- To encourage greater decentralization, Vitalik Buterin suggests penalizing correlated failures among Ethereum validators.
- The plan seeks to improve network resilience and level the playing field for big and small stakeholders.
The co-founder of Ethereum, Vitalik Buterin, unveiled a new idea that aims to improve network equity and security.
His idea, which might completely change Ethereum staking and its underlying mechanics, focuses on updating the validator punishment scheme, especially in cases of correlated failures.
Are validators in the same cluster (eg same exchange, same user) more likely than unrelated validators to miss attestations at the same time? If so, can we tweak rewards to favor decentralized staking?
Possibly yes.https://t.co/TPPg2gAC1j
— vitalik.eth (@VitalikButerin) March 27, 2024
Validator Penalties are Being Revised for Related Failures
On March 27, Buterin provided more information about his idea in the Ethereum Research forum. He called for the implementation of a system that would penalize validators—especially those run by the same company—that suffer simultaneous outages.
The idea behind this project stems from the realization that validators in a staking pool or shared cluster are more vulnerable to simultaneous failures because of setup-related common weaknesses.
The main idea behind Buterin’s proposal is to penalize correlated downtimes more harshly, which will motivate validators to strengthen and diversify their operations. By encouraging a more decentralized staking environment, this strategy seeks to lower the possibility of significant network interruptions.
This proposal’s effects might drastically change Ethereum’s staking dynamics. The idea seeks to strike a balance between huge staking conglomerates and individual stakers by adjusting fines depending on departures from the average failure rate, which might potentially lessen the dominance of the former.
This change would promote a more decentralized network and strengthen the network’s resistance to coordinated attacks by making solo staking more lucrative than joining sizable staking pools.
Buterin’s talk explores how penalty structures could be changed to reduce the gap between individual players and large-scale validators even more. This starts a larger discussion about how these changes might affect the Ethereum network’s client variety and regional dispersion.
The Stake Pool Theory
Although they remove obstacles to entry and democratize staking, staking pools and liquid staking solutions such as Lido also raise concerns about network centralization, echoing earlier coverage by ETHNews.
Lido’s control over a sizable amount of ETH that has been staked has sparked debates over the profitability of solo staking versus centralization
Although Buterin’s plan does not address the existing 32 ETH threshold for individual staking, it does start a crucial conversation about how Ethereum will remain decentralized in the future and how to fairly distribute staking incentives.
Meanwhile, the Ether (ETH) token’s price increased by 0.51% during the last 24 hours, to $3,578.76. It is increasing its market capitalization to $429,907,032,224.