Ethereum has switched to a proof-of-stake (PoS) consensus method in an effort to improve the security, efficiency, and scalability of the network. The new design intends to overcome various difficulties and restrictions that the staking process now faces.
There are still some challenges to overcome, though. For instance, users must pay 32 ETH as a considerable entry hurdle in order to stake alone. With staking pools and the excessive amount of signatures needed for each block, there is also a risk of centralization.
A Two-Tier Solution to Staking
Ethereum co-founder Vitalik Buterin presented potential answers to these problems in a recent blog post. Implementing a two-tiered staking system with two participant categories—node operators and delegators—is one of his suggestions.
Protocol and staking pool changes that could improve decentralization and reduce consensus overhead: https://t.co/PvdKeYmObj
— vitalik.eth (@VitalikButerin) October 7, 2023
Node operators run nodes that process transactions and create new blocks at the same time as serving as validators and staking 32 ETH. They risk severe fines if they act maliciously or in violation of ethical standards.
Delegators, on the other hand, possess stakes lower than 32 ETH and allocate their stake to selected node operators. Although they don’t run the nodes themselves, they are able to choose whose node operators they support and participate in consensus in more limited ways.
Advantages of the Plan
Buterin emphasized the many advantages this idea may offer the network and its customers in his defense. From the perspective of the network, it has the ability to deliver a number of benefits. First off, scaling would be considerably improved and computational overhead would be avoided by lowering the number of signatures per block to around 10,000.
By making it harder for attackers to gain control of a majority stake, it would also support network security and decentralization. This idea also makes it possible to use smart contracts, liquidity tokens, and other mechanisms to create more innovative and flexible staking systems.
He also emphasized the potential for implementing these improvements at different levels of abstraction both within and between staking pools, as well as within the protocol itself. In the end, he suggested a minimal viable enshrinement strategy that would still achieve the intended result while limiting protocol complexity and economic impacts.