Vitalik Buterin, the co-founder of Ethereum, has expressed apprehensions about the growing influence of decentralized autonomous organizations (DAOs) in the selection of node operators for liquidity staking pools. In a blog post on September 30, Buterin voiced concerns that adopting the DAO model for governing node operators, who manage a pool’s funds, could expose these pools to potential risks posed by malicious actors.
Buterin’s worry centers on the possibility that if a single staking token dominates a DAO, it could lead to a concentrated and potentially vulnerable governance system controlling a significant portion of Ethereum validators. He cited the example of Lido, a liquid staking provider with a DAO that validates node operators, while acknowledging that protocols like Lido have implemented safeguards.
However, Buterin emphasized that a single layer of defense might not be sufficient. He also mentioned Rocket Pool, which allows individuals to become node operators by staking 8 Ether (equivalent to approximately $13,406 at the time of writing). But he pointed out that this approach carries risks, including the potential for attackers to launch a 51% attack on the network.
Buterin recognized the necessity of having a mechanism to vet underlying node operators to prevent attacks that exploit users’ funds. He suggested that one way to address this issue is by encouraging ecosystem participants to use a variety of liquid staking providers. This diversity, he explained, would reduce the chances of any provider becoming excessively large and posing a systemic risk.
However, Buterin cautioned that relying solely on moralistic pressure to solve these challenges could be precarious in the long run. Finding a stable equilibrium in the governance of staking pools remains a complex issue for the Ethereum ecosystem.
