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2024-03-28

The Ethereum co-founder has proposed a technique to encourage better decentralization of Ethereum.

Ethereum co-founder Vitalik Buterin has proposed a technique to encourage better decentralization of Ethereum by penalizing correlated errors among validators. 
Buterin published his thoughts on supporting decentralized staking "through more anti-correlation incentives" on the Ethereum research forum on March 27.
He suggested that if multiple validators controlled by the same actor failed together, they would receive a higher penalty than if they failed independently.
"The theory is that if you're a single, large actor, it's more likely that any mistakes you make will be repeated across all the 'identities' that you control," - he said.
Buterin observed that validators in the same cluster, such as in a staking pool, are more likely to experience related failures - possibly due to shared infrastructure.
The proposal suggests penalizing validators in proportion to deviations from the average failure rate. If many validators fail in a given slot, the penalty for each failure will be higher.
Simulations suggest that this approach could reduce the advantage of large Ethereum players over smaller ones, as large players are more likely to cause spikes in failure rates due to correlated failures.
Potential benefits of the proposal include encouraging decentralization by having a separate infrastructure for each validator and making solo betting more economically competitive with betting pools.
Buterin suggested other options, such as different penalty systems to minimize the advantage of the average large validator over small validators, and exploring the impact on geographic decentralization and customers.