Ethereum co-founder, Vitalik Buterin, proposes a solution to address correlated validation failures, aiming to enhance blockchain decentralization. A quantitative analysis by Ethereum Foundation analyst Toni Wahrstatter highlights the risk of centralization due to economies of scale in blockchain networks. Buterin’s proposal suggests penalizing validators under the same command to mitigate these risks.
The proposal aims to create a more balanced ecosystem, facilitating the inclusion of small validators. It targets validators in the same cluster, recognizing the higher risk of correlated failures due to shared infrastructure. Penalties are imposed by adjusting the average for missed attestations, discouraging large entities from dominating multiple validators and promoting a distributed network topology.
This change could shift the landscape of network management, particularly affecting staking pools with significant holdings like Lido, which holds approximately $34 billion in assets. By enhancing penalties for correlation failures, Buterin’s proposal may make solo staking more economically viable compared to pooling, encouraging participant-decentralized staking choices.
While anticipation mounts for the approval of an Ethereum ETF, firms like VanEck and CoinShares remain skeptical about immediate approval. The U.S. SEC’s delay in deciding on Ether ETF applications from industry giants such as BlackRock and Fidelity contributes to the uncertainty. VanEck CEO Jan Van Eck’s cautious remarks at the Paris Blockchain Week reflect the broader challenges facing cryptocurrency ETFs in obtaining regulatory approval.