Vitalik Buterin Explains Rainbow Mechanism to Address Staking Issues on Ethereum
In his latest remarks at the ETH Taipei conference, Ethereum co-founder Vitalik Buterin addressed the issue of decentralization in staking and introduced insights into the Rainbow solution.
Vitalik Buterin Explains Rainbow Mechanism to Address Staking Issues on Ethereum
Rainbow Staking is a solution introduced by the author "barnabe" aimed at optimizing both strengths and weaknesses for participants in the staking network—comprising organizational validators and individual stakeholders alike.
Specifically, the criteria used to categorize roles in this approach include:
- Heavy Tasks (potentially subject to slashing) and Light Tasks (not subject or partially subject to slashing)
- Delegation and Operators
The segregation of roles aims to provide Delegators (ETH delegators) with more choices regarding costs and slashing risks. Compared to current consolidated roles, this direction could incentivize a redistribution of staking proportions across the network.
As outlined in the documentation, the goal of this mechanism is to reduce the dominance of large Liquid Staking Tokens while laying the groundwork for future enhancements. Planned future changes include:
- Modularization for easy application integration
- Implementation of the Minimum Viable Issuance (MVI) mechanism—optimizing issuance levels and yield proportions for participating entities
- Single-slot Finality—enhancing network security in the validation process
Concerns have long surrounded the concentration of stakes in large Liquid Staking solutions like Lido Finance. However, since September 2023, despite reaching a milestone of 33% of total ETH staked, the allocation to Lido has yet to see significant decline, currently hovering around 30%.
