proposes Increasing Blob Count for Ethereum Network—Here’s Why
- Ethereum’s Vitalik Buterin Responds to Claims That Crypto Market Maturity Has Arrived
Lawrence does not hold any crypto asset. This article is provided for informational purposes only and should not be construed as financial advice. The Shib Magazine and The Shib Daily are the official media and publications of the Shiba Inu cryptocurrency project. Readers are encouraged to conduct their own research and consult with a qualified financial adviser before making any investment decisions.
