Here's How Ethereum's Scourge Update Will Reduce Staking Censorship: Buterin

ethereum co-founder Vitalik Buterin has shared information about the upcoming ethereum upgrade in his technical roadmap: The Scourge.

Its goal is to solve problems related to centralization in ethereum block production and staking. Buterin has proposed several solutions to these shortcomings faced by the Layer 1 blockchain.

The scourge of ethereum to reduce 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 allowed eth holders to stake their holdings for additional rewards, block production, and network security.

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

On October 20 eth.limo/general/2024/10/20/futures3.html” data-wpel-link=”external” target=”_blank”>blog postButerin emphasized that economies of scale in PoS models can cause large betting pools to dominate the market as small participants flock to large pools.

Around 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 figure grows significantly, there will be risks, such as staking becoming a “must” for all eth holders, a single liquid staking token (LST) overtaking the majority of staking, and the effect of the blockchain “money” network, and the credibility of the reduction mechanism could be weakened.

The ethereum co-founder proposed a solution: limit the amount of eth each user can stake and limit staking penalties to 12.5% ​​of the coins staked. Buterin also suggested implementing two-level staking, splitting the staked eth into either a clipping or a non-clipping stake.

The Scourge to Solve Block Building Challenges

Regarding the production of ethereum blocks, a researcher at the ethereum Foundation x.com/nero_eth/status/1846786871998759141″ data-wpel-link=”external” target=”_blank”>revealed that two entities, Beaverbuild and Titan Builder, produced 88.7% of eth blocks in the first two weeks of this month, raising concerns about centralization.

Currently, ethereum adopts proposer-constructor separation for block production, a mechanism where constructors create blocks for proponents to review. Buterin stated that actors performing “specialized” tasks can easily be centralized.

Buterin highlighted that Beaverbuild and Titan Builder cannot censor transactions independently since they do not produce 100% of the network's blocks. Still, there is a risk that transactions could be delayed by up to 114 seconds instead of 6 seconds. This delay can be dangerous when dealing with urgent transactions and presents the risk of sandwich attacks.

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

The second approach involves introducing multiple concurrent proposer (MCP) schemes like BRAID, which distributes “the block production process among many actors, such that each proposer only needs to have a medium amount of sophistication to maximize its revenue.”

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