While Ethereum (ETH) inches closer to the mainnet release of its Proof-of-Stake version, DeFi enthusiasts are asking whether ETH2 staking can be protected from whales’ domination
Many Ethereum (ETH) enthusiasts are concerned about the possible centralization of ETH2 staking process. As such, they are discussing measures to prevent the ‘oligarchs’ from domination.
High fees for fat cats
Pseudonymous Ethereum (ETH) enthusiast Superphiz.eth who is an activist of Ethereum Beacon Chain community, has taken to Twitter to share his קאַנסערנז about the centralization in upcoming ETH2 network.
איך ווונדער, ווער וועט זיין דער ערשטער סטאַקינג שפּייַזער צו עפנטלעך יבערגעבן צו באַגרענעצן זיך צו נישט אַרבעטן מער ווי 22% פון וואַלאַדייטערז אויף די קייט? ווער טאָן איר ווילן צו זען טרעטלען אַרויף צו די טעלער און פּרייאָראַטייז ביקאַן קייט געזונט העכער פּראַפיץ?
Namely, he is guessing which pool will be the first to limit its own staking ‘power’ (share of controlled validators participating in signing Ethereum (ETH) transactions) by e.g. 22 per cent of total validators number.
אַדס
Potentially, this decision would cut the profits of this ‘pioneer’ but it would greatly contribute to the health of network as a whole by reducing the possibility of 51% attack.
Ethereum’s founder Vitalik Buterin proposed ‘economical’ motivation for this limit. It looks reasonable for him to increase fees for the participants of staking pools controlling over 15 % of 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) מייַ קסנומקס, קסנומקס
Once the ‘share’ of this or that pool is back below 15 per cent, the fees can be reduced to ‘regular’ levels again.
Here’s how Cardano (ADA) addressed such issues
It should be noticed that Ethereum (ETH) – even in its Proof-of-Work (PoW) version is criticised for ‘centralization’: major mining pools are controlling large lions share of its hashrate.
As covered by U.Today previously, Cardano (ADA) community faced similar issues after the launch of ADA staking. Step by step, Input Output Global (IOG) introduced a number of limitations to make staking through large pools less profitable.
By adjusting so called k-parameter in 2021, it allowed small and medium pools to surpass the top 10 staking whales by share of ADA staked.
Source: https://u.today/ethereums-vitalik-buterin-explains-how-we-can-prevent-whales-from-dominating-in-staking