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In a recent blog post, Vitalik Buterin, Ethereum’s co-founder, deliberated on the future of Ethereum staking. Significantly, his thoughts focus on addressing the current centralization in the Ethereum ecosystem. Hence, he emphasizes the need for changes that could shift the balance, ensuring more decentralization.
Buterin’s post not only navigated the centralization concern but also shed light on the dilemma of incorporating certain protocols into Ethereum’s base layer versus building them on top. He discussed the account abstraction protocol ERC-4337, ZK-EVMs, private mempools, code precompiles, and liquid staking.
Interestingly, he strongly supported integrating some protocols, such as ERC-4337, directly into Ethereum’s code. However, he approached others, like private mempools, with caution. Buterin states each protocol presents a complicated tradeoff, highlighting that these discussions and decisions will continue evolving.
Liquid Staking’s Growing Influence
Consequently, Buterin also delved into the concentration surrounding Ethereum’s liquid staking providers. Notably, the liquid staking pool, Lido, has substantial control, holding over 32% of staked ether. Additionally, it’s worth mentioning that this sizable chunk is spread across different validators.
Along with Rocket Pool, Lido stands tall as the top provider in the ecosystem. Both bring unique risks to the table. Moreover, while they have safety mechanisms installed, Buterin hinted that they need to be more robust.
Paving the Way for Decentralization
Besides the existing safety measures, Buterin is seeking more resilient solutions. Instead of merely exerting moralistic pressure on stakeholders to diversify their choice of staking providers, Buterin considers tweaking the Ethereum protocol to further the decentralization of liquid staking.
Some of his innovative suggestions include refining RocketPool’s current approach. Additionally, he proposes empowering a randomly sampled committee of small stakes with enhanced governance rights. This move could pave the way for a more decentralized and robust Ethereum ecosystem.
As Ethereum continues its journey, the contemplations and insights from its co-founder serve as a guiding light. The ongoing discourse on Ethereum’s direction, especially regarding its staking structure and protocol integration, is bound to shape its future in the decentralized world.
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