Here’s How Ethereum’s Scourge Update Will Reduce Stake Censorship: Buterin

Ethereum co-founder Vitalik Buterin has shared information about Ethereum’s next update to its technical roadmap: The Scourge.

It aims to solve issues related to the centralization of stake and production block of Ethereum. Buterin has proposed several solutions to these shortcomings that face the Layer 1 blockchain.

Ethereum’s scourge to reduce PoS centralization

After Ethereum’s Merge update in late 2022, the smart contract blockchain moved from a Proof-of-Work (PoW) consensus mechanism to a Proof-of-Stake (PoS) model. This allowed ETH holders to participate in their holdings for additional rewards, block production and network security.

While this feature has benefited the ecosystem, Buterin stressed that the centralization of stakes presents “one of the biggest risks” to the L1 blockchain, adding that it could create more challenges within the network.

In a blog post on October 20, Buterin emphasized that economies of scale in PoS models can lead to large staking pools dominating the market as small stakers flock to large pools.

About 30% of the ETH supply is currently being staked. Buterin explained that this is enough to protect the blockchain from the 51% attack. However, if this number grows significantly, there will be risks, such as participation becoming a “must” for all ETH holders, a single liquid token of participation (LST) exceeding the majority of participation and the “money” network effect of the blockchain and the credibility of the cutting mechanism could be weakened.

The co-founder of Ethereum proposed a solution: limit the amount of ETH that each user can bet and limit the penalties for staking to 12.5% ​​of the coins bet. Buterin also suggested the implementation of two-tier staking, dividing the staked ETH into a reduced or no stake.

The scourge for solving block building challenges

Regarding Ethereum block production, a researcher from the Ethereum Foundation revealed that two entities, Beaverbuild and Titan Builder, produced 88.7% of ETH blocks in the first two weeks of this month, awakening concerns about centralization.

Currently, Ethereum adopts proposer-builder separation for block production, a mechanism where builders create blocks for proposers to review. Buterin stated that actors performing “specialized” tasks can easily be centralized.

Buterin emphasized that Beaverbuild and Titan Builder cannot independently censor transactions, as they do not produce 100% of the network’s blocks. However, there is a risk that transactions will be delayed up to 114 seconds instead of 6 seconds. This delay can be dangerous when it involves time-sensitive transactions and presents the risk of sandwich attacks.

The creator of Ethereum shared two possible solutions to the problem. One is the proposal for fork-choice forced inclusion lists (FOCIL), in which proposers or participants select transactions while constructors decide how transactions are ordered and “add new transactions”.

The second approach is to introduce multi-proposer (MCP) schemes like BRAID, which distributes “the block production process among many actors, such that each proposer only needs to have an average amount of sophistication to maximize their income” .

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