Taking a Stand Against Centralization Challenges
Vitalik Buterin, the co-founder of Ethereum, delivered a speech at the ETHTaipei 2024 event in Taipei from March 21 to 24. During his talk, Buterin addressed a critical issue with Ethereum’s proof-of-stake (PoS) system, which is the potential for centralization. He expressed his support for rainbow staking, a concept introduced by Barnabe Monneau of the Ethereum Foundation in February. The proposed mechanism aims to incentivize different types of service providers, including both individuals and professionals, to participate.
Buterin’s main idea is to consolidate the current division into “operators” and “delegators” and introduce categories of “heavy” and “light” services with varying levels of responsibility and income.
During his speech, Buterin highlighted a group of stakeholders he referred to as “lazy stakers.” These individuals own a minimum of 32 Ethereum (ETH) tokens, which is the threshold for becoming a validator. Typically, this group relies on pools and liquid staking instruments. However, Buterin believes that stakeholders should consider individual staking to mitigate the risks of centralization.
Buterin also pointed out that users have been advised against using Lido Finance, despite its total value locked (TVL) now standing at $34.3 billion, making it the largest Ethereum validator and controlling over 30% of assets. Other major providers of liquid staking services include Binance and Coinbase, both of which are prominent cryptocurrency exchanges.
In October 2023, Buterin proposed staking changes aimed at reducing centralization within Ethereum. He expressed concerns about the distribution of assets among Ethereum liquid staking providers. At that time, the Lido Finance platform controlled over 70% of Ethereum in staking, although the assets were distributed among various validators.
