Airdrop Army

Vitalik Buterin is stirring the pot again, this time targeting Ethereum’s growing centralization issues. In an Oct. 20 post, Buterin laid out several ideas to address block production and staking centralization that’s starting to show cracks in the system. It turns out, two block builders have been producing a staggering 88% of Ethereum’s blocks in the first half of October, and that’s not sitting well with Buterin.

Staking Pools: Shrinking or Merging?

Buterin expressed his concerns over how small staking pools are gravitating toward larger ones, adding to the centralization issue. His biggest worry is that this could push Ethereum toward transaction censorship and other headaches that Ethereum doesn’t want on its roadmap. He pointed out, “One of the biggest risks to the Ethereum L1 is proof-of-stake centralizing due to economic pressures.” So, while 30% of all Ether staked right now is enough to fend off a 51% attack, more centralization could flip the situation, introducing risks and reducing the profitability of staking.

But it gets worse: Staking could become burdensome if most Ether ends up staked. With almost all Ether in the game, Buterin warned that slashing penalties will weaken, and a liquid staking token might overshadow Ether’s network effects. That doesn’t sound like a scenario Ethereum would want to find itself in.

Buterin’s Proposed Fixes

Buterin’s proposed remedies involve capping how much Ether anyone can stake and dividing staking into two categories—risk-bearing (slashable) and risk-free (unslashable). The idea is that smaller stakes might lessen the pressure on individual stakers and stop the stampede into larger staking pools.

On the block production side, Buterin also pointed to the centralization of specialized tasks under the proposer-builder separation method. Builders like Beaverbuild and Titan Builder are crafting nearly 89% of Ethereum’s blocks, so Buterin believes this could open the door to transaction censorship and slower block inclusion.

Buterin’s got ideas though, like the “fork-choice-enforced inclusion lists,” where the power of choosing transactions returns to the proposer. Another alternative is the BRAID proposal, which splits block production into several less centralized actors. The goal? Decentralize block building, while making sure each actor can still maximize their revenue without needing to monopolize the process.