Outside Source
Reactions continue to emerge following Ethereum co-founder Vitalik Buterin’s latest proposal in “The Scourge,” addressing Ethereum’s future.
Ethereum (ETH) co-founder Vitalik Buterin recently unveiled the final part of his vision for Ethereum’s future, known as “The Scourge.”
This proposal targets two main issues: the rising centralization in Ethereum’s block construction and the increasing dominance of liquid staking providers.
Buterin’s plan includes introducing a two-tier staking system, capping penalties for stakers at 12.5%, and allowing proposers more control over transaction selection.
The proposal comes after warnings from Toni Wahrstätter, an Ethereum researcher who cited concerns about the centralization of block production before Buterin’s announcement.
According to Wahrstätter, two builders—Titan Builder and Beaverbuild—have produced nearly 88.7% of Ethereum’s blocks in the last two weeks.
This alarming centralization stems from the growth of private order flows, where certain decentralized applications sell exclusive access to their transactions. This minimizes competition, narrowing the transaction pool and threatening decentralization.
Wahrstätter highlighted that while Ethereum is making progress in resisting censorship, this centralization could lead to more severe issues.
In the absence of strong competition, builders could be incentivized to take on more risks, potentially destabilizing the network. According to Wahrstätter, these risks could be minimized with better public access to order flow, encouraging greater competition.
Industry reactions
Industry reactions have trailed Buterin’s proposed solution. Mario Raufal, host of the Crypto Roundtable, supported the proposal, especially the two-tier staking approach.
He believes this change could significantly shake up the dominance of large players in block production and transaction selection, fostering a more decentralized environment.
However, not everyone agrees. Dr. Jasper, a community advocate for Rocket Pool, expressed skepticism, particularly regarding Buterin’s suggestion to lower terminal inflation.
Jasper believes this could lead to unfavorable outcomes for solo stakers. He pointed out that large liquid staking token providers like Lido and Coinbase, with minimal operational costs, would continue to thrive even with yields as low as 0.7%.
In contrast, solo stakers, who typically have higher fixed costs, would struggle to remain profitable below an 0.8% annual percentage return.
He predicts that as staking rewards dwindle, solo stakers would leave first, with LST providers remaining profitable even as yields approach fractions of a percent.
This article first appeared at crypto.news
