ETHTaipei | The next step in Ethereum Cancun upgrade: PBS, Verkle Trees to reduce centralization issues among validators

ETHTaipei 2024 has invited Guillaume Ballet, a member of the Ethereum Foundation's Geth development team, to address the centralization issue caused by high validator thresholds. He proposed four mainstream solutions among current developers. This echoes Vitalik's speech yesterday, once again emphasizing the Ethereum Foundation's next step - to alleviate the centralization issue among validators.

The Increasing Centralization Issue of Ethereum Validators

Following Vitalik's concerns about the gradual centralization of Ethereum network validators, Guillaume Ballet, a member of the Ethereum Foundation Geth development team, continues to delve into this issue to help participants gain a more comprehensive understanding. It is evident that this phenomenon has become one of the top concerns of the Ethereum Foundation.

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Guillaume points out that the threshold for running an independent node is actually higher than one might imagine:

• 32 ETH
• Good network connection infrastructure
• Reliable power grid
• Smart plug
• A love for waking up at 4 am on Sundays for maintenance

As a result, most users choose to stake their ETH in smart contracts like Lido or services of centralized institutions like Coinbase. This has led to a concentration of the majority of staked tokens in a few entities, increasing centralization risks and reducing Ethereum's stability.

Potential Solutions

Guillaume mentioned that developers have long been preparing corresponding solutions to lower the threshold for Ethereum validators. He outlined four directions that the Ethereum Foundation is currently working on:

• Verkle Trees
• PBS
• DVT
• Rainbow Staking

Among them, Verkle Trees, repeatedly mentioned by Vitalik this year for imminent deployment, has garnered significant market attention.

Verkle Trees

The first solution Guillaume discussed is the highly discussed Verkle Trees. Its principle involves compressing the required storage space using Vector Commitment design to reduce the rate of ledger state and historical data expansion.

Additionally, Verkle Trees make validation more efficient. They can generate a set of data for specific transactions, and validation can be done using the root data, eliminating the need for validators to store the entire tree data, making stateless clients possible.

Due to these advantages, Verkle Trees significantly lower the operational threshold for validators, thereby addressing the issue of client centralization.

PBS

PBS, short for Proposer-Builder Separation, was originally intended to split validators into Proposers and Builders to decentralize power and reduce the issue of MEV exploitation. However, PBS also assists in reducing the burden on validators.

In essence, PBS delegates the task of sorting transactions to Builders. Once the Builder organizes the block contents, they compete with other Builders by bidding their block contents, with the decision ultimately resting with the current Proposer.

The structure of PBS allows Builders to bear the heavy costs of hardware and complexity, while Proposers only need to stake 32 ETH to maximize profits. This is expected to decentralize MEV and encourage more individuals to become validators.

DVT

The discussion of how much ETH validators should stake has been a topic among developers. Maintaining 32 ETH may deter retail investors due to economic barriers, leading them to opt for centralized staking services. On the other hand, having less than 32 ETH would increase the number of validators, potentially enhancing decentralization but negatively impacting network performance in the long run.

Hence, within the development community, there have been proposals to decentralize validator staking thresholds - Distributed Validator Technology (DVT).

For example, the SSV Network represents a case of DVT. In contrast to Lido or Coinbase, which do not have control over validator accounts' private keys, the SSV Network utilizes Secret Shared Validator technology, allowing users to stake ETH on the network without requiring a 32 ETH threshold.

Rainbow Staking

Rainbow Staking, proposed by Barnabé Monnot in February, divides validators into operators and delegators, each with distinct responsibilities, obligations, and risks. This approach encourages a more diverse range of roles and capital participation in the Ethereum ecosystem, rather than confining the ideal validator profile within a specific range.

Ethereum's Next Blueprint: Strengthening Decentralized Validator Structure

Guillaume introduced four solutions that the Ethereum Foundation is prioritizing to reduce the centralization of validators. During the second day of ETHTaipei in the morning, speakers from the Ethereum Foundation emphasized network security and decentralization, albeit from different perspectives:

• Marius from the MEV perspective;
• Guillaume from the decentralization perspective in this article

The speeches of both individuals echo Vitalik's opening speech on the first day, effectively conveying Ethereum's latest important goal post-London upgrade - enhancing Ethereum's decentralization and stability through PBS and Verkle Trees.

This meticulous arrangement by the organizers and the Ethereum Foundation may be the primary message Vitalik intended to convey during his visit to Taiwan.

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