Ethereum’s co-founder, Vitalik Buterin, has ignited a debate about potential protocol and staking pool changes to enhance decentralization and efficiency within the Ethereum network. But these proposed changes haven’t gone unnoticed by rivals, with Charles Hoskinson, the founder of Cardano, taking to Twitter to express his skepticism, using an animated GIF featuring Christian Bale and Kermit the Frog.
Buterin’s Plan To Enhance Ethereum’s Staking System
In his blog post dated October 6th, Vitalik Buterin explores the complexities surrounding Ethereum’s current staking system. The author draws attention to two key challenges: the potential centralization risk among node operators and the excessive load imposed on the consensus layer due to numerous signatures. To tackle these concerns, Buterin introduces possible solutions centered around a concept referred to as “two-tiered staking.”
Two-tiered staking essentially involves two classes of participants: node operators and delegators. Node operators run nodes and put up their reputation or some collateral, while delegators contribute ETH without needing significant commitments beyond collateral.
Currently, leading decentralized staking pools, such as Lido and RocketPool, have implemented two-tiered staking ecosystems. In the Lido ecosystem, tier divisions consist of node operators selected through a vote in the Lido DAO, while delegators hold stETH.
On the other hand, in RocketPool’s system, anyone can become a node operator by making an 8 ETH deposit and obtaining RPL tokens, while delegators hold rETH.
Buterin’s proposal explores the idea of simplifying the role of delegators in the staking system, ensuring they have a meaningful role without the complexities of full staking. Delegators could be given the power to choose which node operators they delegate their stake to, thus enhancing decentralization.
Three approaches are proposed to promote competition and choice among delegators. The first approach involves enhancing voting tools within pools to improve the overall voting experience.
The second approach focuses on fostering competition among staking pools, encouraging them to innovate and provide better services for delegators. Lastly, the third approach suggests implementing protocol-level delegation mechanisms as a means to expand options for participants.
However, token voting governance has its limitations. Therefore, exploring alternative forms of consensus participation can be valuable in preventing censorship and promoting decentralized decision-making without exposing participants.
Ultimately, Buterin’s proposal seeks to achieve two goals: empower individuals who lack the resources for solo-staking and reduce the number of signatures processed by the Ethereum consensus layer, thus enhancing decentralization and security.
Implementing these ideas will require careful consideration, focusing on minimizing protocol complexity while achieving the desired objectives. In this rapidly evolving landscape, the discussion around Ethereum’s staking system highlights the ongoing quest for decentralization and security within blockchain networks.
Related Reading | BNB’s Meteoric Rise: Early Holder’s $54M Profit and Ongoing Journey