Ethereum co-founder Vitalik Buterin continues his thoughts on the development of the network with a new detailed blog post. It addresses the challenges of centralization, value capture, and transaction fees, and proposes ambitious solutions to sustain the crypto ecosystem.
A Holistic Approach to Ethereum Challenges
Since the beginning of October, Vitalik Buterin has multiplied his publications by X, detailing the fundamental problems of the Ethereum network and the supposed solutions. Today, in an article titled “Possible Futures of the Ethereum Protocol, Part 3: The Scourge,” published on his personal blog, he addressed the centralization of block construction and the economic issues associated with staking.
These considerations are part of the larger context of network optimization. As early as October 11, Buterin addressed the burning issue of transaction fees on Layers 1 and 2. This issue is all the more pressing because transaction fees have not decreased despite various upgrade solutions already implemented.
At the same time, the announcement of the next Pectra fork, planned for late 2024 or early 2025, completes this overall vision. This major update aims to optimize transaction fees for Layer 2 (L2) scaling solutions, a critical issue for Ethereum’s scalability and competitiveness.
In this new paper, Buterin identifies two main challenges: the centralization of block construction and the economic problems associated with staking. In particular, it highlights the risks associated with the current MEVBoost system, which could concentrate power in the hands of a few niche players. Economically, he worries about the consequences of a scenario where almost all ETH is staked.
These ideas are a continuation of her recent proposals to balance costs between Layer 1 and 2 networks. Buterin strives to create a cohesive ecosystem capable of handling increased traffic without compromising its availability or decentralization.
Innovative technical solutions
Faced with these challenges, Vitalik Buterin outlines several ambitious technical paths. For block building, he proposes a hybrid approach combining forced inclusion lists (FOCIL) and an auction system. As for the economics of staking, he envisions capping rewards or introducing a two-tier system.
These proposals are a follow-up to EIP-7762, mentioned in his previous article, which aims to make “blob” fees more predictable. Buterin also highlights the importance of generating maximum value mining (MEV) revenue at the protocol level, an issue closely related to block construction.
At the same time, the co-founder of Ethereum supports the development of solutions at the application level, such as group staking (squad staking) or decentralized block building markets. These approaches complement the “fee-based summaries” discussed earlier.
In short, Vitalik Buterin’s proposals combined with the Pectra fork demonstrate a holistic approach to Ethereum development. By simultaneously addressing the issues of fees, centralization, and staking economics, the co-founder proposes an ambitious plan to meet the challenges of mass network adoption. The challenge now is to turn these considerations into concrete solutions and implement them effectively to preserve the Ethereum ecosystem and strengthen its position in the crypto landscape.
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I am passionate about Bitcoin, I love exploring the intricacies of blockchain and cryptocurrency and sharing my discoveries with the community. My dream is to live in a world where privacy and financial freedom are guaranteed for everyone, and I firmly believe that Bitcoin is the tool that can make this possible.
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