Vitalik Buterin explains how to prevent whales from dominating in Ethereum staking

While Ethereum (ETH) moves closer to the mainnet release of its Proof-of-Stake (POS) version, DeFi enthusiasts are questioning whether ETH2 staking can be protected from whale domination or not. Ethereum’s Vitalik Buterin will explain how we can prevent whales from dominating in staking.

Ethereum (ETH) enthusiast nicknamed Superphiz.eth, an activist of the Ethereum Beacon Chain community, has shared his concerns about centralization in the upcoming ETH2 network.

I wonder, who will be the first staking provider to publicly commit to limiting themselves to not operating more than 22% of validators on the chain? Who do you want to see step up to the plate and prioritize beacon chain health above profits?

— superphiz.eth 🦇🔊🐼 (@superphiz) May 13, 2022

Specifically, he is guessing which pool will be the first to limit its own staking ‘power‘ (market share of controlled validators involved in validating ETH transactions), representing 22% of all submissions. accuracy.

That would cut the profits of the ‘pioneer,’ but it would greatly contribute to the stability of the entire network by reducing the chance of a 51% attack.

Vitalik Buterin has proposed an ‘economic’ impetus for this possibility. It makes sense for him to increase fees for staking pool participants who control more than 15% of the network.

Speculative controversial take: we should legitimize price gouging by top stake pool providers. Like, if a stake pool controls > 15%, it should be accepted and even *expected* for the pool to keep increasing its fee rate until it goes back below 15%. https://t.co/cOtuM7Occd

— vitalik.eth (@VitalikButerin) May 14, 2022

Once this pool’s share is back below 15%, fees can be reduced to ‘regular’ levels again.

It should be noted that Ethereum – even in its Proof-of-Work (PoW) version is criticized for being ‘centralized’: large mining pools are controlling large hash rates.

As mentioned by CoinCu earlier, the Cardano (ADA) community has faced similar issues after the launch of ADA staking. Step by step, Input-Output Global (IOG) has introduced some restrictions that make staking through large pools less profitable.