Vitalik Buterin’s endorsement of ETH staking pool operators raised concerns over DAOs.
Ethereum founder Vitalik Buterin has expressed concern about decentralized autonomous organizations (DAOs) monopolizing the choice of node operators in liquid staking pools.
In a September 30 blog post, Buterin warned that when staking pools adopt the DAO approach to node operators—who are ultimately responsible for the pool's funds—it could expose them to potential threats from malicious actors.
“With the DAO approach, if a single standing token is controlled, this leads to a single, attackable governance tool controlling a very large portion of Ethereum's validators.”
Buterin highlights the liquidity provider Lido (LDO) as an example with a DAO that validates node operators. However, he emphasized that relying on a single layer of protection may not be enough:
“Thanks to protocols like Lido, they have implemented safeguards to prevent this, but one layer of protection may not be enough,” he said.
Meanwhile, Rocket Pool explains that anyone can become a node operator by making a deposit of 8 Ether (ETH), which at the time of going to print is roughly $13,406.
However, he understands that this comes with its own risks. “The Rocket Pool approach allows attackers to attack 51% of the network, and forces users to pay most of the cost,” he said.
On the other hand, Buterin highlights the inevitable need to have a mechanism to determine who acts as the main node operators.
“It can't be unlimited because then attackers will join in and strengthen their attacks with users' money.”
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Buterin explains that a possible way to solve this problem involves encouraging ecosystem participants to use a variety of liquidity providers.
This, he explained, would reduce the possibility of any supplier becoming overwhelmed and creating systemic risk.
“But in the long run, this is an unstable equilibrium, and there is a danger of relying too much on moral pressure to solve problems,” he said.
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