Ethereum developer warns about staking cartel in validator financing plan

Lefteris Karapetsas, founder of Rotki and an Ethereum developer, publicly opposes a proposal to fund Ethereum core development through validator rewards. He argues that the mechanism gives large stakers the opportunity to route up to 10% of all validator rewards according to their own choice, which encourages a dangerous cartel. He shares his objections both on X and in the ethresearch forum.

Ethereum is available at OKX and Bybit.

Cartel formation as a major risk

The proposal that Karapetsas is responding to is intended to solve the so-called free rider problem regarding the financing of Ethereum core development. In theory, validators would contribute a portion of their rewards for this purpose. However, Karapetsas sees a serious danger in this: the largest stakers can jointly decide where that money goes, at the expense of the remaining 49% of the network.

If a funding mechanism is to be introduced anyway, Karapetsas prefers burning ETH fees instead of a percentage of validator rewards. That does introduce the gas problem that others have previously pointed out, but he considers that less harmful than the cartel risk. He also does not expect stakers to quickly leave such a cartel, because staking shares are much stickier than people assume and move slowly.

Criticism of ten years of Ethereum development

In addition to the technical objections, Karapetsas expresses broader criticism of the direction of Ethereum core development over the past ten years. According to him, the development team has lost touch with the users of the protocol and the work has led to unnecessary technical complexity. He cites RLP, SSZ and RPLx as examples of that excessive complexity.

Karapetsas does not want to reward this way of working with additional funding and sees consolidation as a healthy, but long-deferred step. Incidentally, he also notes that many people on X conducted the discussion without even reading the original proposal, which he considers inappropriate towards the authors. The Ethereum price is currently at $1.743,76. an increase of 1.3% in the past 24 hours.