Lefteris Karpetsas, Rotki’s founder and Ethereum developer, has opposed a proposal to fund the Ethereum ecosystem through rewards for validators.
You can read more about it here:
- Lefteris claimed that the proposal for validator funding could allow top stakeholders to form a reward routing cartel.
- Up to 10% of the rewards for validators could be redirected towards Ethereum shared public goods.
- Ethereum Core Development needs consolidating and closer contact between protocol users.
Validator Redirected revenue is the proposal which would redirect part of validators’ staking earnings to public goods and infrastructure.
Karapetsas said Before he formed his opinion, he read the proposal as well the reply. He was critical of those who were against other versions than the one in the post. However, he said that he did not oppose the mechanism.
Staking cartel risk drives opposition
This proposal allows validators to redirect staking reward amounts between 0% and 10 %. If at least half of the validators agree to a rate that is not zero, then the contribution applies across all the validators. Validators can also specify preferred recipient addresses. A splitter contract will then route the funds towards selected projects.
Karapetsas claimed that the design could lead to “a cartel of the top stakers” The network can divert 10% of validator reward. He suggested that the large stakers could fund the choices of the resting validators even if those choices were not to their liking.
Ethereum core development criticism widens debate
Karapetsas has also linked his opposition with broader concerns Ethereum core development. He was unhappy with core development’s progress over the past ten years and said that it has lost touch with protocol users.
He said Ethereum’s technical complexity was too high and cited RLPx RLPx SSZ as examples. A funding crunch, according to his opinion, could result in a consolidation within research and core development. The result was long overdue, and the man said he would not reward the old development culture.
Who decides funding remains unresolved
Supporters of the proposal frame it as a solution to Ethereum’s problem with free riders. Many projects are able to benefit from the shared infrastructure and tools. According to the proposal, validators may be potential funders because they benefit from Ethereum’s value over time.
As earlier reported According to crypto.news’ proposal, a 5%-10% redirection could generate 50,000-70,000 ETH annually for funding the ecosystem. The report also raised concerns about staking operators setting their preferences, while ETH owners bear the reduction in yield.
Karapetsas told us that if Ethereum were to need a financing mechanism he’d prefer to use the burned ETH instead of a percentage of validater proceeds. The option has problems with gas consumption, but Karapetsas viewed this as better than the risk of a cartel.
The question was also raised about a proposal for a list of pre-approved funds, and who decides what is on the list. Validator Redirected revenue is still only a suggestion on the research forum, it’s not yet a rule change.
Next steps will be determined by whether or not researchers are able to answer questions about governance and incentives without eroding stakeholder confidence. Now, his argument includes a strong warning that funding reform shouldn’t give the large stakeholder group too much power over rewards.
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Source: crypto.news
