Vitalik Buterin Unveils New “Rainbow Staking” Framework For Ethereum – Here’s How It Works

Ethereum Ethereum staking Vitalik Buterin
Last updated:
Freelance Journalist
Freelance Journalist
Andrew Throuvalas
About Author

Andrew is a journalist and content writer with a passion for Bitcoin. His work has been featured with Cryptonews, Decrypt, CryptoPotato, and Bitcoin Magazine, among others.

Last updated:
Why Trust Cryptonews
With over a decade of crypto coverage, Cryptonews delivers authoritative insights you can rely on. Our veteran team of journalists and analysts combines in-depth market knowledge with hands-on testing of blockchain technologies. We maintain strict editorial standards, ensuring factual accuracy and impartial reporting on both established cryptocurrencies and emerging projects. Our longstanding presence in the industry and commitment to quality journalism make Cryptonews a trusted source in the dynamic world of digital assets. Read more about Cryptonews

Ethereum co-founder Vitalik Buterin unveiled a new “rainbow staking” framework on Wednesday that may help decentralize protocol control from the network’s largest players.

Vitalik Tackles ETH Staking Centralization at ETHTaipei 2024

Speaking at the ETHTaipei 2024 event on Wednesday, the renowned developer highlighted the overconcentration of ETH’s staked supply with centralized providers, including government-regulated exchanges like Coinbase and Binance.

Such staking providers haven’t colluded for anything nefarious so far, but the long-term risk of those entities doing so remains, according to Vitalik.

“We have become very dependent on ‘social pressure + virtue’,” said the co-founder, according to a translated report from Chinese outlet ABMedia Crypto.

“To what extent is this inevitable?” he asked. “If it is inevitable, we should be clearer about whether we rely on incentives or social pressure + virtue, rather than excessively rely on the latter.”

While solo staking without third-party providers is possible on ETH, it requires a minimum of 32 ETH to get involved.

The minimum was originally established to avoid overwhelming the blockchain with tiny stakers, and hopefully avoid excessive ETH requirements.

However, with that minimum now worth $112,000, the economic and technical barrier to entry has generated a swath of “lazy ETH holders” who delegate the task to massive third parties.

These groups also provide “liquid staking” – a service that rewards stakers with ETH-pegged tokens redeemable for their locked ETH.

At present, nearly 42 million ETH worth $145 billion is being staked on Ethereum, blockchain data shows.

What Is Rainbow Staking?

To remedy the issue, the “rainbow staking” framework could allow solo and professional staking providers to access differentiated tiers of staking depending on their needs.

According to Ethereum’s official blog, one example would be discriminating between heavy (slashable) and light (partially / non-slashable) clients, unbundling the roles that each service provider plays.

“This allows for differentiated classes of service providers to be maximally effective in each service category, instead of lumping all under a single umbrella of expectations, asking everything of everyone,” the blog post reads.

Rainbow staking would also distinguish between “capital allocators” and “service operators,” separating the roles of putting up an economic stake to secure the network from those of actual block validation.

Last month, Binance Labs backed Babylon – a team working to allow Bitcoin owners to earn staking yield on their BTC from other networks, potentially including Ethereum.

More Articles

Altcoin News
SEC Moves to Dismiss Kraken’s Defenses in Ongoing Legal Battle
Ruholamin Haqshanas
Ruholamin Haqshanas
2024-11-07 10:48:28
Press Releases
Cytonic Secures $8.3 Million Seed Funding to Solve Blockchain Compatibility
Linda Garcia
Linda Garcia
2024-11-07 10:00:00
Crypto News in numbers
editors
Authors List + 66 More
2M+
Active Monthly Users Around the World
250+
Guides and Reviews Articles
8
Years on the Market
70
International Team Authors