Key Points
• Vitalik Buterin addresses centralization risks in Ethereum’s proof-of-stake system, particularly in block construction and staking capital provision, which could lead to 51% attacks and transaction censorship.
• The article outlines potential solutions including committee inclusion lists, two-tiered staking models, and encrypted mempools to minimize centralization and excessive value extraction from users.
Ethereum co-founder Vitalik Buterin has unveiled a series of potential solutions to address growing centralization concerns in the Ethereum protocol. In a recent blog post, Buterin detailed an initiative called “The Scourge,” which aims to combat the centralization risks inherent in Ethereum’s proof-of-stake system and minimize excessive value extraction from users.
Centralization Concerns in Block Construction and Staking
Buterin highlights two primary areas of concern: block construction and staking capital provision. The current system, which relies on extra-protocol proposer-builder separation through MEVBoost, has led to a concentration of power among a small number of specialized actors. According to Buterin, two entities are currently responsible for choosing the contents of roughly 88% of Ethereum blocks, raising significant centralization concerns.
This centralization poses risks such as potential transaction censorship and market manipulation. While complete censorship would require 100% of block builders to participate, even 88% censorship could lead to significant delays in transaction processing, particularly impacting time-sensitive operations like DeFi liquidations.
Proposed Solutions to Decentralize Block Construction
To address these issues, Buterin proposes several potential solutions:
1. Inclusion Lists and Committee-Based Approaches
One leading solution involves breaking down the block production task further by introducing inclusion lists. This approach would give the task of choosing transactions back to randomly selected stakers, while builders would only be responsible for ordering and inserting some of their own transactions.
An extension of this idea is the fork-choice-enforced inclusion lists (FOCIL), which involves a committee of multiple inclusion list creators per block. This method aims to make it significantly more difficult for any single entity to censor transactions.
2. Multiple Concurrent Proposers (MCP) Schemes
Another approach discussed is the use of multiple concurrent proposers (MCP) schemes, such as BRAID. Unlike the inclusion list method, BRAID seeks to distribute the block production process among many actors without splitting the role into low and high economies-of-scale parts. This approach aims to create a system where each proposer only needs a medium amount of sophistication to maximize their revenue.
Encrypted Mempools: A Crucial Technology
Buterin emphasizes the importance of encrypted mempools in implementing many of these designs. This technology allows users to broadcast their transactions in encrypted form, along with proofs of validity. Transactions are then included in blocks while still encrypted, preventing block builders from knowing the contents until later revelation.
Two main techniques for implementing encrypted mempools are threshold decryption and delay encryption, both aimed at ensuring that transaction contents are eventually revealed without creating new opportunities for exploitation.
Addressing Staking Economics
Beyond block construction, Buterin also touches on the need to address staking economics. He mentions ideas such as two-tiered staking models and reducing issuance to cap the percentage of ETH staked. These proposals aim to balance the incentives for staking while preventing over-centralization of staked ETH.
The Road Ahead
While Buterin’s proposals offer promising avenues for addressing Ethereum’s centralization concerns, implementing these changes will require careful consideration and community consensus. The Ethereum community will need to weigh the trade-offs between decentralization, efficiency, and security as it moves forward with any potential protocol changes.
As Ethereum continues to evolve, initiatives like “The Scourge” demonstrate the ongoing commitment to maintaining the network’s foundational principles of decentralization and security. The coming months and years will likely see continued debate and refinement of these ideas as the Ethereum ecosystem works to address these critical challenges.
