Key Points
- Ethereum co-founder Vitalik Buterin reveals a new roadmap for Ethereum as part of the “Scourge” upgrade.
- Buterin discusses the potential strategies to mitigate Ethereum staking centralization risks.
Ethereum’s co-founder, Vitalik Buterin, has recently shared a series of blog posts detailing a new roadmap for Ethereum. This roadmap is part of the upcoming “Scourge” upgrade.
He also outlined potential strategies that the blockchain community could implement to address the centralization risks associated with Ethereum staking.
‘Scourge’ Upgrade and Ethereum Staking
In previous blog posts, Buterin discussed the “Merge” and “Surge” upgrades. These enhancements aim to improve Ethereum staking and set an ambitious goal of achieving 100,000 transactions per second across Layer 1 and Layer 2 networks on the blockchain.
In his latest blog post, Buterin focuses on the risk of proof-of-stake centralization, which he regards as one of the most significant threats to Ethereum’s Layer 1. He proposes several strategies to mitigate these risks as part of the planned “Scourge” upgrade.
Buterin explains that the two main areas where these risks are apparent are in staking capital provision and block construction.
Addressing MEV and Censorship
Buterin also discusses the issue of Maximal Extractable Value (MEV). He notes that currently, “two actors are choosing the contents of roughly 88% of Ethereum blocks”. This situation increases the risk of censorship, which can delay a transaction by minutes and cause problems with token swaps or time-sensitive liquidations.
An encrypted mempool could be a crucial part of the solution, making it harder for block proposers to censor specific transactions. Buterin mentions in his blog post that further development is needed to create a design that is “both robust and reasonably simple, and plausibly ready for implementation”.
Buterin suggests a conservative strategy of implementing a solution where stakers’ authority is limited, and most of the authority is auctioned off. He proposes slowly increasing stakers’ authority over time as we learn more about the MEV market operation on the live network.
Capital Provision and Ethereum Staking
Buterin states that 30% of the ETH supply is currently staked, which he considers “far more than enough to protect Ethereum from 51% attacks”. However, he warns that if this metric reaches 100%, it could pose more risks, including the weakening of the effect of slashing and the unnecessary issuance of an extra one million ether per year.
In such a scenario, a single liquid staking token could take over the “money network” effects from the Ethereum blockchain. Buterin suggests two strategies to address the issue: capping the amount of ether a user can stake and introducing a two-tier staking system.
In this system, staked ether would be divided into a slashable and an unslashable portion. Buterin writes, “The main remaining task is to either agree to do nothing, and accept the risks of almost all ETH being inside LSTs, or finalize and agree on the details and parameters of one of the…proposals”.
Buterin also proposes a few application-level solutions to the issues above. These include developing and promoting specialized staking hardware solutions and reducing MEV through sophisticated application design. He also suggests supporting solo stakers through airdrops.
