Ethereum’s co-creator, Vitalik Buterin, has put forward a number of solutions to address the issues of block production and staking centralization in Ethereum’s technical roadmap phase known as “Scourge.”
Buterin expressed concern that the concentration of staking power in larger pools is leading to smaller pools leaving the network. He also highlighted that two entities were responsible for 88% of Ethereum blocks over the first two weeks of this month. He emphasized that this centralization poses a significant risk to Ethereum, potentially resulting in transaction censorship and other crises.
According to Buterin, the current 30% of Ether (ETH) staked is already sufficient to protect Ethereum from 51% attacks. However, if almost all Ether were to be staked, there would be additional risks. This would make staking less profitable and impose more obligations on Ether holders. Buterin also mentioned that a liquid staking token could potentially replace Ether as the dominant network currency.
To address these concerns, Buterin proposed capping the amount of Ether that can be staked and limiting staking penalties to 12.5% of staked Ether. He suggested implementing a two-tier staking model, with one tier being slashable (risk-bearing) and the other tier being unslashable (risk-free).
The issue of block production centralization was brought to light by Ethereum Foundation researcher Toni Wahrstätter, who revealed that two entities, Beaverbuild and Titan Builder, were responsible for building 88.7% of all Ethereum blocks in the first two weeks of October. Ethereum’s block construction follows the proposer-builder separation method, where builders create blocks for the proposer to review and select the most profitable one.
Buterin acknowledged that assigning specialized tasks to specific actors has led to centralization problems. While Ethereum’s security is not currently at risk, the concentration of block production could result in increased transaction censorship and longer block inclusion times for Ethereum users.
To address these issues, Buterin proposed two solutions. The first is a “fork-choice-enforced inclusion lists” proposal, which would give the task of choosing transactions back to the proposer or staker, while the builder would only determine the order of the transactions. The second solution is “BRAID,” which involves splitting the block production process among multiple actors, each requiring a moderate level of sophistication to maximize their revenue.
In conclusion, Buterin’s proposed solutions aim to address the issues of block production and staking centralization in Ethereum, safeguarding the network from potential risks and ensuring its continued stability and decentralization.