By Assad Jafri

Compilation | Huo Huo

As the world's second largest blockchain by market value, Ethereum's continued development is crucial to its huge user base, and it needs to enhance decentralization, efficiency and security through continuous revisions.

Ethereum founder Vitalik Buterin unveiled an innovative proposal this week to improve Ethereum’s staking mechanism.

Decentralized Stake Vision

Vitalik’s proposal this time mainly revolves around the limitations of the current staking system.

Notably, he pointed out the decentralization issues surrounding the node operator selection process for various staking pools and pointed out the inefficiencies in the current Layer 1 consensus mechanism.

Currently, the limit on individual stakes combined with liquidity stake issues means the platform can only process about 100,000 to 1 million BLS signatures per session. (Note: In cryptocurrency and blockchain networks, BLS signatures are used to verify and authorize transactions.)

In the case of accountability in signatures, requiring each signature to have a record of participation further complicates the problem. If Ethereum scales globally, relying solely on full danksharding storage may still not be enough, as each slot has a capacity of only 16 MB, which can only accommodate about 64 million stakers.

Drawing inspiration from the models implemented by Rocketpool and Lido, Vitalik suggested a two-tier staking system where node operators and delegators become the core players.

The two-tier staking model is specifically divided into:

1) A punishable tier with high complexity and involvement but limited participants (around 10,000 people).

2) A tier with low complexity, irregular participation, and minimal or no risk of punishment.

The model will involve modifying the validator balance cap and implementing balance thresholds to classify validators into these two tiers.

Vitalik elaborated on the potential role of small stakeholders:

1) Each slot randomly selects 10,000 small stakers, who will sign the block header of their slot. (Note: The block header usually contains important information about the block, such as the block number, timestamp, hash value of the previous block, etc.) If there is a disagreement between the staker and the node operator, an error alert will be triggered, prompting the community to intervene.

2) Through a system where a principal declares that he is online and is willing to act as a small pledger for a certain period of time. In order for the node's message to be confirmed, it needs to be recognized by both the node and the randomly selected principal.

3) Another approach is for delegators to signal their availability, and then selected delegators confirm their online status. These delegators can then publish inclusion lists for block validation.

(Note: "Inclusion list" refers to a list published by selected delegators, which contains the public keys or other relevant information of recognized delegators for block verification. These delegators are selected to participate in the block verification process by confirming their online status and availability.)

The role of small stakers is characterized by irregular participation and unpunishable characteristics. Importantly, the role of small stakers addresses an important issue, which is that node operators may occupy more than 51% of the majority power in the network and attempt to censor transactions. By introducing the role of small stakers, the risk of node operators centralizing control of the network can be reduced, thereby preventing them from abusing their power to censor or restrict transactions. The participation of small stakers can increase the decentralization of the network and provide greater security and anti-censorship, thereby protecting the rights and interests of users.

Vitalik also considered implementing these solutions in the context of the staking pool feature. He suggested a protocol that allows validators to specify two staking keys: a persistent key and an ephemeral key, which together determine the finality of the block.

Influence

Vitalik’s proposal is more than just a technical fix; it’s a vision for the future of Ethereum. By further decentralizing the staking process and integrating a safety net, he aims to: 1) Support those who lack the resources to stake individually and provide them with a meaningful way to participate.

2) Reduce the transaction processing load on the Ethereum consensus layer, making it easier for everyone to run a validator node.

By decentralizing the staking process and embedding safeguards, the goal becomes clear: provide meaningful participation for those who traditionally lack the means to stake individually, and reduce transaction processing pressure on Ethereum’s consensus layer. This helps achieve a more inclusive platform that enables everyone who intends to run a validator node to participate.

These proposals are based on the principle of minimal modification and combined with a strategic perspective, ultimately aiming to achieve a balanced, decentralized, and efficiently operating Ethereum network.