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During a June 29 episode of the Bankless podcast, Ethereum co-founder Vitalik Buterin disclosed he stakes only a portion of his Ether holdings.
Buterin is yet to reach his safety standard for staked Ether storage. The co-founder noted that his staked Ether has to be in a multi-signature wallet which he said is still hard to set up.
Why Buterin Stakes Only a Small Portion of His Ethereum
Buterin revealed that security is the reason for staking only a tiny portion of his Ether. According to the Ethereum co-founder, when one stakes Ether, the keys to access the staked Ether is often public on an online subsystem.
Buterin explained that the access key should be on a multi-signature wallet to safeguard one’s Ether holding. However, he noted that multi-signature wallets for staking are still complicated to set up.
Cardano Founder Reacts
Meanwhile, Buterin’s statement did not sit well with Ethereum co-founder and founder of the Cardano blockchain, Charles Hoskinson, who took to Twitter to express his displeasure.
In a June 30 tweet, Hoskinson said he had to listen to the podcast a few times to understand Buterin. The Cardano founder added that he is “at a loss for words” after hearing that Buterin only stakes a small portion of his Ether.
Hoskinson noted that he stakes all his Cardano (ADA). That’s how it’s supposed to be for a properly designed proof-of-stake protocol he added.
Buterin Disclosed Potential Limitations of Ethereum Re-staking Protocol, EigenLayer
Buterin also spoke on the EigenLayer protocol that allows Ethereum validators and stakers to re-stake their Ether on other emerging networks. But the EigenLayer protocol is still in its test net phase and will not launch until the Q3 of 2023.
While this protocol would permit the re-staking of Ethereum on other networks, Buterin said the main drawback is that it creates centralization risks.
However, he noted that the system would value Trustworthy stakers more than untrustworthy ones. Trustworthy stakers are much less likely to get slashed he added.
The founder of EigenLayer, Sreeram Kaanan, also participated in the discussion. Kaanan explained that re-staking comes with complex risks, and a constrained approach in building re-staking systems is crucial to mitigating these challenges.
Also, Kaanan noted that constraints are healthy for the ecosystem, and incorporating that while building new systems could help unleash innovation.
Three Focal Points of Ethereum’s Success
It bears mentioning that Buterin’s remarks come after a lengthy June 9 blog where he highlighted three technical transitions to Ethereum Blockchain’s failure or success.
Buterin noted that sufficient scaling infrastructure is paramount to make transactions cheap. Besides layer scaling, he listed wallet security and privacy-preserving features as the focal points of Ethereum’s success or failure.
Buterin cited Smart Contract wallets as another focal point of failure for Ethereum. He noted that a move to Smart contract wallets caused issues due to user experience-related complexities arising when users control multiple addresses concurrently.
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