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Reactions continue to emerge following ethereum co-founder Vitalik Buterin's latest proposal in “The Scourge,” which addresses the future of ethereum.
ethereum (eth) co-founder Vitalik Buterin recently revealed the final part of his vision for the future of ethereum, known as “The Scourge.”
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This proposal targets two main issues: the increasing centralization in ethereum block construction and the growing dominance of liquid staking providers.
Buterin's plan includes introducing a two-tier betting system, capping penalties for bettors at 12.5% and allowing proponents greater 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.
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According to Wahrstätter, two builders, Titan Builder and Beaverbuild, have produced almost 88.7% of ethereum blocks in the last two weeks.
This alarming centralization arises from the growth of private order flows, where certain decentralized applications sell exclusive access to your transactions. This minimizes competition, reduces the transaction pool, and threatens decentralization.
Wahrstätter highlighted that while ethereum is making progress in censorship resistance, this centralization could lead to more serious problems.
In the absence of strong competition, builders could be incentivized to take on more risks, which could destabilize the grid. According to Wahrstätter, these risks could be minimized with better public access to the order flow, encouraging greater competition.
Industry reactions
Industry reactions have followed 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 disrupt the dominance of large players in block production and transaction selection, fostering a more decentralized environment.
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However, not everyone agrees. Dr. Jasper, a community advocate for Rocket Pool, expressed skepticism, particularly regarding Buterin's suggestion to reduce terminal inflation.
Jasper believes this could lead to unfavorable results for solo bettors. He noted that large liquid staking token providers like Lido and Coinbase, with minimal operating costs, would continue to thrive even with yields as low as 0.7%.
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In contrast, individual bettors, who typically have higher fixed costs, would struggle to remain profitable below a 0.8% annual percentage return.
He predicts that as staking rewards decline, individual bettors will leave first, and LST providers will remain profitable even as returns approach fractions of a percent.
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