Vitalik Buterin is cooking up a new way to decentralize Ethereum staking

 Vitalik Buterin has proposed a plan to encourage greater decentralization inside the Ethereum network. According to his proposal, validators should fine based on how far they depart from their typical failure rate.

This proposal, which posted on March 27 in the Ethereum Research Forum, seeks to improve decentralized staking by providing incentives that dissuade validators from experiencing correlated failures.

According to Buterin’s notion, if validators controlled by the same entity fail concurrently rather than separately, a heavier penalty would imposed. This strategy is based on the idea that mistakes made by a single large entity are more likely to be repeated across all the identities under its control.

Buterin’s Proposal for Validator Fines and Decentralization

According to his proposal, validators should fined according to the differences in the average failure rate. The price paid for each failure would increase if a large number of validators failed during a certain slot.

According to simulations, this strategy could reduce the advantage that larger Ethereum stakers have over smaller ones because associated failures by large entities are more likely to create spikes in the failure rate.

The idea may encourage decentralization by providing independent infrastructure for each validator and increase the economic viability of solo staking in comparison to staking pools.

To reduce the average big validator’s advantage over small validators and investigate the effects on client and regional decentralization, Buterin suggested other solutions, such as various punishment schemes.

Concerns Over Lido’s Dominance in Staking

No mention made by him of the potential to lower the 32 Ether solo staking limit, which is now equivalent to about $111,500. Stakers continue to favor staking pools and liquid staking services like Lido because they enable engagement with fewer ETH.

Currently, Lido has staked $34 billion worth of ETH, or almost 30% of the total supply. Developers and supporters of Ethereum have already issued warnings on Lido’s hegemony and “cartelization,” which allows for the extraction of disproportionate earnings in comparison to non-pooled funds.