A Fix for Ethereum’s Centralization Problem…

TL;DR

• Barnabé Monnot has proposed a ‘low barrier to entry’ version of ETH staking, designed to entice anyone/everyone, and help diversify the ETH staking market.

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Ok, lightning round on ETH staking:

If you want to earn ETH tokens by processing transactions on the Ethereum network, you can:

Stake (aka lock up) your tokens → start processing transactions → earn 5% interest on your total staked ETH per year.

That’s the carrot, now here’s the stick:

If you try and do anything dodgy (like process a bad transaction), others on the network will call you out (and as long as the majority is against you) you’ll lose a chunk of your staked ETH.

Ok, cool. Next, onto the centralization issue…

To process transactions on Ethereum yourself, you need to stake a minimum of 32 ETH ($108k) — say it with us now: “OOOFT!”

So a cottage industry has sprung up, where companies (like Lido) front the initial 32 ETH and let others contribute and earn 5% on however much they want.

Only problem is:

These companies pretty much own the ETH staking market — hell, Lido alone owns an estimated 30%.

A system where bad actors are weeded out by the majority of stake holders policing dodgy transactions is cool and all…

But it breaks down if/when ‘the majority’ is a single entity.

Now comes a new solution from Ethereum researcher, Barnabé Monnot (helluva name!):

We keep everything described up above…but add a ‘staking lite’ version.

Where users can join with lower amounts of initial staked ETH, will be guaranteed to never lose that stake, and will be randomly called upon (lottery style, and much more sporadicly) to process transactions.

This low barrier to entry approach is designed to entice anyone n’ everyone to start staking, and diversify the staking market.

Not bad!