Ethereum co-founder Vitalik Buterin Proposes Technical Changes to Enhance Liquid Staking Decentralization

In a recent blog post, Ethereum co-founder Vitalik Buterin unveiled his vision for integrating various protocols directly into the Ethereum source code. Buterin’s proposals touch upon concepts such as ERC-4337, ZK-EVM, Mempool Private, and Liquid Staking. While these ideas may reshape the Ethereum landscape, Buterin acknowledges that careful considerations are needed, and many protocols will evolve over time.

Buterin’s primary focus lies in what he terms “Enshring” – the integration of these protocols directly into the Ethereum source code. This approach aims to streamline the Ethereum ecosystem by embedding these protocols at its core. However, Buterin also acknowledges that there are several aspects to consider, and many protocols will undergo changes as they mature.

One significant concern raised by Buterin is related to the centralization of service providers within the Liquid Staking ecosystem. Notably, the Lido Finance protocol currently controls a staggering 32% of the total ETH staked on the network. Buterin highlights that both Lido and Rocket Pool, two prominent Liquid Staking protocols, carry distinct risks, emphasizing the need for additional mechanisms to ensure safety.

Rather than relying on ethical and moral aspects, Buterin proposes technical changes to decentralize the Liquid Staking market. These solutions include reimagining Rocket Pool’s approach and assigning certain governance rights to a random group of stakers.

The Ethereum community has been eagerly awaiting Buterin’s insights and proposals, given his prominent role in shaping the Ethereum network. His vision for the integration of these protocols directly into the Ethereum source code reflects his ongoing commitment to making the platform more efficient, secure, and decentralized.

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