Vitalik, supported by empirical data, proposes anti-correlation incentives to promote decentralization in staking protocols, punishing misbehaving actors, and apply them in a variety of scenarios.
Vitalik Buterin recently published a thought-provoking Article Which highlights the concept of supporting decentralized staking through the use of anti-correlation incentives. Written by Vitalik Buterin, the article provides preliminary research and encourages independent replication efforts to validate the proposed ideas.
The primary focus of the article is to address the challenge of encouraging better decentralization within staking protocols. The author suggests that penalizing correlations between actors could be an effective mechanism to encourage more distributed and resilient ecosystems.
The current approach to Ethereum’s slashing mechanics already includes an element of anti-correlation incentives. However, the article argues that relying solely on edge-case incentives, which may arise only in extremely exceptional attack situations, may not be sufficient to drive decentralization.
To further enhance anti-correlation incentives, the article proposes to extend this concept to address more general failures, such as missing validation. It recognizes that large stakeholders, including wealthy individuals and staking pools, often run multiple validators on the same internet connection or physical computer, leading to correlated failures. The article acknowledges that requiring these stakeholders to set up independent physical setups for each validator would eliminate the economies of scale at stake.
To validate the hypothesis, the authors combine validation data from recent eras with information mapping validator IDs to publicly known groups. By analyzing the occurrences of co-failures (instances where two validators within the same cluster fail during the same slot), the article provides empirical evidence of additional correlated failures within the cluster. This data supports the notion that validators in the same cluster are more likely to miss validation together than validators in different clusters.
Based on this analysis, the article proposes a penalty mechanism based on the current number of slots missed relative to the average of the last 32 slots. This mechanism ensures that the penalty for missed validations is proportional to the number of validators failing in a given slot compared to recent slots. The article highlights the flexibility of this mechanism, as it cannot be easily manipulated and does not provide incentives for actors to deliberately fail.
The research presented in this article contributes to the ongoing discourse on decentralized staking and provides insight into the potential benefits of anti-correlation incentives. By encouraging decentralization and reducing correlated failures, staking protocols can become more robust and resistant to attacks.
It is important to note that the research presented in the article is preliminary, and the author encourages independent replication efforts to support the findings. The code used for the analysis is available on GitHub for reference.
Finally, supporting decentralized staking through anti-correlation incentives offers a promising opportunity to enhance protocol decentralization. By penalizing correlations between misbehaving actors, staking protocols can foster a more robust and resilient ecosystem. Further research and experiments in this area will contribute to the development of decentralized blockchain networks like Ethereum.
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