How Ethereum's Scourge upgrade reduces staking censorship: Buterin

Ethereum co-founder Vitalik Buterin shared his insights on the next upgrade in Ethereum’s technology roadmap, “The Scourge.”

This aims to fix issues surrounding centralization concerns in Ethereum staking and block production. Buterin proposed several fixes for these shortcomings faced by layer 1 blockchains.

The Ethereum disaster of reducing PoS centralization

Following Ethereum's merge upgrade in late 2022, the smart contract blockchain moved from a proof-of-work (PoW) consensus mechanism to a proof-of-stake (PoS) model. This allows ETH holders to stake their holdings for additional rewards, block production, and network security.

Although this feature has benefited the ecosystem, Buterin highlighted that the centralization of staking poses “one of the biggest risks” to the L1 blockchain, creating further challenges within the network. He added that it is possible.

In an Oct. 20 blog post, Buterin said the PoS model's economies of scale could lead to smaller stakers flocking to larger pools, and larger staking pools potentially dominating the market. emphasized.

Currently, approximately 30% of the ETH supply is staked. Buterin explained that this is enough to protect the blockchain from a 51% attack. However, if this number increases significantly, staking will become an “obligation” for all ETH holders, a single Liquid Staking Token (LST) will overtake the majority of staking, and staking will become a “duty” for all ETH holders. Risks such as “money” network effects will arise. The reliability of the slash mechanism may be weakened by the impact of blockchain.

The co-founders of Ethereum proposed a solution that would limit the amount of ETH that each user can stake and limit the staking penalty to 12.5% ​​of the staked coins. Buterin also proposed a two-tier staking implementation that would split staked ETH into slashable and non-slashable staking.

Calamity to solve block construction challenges

Regarding Ethereum block generation, Ethereum Foundation researchers revealed that two entities, Beaverbuild and Titan Builders, generated 88.7% of ETH blocks within the first two weeks of this month, raising concerns about centralization. caused it.

Currently, Ethereum employs proposer and constructor separation for block generation. This is a mechanism by which builders create blocks for proposers to review. Buterin said actors performing “specialized” tasks could easily be centralized.

Buterin emphasized that Beaverbuild and Titan Builder do not generate 100% of the network's blocks, so they cannot independently censor transactions. You still run the risk of transactions being delayed by 114 seconds instead of 6 seconds. This delay can be dangerous when time-sensitive transactions are involved, creating the risk of a sandwich attack.

The creators of Ethereum shared two possible solutions to this problem. One is the Forked Choice Forced Inclusion List (FOCIL) proposal. In this proposal, the proposer or stakeholder selects the transactions, and the builder decides how to order the transactions and how to “add new transactions.”

The second approach involves introducing multiple concurrent proposer (MCP) schemes like BRAID. This “distributes the block generation process among many actors so that each proposer requires only a moderate amount of knowledge to maximize revenue.”