Ethereum co-founder Vitalik Buterin has shared insights into Ethereum’s next upgrade on its technical roadmap – The Scourge.

It aims to fix issues involving centralization concerns in Ethereum’s staking and block production. Buterin has proposed several fixes to these shortcomings the layer-1 blockchain faces.

Ethereum’s Scourge to Reduce PoS Centralization

Following Ethereum’s Merge upgrade in late 2022, the smart contract blockchain transitioned from a proof-of-work (PoW) consensus mechanism to a proof-of-stake (PoS) model. This allowed ETH holders to stake their holdings for additional rewards, block production, and network security.

While this feature has profited the ecosystem, Buterin highlighted that staking centralization presents “one of the biggest risks” to the L1 blockchain, adding that it could birth further challenges within the network.

In an October 20 blog post, Buterin stressed that the economies of scale in PoS models can make large staking pools dominate the market as small stakers flock to large pools.

Around 30% of ETH’s supply is currently being staked. Buterin explained that this is enough to protect the blockchain from the 51% attack. However, if this figure grows significantly, there will be risks, such as staking becoming a “duty” for all ETH holders, a single liquid staking token (LST) overtaking the majority of the stake, and the “money” network effect from the blockchain, and the credibility of the slashing mechanism could weaken.

The Ethereum co-founder proposed a solution: limit the amount of ETH each user can stake and limit staking penalties to 12.5% of staked coins. Buterin also suggested implementing two-tier staking, dividing staked ETH into a slashable or unslashable stake.

The Scourge to Fix Block Construction Challenges

Regarding Ethereum’s block production, an Ethereum Foundation researcher disclosed that two entities, Beaverbuild and Titan Builder, produced