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ethereum co-founder Vitalik Buterin launched a proposal to improve the decentralization and fairness of the ethereum network's staking process, marking a significant step in perfecting the protocol.
Nicknamed Within the “anti-correlation incentives” program, this initiative seeks to penalize what validators consider routine errors, such as not completing a certification, a vital process for the security and efficiency of the network.
The rationale for Buterin's proposal arises from an observation within decentralized systems: errors made by one participant are likely to be reflected in other nodes or validators controlled by the same entity.
The anti-correlation incentive is designed to discourage such uniformity in errors, thus encouraging a more distributed and robust network structure.
Central to Buterin's argument is the concern that without such measures, attempts to promote decentralization could inadvertently foster only the appearance of compliance. It might appear that validators are simply diversifying without genuinely distributing control or resources, thus maintaining the status quo under the guise of decentralization.
ethereum already employs penalty mechanisms for serious violations, known as slashing, but they have historically been reserved for egregious or malicious behavior. However, the proposed anti-correlation incentive program would integrate sanctions into the network's daily operations.
The approach aims to particularly address large stakeholders who operate numerous validators from a singular location or device, which could lead to widespread and correlated failures within the network.
Buterin suggests that the new program would force these large entities to genuinely diversify their operations, thereby reducing the risk of simultaneous bankruptcies while allowing them to take advantage of economies of scale. The idea is to balance the scale advantages of large validators with the need for a decentralized and resilient network.
To ensure fairness, the proposal is designed to primarily impact large validators, with safeguards in place to avoid undue hardship for smaller participants. It ensures that the punitive aspects of the program are directed where they can foster real change, without disproportionately affecting those with the least resources.
Speaking at ETHTaipei 2024, which took place from March 21 to 24, Buterin previously talked about the “bet rainbow.” The concept encourages diversity in service providers, attempting to further address ethereum's centralization issues.
Their concern about centralization was highlighted by the dominance of platforms like Lido Finance, which, at one point, controlled more than 70% of the assets staked on ethereum even though they were distributed among numerous validators.
