Since Ethereum’s network reached the impressive milestone of one million validators, the community has engaged in lively debates about potential issues that could arise from this quantity. In this context, Vitalik Buterin, co-founder of Ethereum, has come up with a new approach, suggesting incentivizing decentralization of the network by penalizing correlated failures among validators.

Source: CoinTelegraph

Ethereum’s network recently hit the one million validators mark: currently, there are 32 million Ether at stake, roughly valued at $114 billion based on current market prices. Validators ensure the security of the blockchain by monitoring the network for any malicious transactions, such as double spending, where essentially the same currency is spent twice.

Related: A Drop of Ethereum Fees Will Spark a Ripple Effect in Crypto Adoption

In Ethereum, validators play the proposal and verification game within the network. Those wishing to participate in this process must deposit 32 ETH. In return, they get a wee bit of ETH as a reward.

On March 28th, the Dune Analytics dashboard, designed to keep tabs on Ethereum’s staking progress, revealed that the network had hit a whopping one million validators, with 32 million ETH bets making up 26% of the total betting volume.

The data also showed that about 30% of ETH is lounging in the Ethereum Lido betting pool, a liquid platform for proof-of-stake (PoS) cryptocurrencies. Betting pools like Lido remain all the rage, letting users with a modest stash of ETH pool their resources.

The Community Considers It Unsafe

While a surge in validators could lead to increased blockchain security, some community members reckon having a hoard of validators might create a problem.

Venture investor and Ethereum advocate Evan Van Ness quipped that perhaps he’s already “had one too many” on him. Gabriel Weide, managing the betting pool, believes too many validators might end up in “failed transactions” down the line.

Meanwhile, Peter Kim, head of development at Coinbase Wallet, chimed in saying, while the validator count is “impressive,” it’s “artificially inflated due to the 32 ETH cap.” Yet, he speculated that the situation might turn soon.

Vitalik Buterin Suggests New Approach to Decentralize Ethereum Staking

Co-founder of Ethereum, Vitalik Buterin, proposed a method to incentivize better decentralization on Ethereum by penalizing correlated failures among validators. He shared his thoughts on fostering decentralized betting through “additional anti-correlation incentives” on the Ethereum research forum.

Buterin suggested that if multiple validators, controlled by the same entity, fail together, they would receive a higher penalty than if they failed independently.

The theory is that if you’re one big actor, any mistakes you make are more likely to be repeated across all the ‘personas’ you control.

Buterin observed that validators grouped in the same cluster, such as within a staking pool, are prone to encountering correlated failures – likely due to shared infrastructure.

The proposal recommends penalizing validators in proportion to their deviation from the average failure frequency. If multiple validators fail in one slot, the penalty for each failure will be higher.

More on Ethereum:

Buterin offered other alternatives, such as different penalty schemes, to minimize the advantage of a large average validator over smaller validators, and also explore the impact on geographic and client decentralization.

Disclaimer: All materials on this site are for informational purposes only. None of the material should be interpreted as investment advice. Please note that despite the nature of much of the material created and hosted on this website, HODL FM is not a financial reference resource and the opinions of authors and other contributors are their own and should not be taken as financial advice. If you require advice of this sort, HODL FM strongly recommends contacting a qualified industry professional.