English
French
German
Italian
Russian
Spanish
Vitalik Buterin voices concerns over DAOs approving ETH staking pool operators
The Ethereum co-founder proposes a solution that could lower the likelihood of any individual liquid staking provider growing to a point where it poses a systemic risk.
News
Vitalik Buterin, the co-founder of Ethereum, has expressed worries regarding decentralized autonomous organizations (DAOs) exerting a monopoly over the selection of node operators in liquidity staking pools.
In a Sept. 30 blog post, Buterin warns that as staking pools adopt the DAO approach for governance over node operators — who are ultimately responsible for the pool’s funds — it can expose them to potential risks from malicious actors.
“With the DAO approach, if a single such staking token dominates, that leads to a single, potentially attackable governance gadget controlling a very large portion of all Ethereum validators.”
Buterin highlights the liquid staking provider Lido as an example with a DAO that validates node operators. However, he emphasizes that relying on just one layer of protection may prove insufficient:
“To the credit of protocols like Lido, they have implemented safeguards against this, but one layer of defense may not be enough,” he noted.
ETH staked by category chart. Source: Vitalik Buterin/Dune
Meanwhile, he explains that Rocket Pool offers the opportunity for anyone to become a node operator by placing an 8 Ether (ETH) deposit, which, at the time of this publication, is equivalent to approximately $13,406.
However, he notes this comes with its risks. “The Rocket Pool approach allows attackers to 51% attack the network, and force users to pay most of the costs,” he stated.
On the other hand, Buterin highlights that having a mechanism to ascertain who can act as the underlying node operators is an inevitable necessity:
“It can’t be unrestricted, because then attackers would join and amplify their attacks with users’ funds.”
Related: Ethereum is about to get crushed by liquid staking tokens
Buterin further outlines that a possible approach to address this issue involves encouraging ecosystem participants to utilize a variety of liquid staking providers.
He clarifies this would decrease the likelihood of any provider becoming excessively large and posing a systemic risk.
“In the longer term, however, this is an unstable equilibrium, and there is peril in relying too much on moralistic pressure to solve problems,” he stated.
Magazine: Are DAOs overhyped and unworkable? Lessons from the front lines
