April 19, 2024
Ethereum Co-Founder Vitalik Buterin Expresses Concerns Over ETH Staking Pools
Altcoins News

Ethereum Co-Founder Vitalik Buterin Expresses Concerns Over ETH Staking Pools

Vitalik Buterin, a co-founder of Ethereum, expressed worry about the processes used by Lido and Rocket Pool, two of the biggest ETH staking pool providers.

By market share, Lido and Rocket Pool are the two most liquid ETH staking pools, enabling users to stake ETH and receive rewards without having to entrust their money to a staking smart contract.

Buterin said in a blog post on September 30 that the problems with the Lido model of having its decentralized autonomous organization (DAO) whitelist node operators and the Rocket Pool model of requiring users to deposit 8 ETH to run a node varied.

To indicate the worth of the amount staked, Lido gives customers a derivative token called “staked ETH” or stETH, whereas Rocket Pool enables users to stake ETH by operating a permissionless node.

According to Buterin, Rocket Pool’s strategy would let hostile actors attack the network at a 51% rate, making consumers responsible for the majority of the expenses. In the meantime, Lido’s DAO strategy would result in a scenario in which a single staking token would control a significant part of Ethereum’s validators, making it potentially attackable.

“To the credit of protocols like Lido, they have implemented safeguards against this, but one layer of defence may not be enough,” stated Buterin.

As a temporary fix to the possibility of one provider growing too big and posing a system threat to the blockchain, he suggested encouraging ecosystem users to switch to various staking pool operators.

Enshrining features at the protocol level to limit the consequences of centralization in other domains would be a different approach. According to him, “minimal viable enshrinement” could be a good compromise that solves these issues without being overly concentrated.

“Rather than enshrining a full liquid staking system, changing staking penalty rules will make trustless liquid staking more viable,” concluded Buterin, as an example of how this might be carried out.

Image: Flickr

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