Vitalik Buterin Simplification Proposal

In the blockchain world, there is a well-known tradeoff between Security, Scale, and Decentralization. In order to address this issue in the context of Ethereum, Vitalik Buterin suggests that it may be necessary to sacrifice some decentralization or security in order to improve scalability.

The Ethereum validator system currently supports a large number of validators to promote decentralization. However, this comes at the cost of processing a high number of signatures per slot, which presents technical challenges.

In order to address this issue and simplify the system, Vitalik Buterin proposes the following approaches:

1. Decentralized Staking Pools: Focus on decentralized stake pools using distributed validator technology (DVT). Raise the minimum deposit size to 4096 ETH and cap the total number of validators at 4096. Small-scale stakers would join a DVT pool, either by providing capital or being a node operator. Penalties could be capped to make pooled staking more forgiving.

2. Two-Tiered Staking: Create two layers of stakers - a "heavy" layer with a 4096 ETH requirement for finalization and a "light" layer with no minimum requirement. Both layers need to finalize a block for it to be considered valid. This provides additional security against censorship and attacks, but introduces a divide between small-scale and larger stakers.

3. Rotating Participation: Implement a rotating committee system where currently active validators are chosen for each slot. Validators with higher balances have a higher probability of being selected. This ensures that breaking finality requires a significant amount of ETH. However, this approach adds complexity to the selection process.

These approaches aim to simplify the Ethereum validator system while balancing decentralization, security, and scalability. Choosing the best approach would involve considering trade-offs and related issues such as liquid staking. Implementing one of these approaches would make the Ethereum protocol more efficient and easier to manage for technical implementers and users alike.

https://ethresear.ch/t/sticking-to-8192-signatures-per-slot-post-ssf-how-and-why/17989/12