Ethereum Foundation researcher Mike Neuder recently suggested in an article titled “Issuance Issues” that Ethereum should address some of the current problems it faces by reducing token issuance in the next Electra upgrade, particularly in response to the centralization risks in PoS staking. The proposal aims to “preserve the survivability and proportion of independent stakeholder interests” including the feasibility of maintaining independent staking compared to liquidity staking.
However, this proposal has faced opposition from within the Ethereum community. For example, Eric Conner, co-author of Ethereum Improvement Proposal (EIP) 1559, argued that Neuder’s proposal would undermine the efforts of the community to use ETH as a currency. Additionally, Ahmad Bitar, a core Ethereum developer, opposed the proposal, stating that its goals were unclear and that the current issuance curve has not eroded the value of Ethereum. Furthermore, Ryan Berckmans, an Ethereum investor, stated that the consequences of not changing the issuance curve are speculative, and it is currently unclear whether it would harm Ethereum and its community under normal issuance conditions.
Vitalik Buterin, also known as V, has been concerned about the centralization risks in Ethereum’s PoS staking. He recently published an article on Farcaster and the Ethereum research forum titled “Decentralizing Staking Through More Counter-Incentives.” In this article, he proposed a strategy to encourage better decentralization through “punishing correlated behavior.” If a validator behaves improperly (including accidental situations), the severity of their punishment would increase as the number of other validators behaving improperly at the same time (measured by the total amount of ETH they hold) increases. Vitalik also defined two types of common failure cases, such as the “proof of custody” failures that almost all validators occasionally make: (i) Fumbles, when a validator misses a proof in the current epoch but correctly proved in the previous epoch, and (ii) Misses, when a validator misses a proof in the current epoch and also missed a proof in the previous epoch.
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