TL; DR
-
Barnabé Monnot has proposed a ‘low barrier to entry’ version of ETH staking, designed to entice everyone and help diversify the ETH staking market.
Full story
Okay, lightning round on ETH to expand:
If you want to earn ETH tokens by processing transactions on the Ethereum network, you can:
Stake your tokens (also called lock-up) → start processing transactions → earn 5% interest on your total staked ETH per year.
That’s the carrot, now here’s the stick:
If you try to do something dodgy (like process a bad transaction), others on the network will call you out (and as long as the majority is against you), you will lose some of your staked ETH.
Okay, cool. Then to the centralization issue…
To process transactions on Ethereum yourself, you need to stake a minimum of 32 ETH ($108,000) – say it with us now: “OOOFT!”
So a cottage industry has emerged, where companies (such as Lido) give up the initial 32 ETH and let others contribute and earn 5% on however much they want.
The only problem is:
These companies virtually own the ETH staking market – hell, Lido alone owns an estimated 30%.
A system where bad actors are weeded out by the majority of stakeholders overseeing dodgy transactions is cool and everything…
But it falls apart if/when ‘the majority’ is a single entity.
Now comes a new solution from Ethereum researcher Barnabé Monnot (helluva name!):
We’re keeping everything described above… but adding a ‘staking lite’ version.
Where users can join with lower amounts of initial ETH staked, they are guaranteed never to lose that stake and will be randomly called up (lottery style, and much more sporadically) to process trades.
This low barrier to entry is intended to entice anyone to start staking, and to diversify the staking market.
Not bad!