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Ethereum co-founder Vitalik Buterin has proposed several solutions to counter the increasing centralization risks in the Ethereum network’s proof-of-stake mechanism, with a particular focus on the economics of block generation and staking. The strategy was outlined.
This proposal comes at a critical time, as recent data on concentration levels in block production indicate.
“Since early October, approximately 88% of the Ethereum block has been decided by just two major organizations,” Buterin pointed out in a comprehensive analysis called “The Scurge” published on Monday, noting that these He emphasized the urgency of addressing the trend toward centralization. His comments are part of the third installment of his ongoing series of essays on the network’s “potential future.”
Notably, at the heart of Buterin’s proposed solution is a rethinking of the block manufacturing process. The current system, which relies heavily on MEVBoost (Maximal Extractable Value Boost), creates what Buterin calls “economies of scale” that inevitably favor large stakeholders. While this concentration has not yet led to major vulnerabilities, it does pose a risk to network security and user experience.
“One of the biggest risks to Ethereum L1 is the centralization of proof-of-stake due to economic pressures. This naturally leads to the dominance of large stakers and the dropout of smaller stakers into larger pools. This increases the risk of 51% attacks, trade censorship, and other crises,” Buterin explained.
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Buterin proposed several innovations to counter these trends, such as implementing “inclusion lists” and encrypted memory pools. These mechanisms help distribute block generation responsibility more evenly across the network while protecting transaction privacy.
This analysis also addressed concerns about the economics of staking, particularly the current situation where approximately 30% of Ethereum’s market supply is locked in staking. Buterin warned that the unchecked growth of staking ETH could lead to several challenges, including turning staking “from a process that generates additional income to an obligation for all crypto holders.” .
Among the proposed solutions is a new two-tier staking scheme that lowers the barrier to entry for individual participants while maintaining network security. In his first essay, Buterin proposed lowering the minimum staking requirement from 32 ETH to 1 ETH to make it easier for users to join the network.
This approach aims to balance accessibility and responsibility, but Buterin acknowledged challenges in implementation, saying, “We need to ensure that the ‘risk-free layer’ has some useful role and some degree of risk.” “There is.”
The proposal also addresses the contentious issue of MEV revenue sharing and suggests protocol-level changes to make these revenues more transparent and equitably distributed among participants. This could help alleviate the centralization pressure that drives users towards large staking pools.
Buterin stressed to private stakeholders the need to reduce operational costs, saying that current cloud solutions cost about $60 per month to run nodes, making it difficult for small participants to He pointed out that this has a significant impact on potential profits.
That said, these proposals represent an important step toward addressing Ethereum’s growing pains as it continues to mature as a proof-of-stake network while balancing the needs of security, decentralization, and accessibility. I am.
