Ethereum co-founder Vitalik Buterin has put forward a proposal aimed at enhancing the decentralization of Ethereum by addressing correlated failures among validators.
- Vitalik Buterin proposes measures to enhance Ethereum’s decentralization by tackling correlated failures among validators
- Buterin suggests penalizing validators more heavily for simultaneous failures, especially those controlled by the same entity, to incentivize decentralized staking
- The proposal aims to address the tendency of validators within the same cluster to experience correlated failures due to shared infrastructure
- By penalizing validators based on deviation from the average failure rate, the proposal seeks to level the playing field between large and small Ethereum stakers
- The main benefits include incentivizing separate infrastructure for each validator and making solo staking economically competitive against staking pools
- While Buterin didn’t address reducing the minimum staking amount, concerns persist about the dominance of services like Lido and potential cartelization in the Ethereum community
Buterin suggested to the Ethereum Research forum to introduce some measures. The goal is to promote decentralized staking through anti-correlation incentives. His proposal offers to penalize validators more heavily if they fail simultaneously, particularly those controlled by the same entity.
What’s the Reasoning Behind This Decision?
Buterin’s grounds lie in the observation that validators within the same cluster, like staking pools, are prone to experience similar failures due to shared infrastructure. To reduce this, he recommends penalizing validators based on their deviation from the average failure rate, with higher penalties applied during periods of widespread failures.
“Are validators in the same cluster (eg same exchange, same user) more likely than unrelated validators to miss attestation at the same time? If so, can we tweak rewards to favor decentralized staking? Possibly yes.” – Vitalik Buterin via X
Simulations indicate that this approach could level the playing field between large and small Ethereum stakes, as it diminishes the advantage enjoyed by larger entities, which are more likely to cause spikes in failure rates due to correlated failures.
The main benefits of the proposal are:
- Incentivizes decentralization by encouraging separate infrastructure for each validator
- Makes solo staking economically competitive compared to staking pools
While Buterin did not address reducing the minimum staking amount of 32 Ether (ETH), currently valued at approximately $111,500, he highlighted the popularity of staking pools and liquid staking services like Lido. Lido alone boasts $34 billion worth of staked ETH, representing around 30% of the total supply.
Concerns remain within the Ethereum community when it comes to the dominance of services like Lido and the potential for cartelization, which could lead to uneven profits compared to non-pooled capital.
Vitalik Buterin’s proposal marks a significant step towards enhancing the decentralization of Ethereum’s staking ecosystem. By addressing correlated failures among validators and introducing anti-correlation incentives, Buterin aims to foster a more equitable environment for speakers of all sizes.
As the community awaits further developments and implementation, concerns linger regarding the dominance of certain staking services and the potential for cartelization. Nonetheless, Buterin’s proactive approach signals a positive stride towards a more inclusive and resilient Ethereum ecosystem.
Disclaimer
FAQ
Vitalik Buterin proposes to enhance Ethereum's decentralization and security by introducing measures that penalize validators more heavily for correlated failures, promoting more equitable participation in staking.
By penalizing validators based on deviation from the average failure rate and incentivizing separate infrastructure for each validator, the proposal aims to make solo staking as economically viable as participating in large staking pools.
Decentralizing Ethereum staking encourages a more distributed network, reducing the risks of correlated failures among validators. This leads to improved network security and fairness, making the Ethereum ecosystem more resilient against attacks.
