Vitalik Buterin Proposes Modifying Incentives to Encourage Decentralized Staking

BlockBeats reports that Vitalik Buterin, co-founder of Ethereum, suggested in a Warpcast discussion on March 27 that rewards could be modified to encourage decentralized staking. He inquired whether validators belonging to the same cluster, such as the same trading platform or user, have a higher probability of simultaneously missing proofs than validators that are unrelated. If so, he proposed modifying the incentives to promote decentralized staking.

Buterin explained in a post titled "Supporting Decentralized Staking Through More Anti-Correlation Incentives" that penalizing correlation is one way to encourage greater decentralization in protocols. This means that the punishment a participant receives for an error, including inadvertent errors, will increase in proportion to the number of other participants who commit the same error at the same time, as measured in total ETH. The aforementioned technology has been implemented in the penalty mechanism of Ethereum.

However, Buterin noted that incentives to decentralize might not be sufficiently strong for extreme cases that may never occur in practice. He suggested that comparable anti-correlation incentives be applied to more "routine" failure scenarios, like the occasional omission of a proof, which virtually all validators will encounter.