Ethereum Co-Founder Vitalik Buterin recently addressed the audience at the ETHTaipei 2024 event in Taipei, discussing the centralization risks associated with Ethereum’s proof-of-stake (PoS) system. Buterin advocated for the concept of rainbow staking, a mechanism introduced by Barnabe Monneau from the Ethereum Foundation to encourage a diverse range of service providers to participate in the network.

During the event, Buterin highlighted the centralization risk of ETH staking, pointing out that major players like LIDO, COINBASE, and BINANCE hold a significant share of the assets. He emphasized the need for a more inclusive framework that allows protocol service providers of all types to contribute.

One of the key proposals put forth by Buterin is the reorganization of stakeholders into categories such as “operators” and “delegators,” as well as the introduction of different service classes with varying levels of responsibility and rewards.

Buterin also addressed the issue of “lazy stakers,” a group that typically holds the minimum threshold of 32 Ethereum to operate as a validator. He suggested that individual staking could help mitigate centralization risks posed by large liquid staking providers like Lido Finance, whose total value locked (TVL) exceeds $34.3 billion.

In a bid to reduce Ethereum’s centralization, Buterin proposed staking changes in October 2023, expressing concerns about the dominance of certain liquid staking providers. While Lido Finance, Binance, and Coinbase are major players in the liquid staking space, efforts are being made to promote a more decentralized ecosystem.

For more insights into Ethereum’s strategies to combat quantum attacks, you can explore Vitalik Buterin’s recent discussions on the topic.

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