Ethereum co-founder Vitalik Buterin has revealed that he only stakes a small fraction of his Ethereum (ETH), instead of staking the entirety of it. In a recent podcast episode titled “Restaking Alignment,” Buterin explained that he does not stake all of his ETH due to the complexities and challenges associated with multisignature (multisig) wallets.
When you stake your ETH, the keys that access it need to be public on an online subsystem. For security reasons, it is recommended to use a Multisig wallet, which adds an extra layer of protection and requires multiple signatures for transactions. Buterin highlighted that setting up a Multisig wallet for staking is still quite difficult and can get complicated in various ways.
This statement by Buterin caught the attention of Charles Hoskinson, the co-founder of Ethereum and founder of Cardano (ADA), who expressed his surprise on Twitter. Hoskinson stated that all of his Cardano is staked, emphasizing that this is how it is supposed to be in a properly designed Proof of Stake protocol.
Buterin also discussed the EigenLayer protocol, which is currently in its testnet phase and expected to launch in Q3. The protocol allows Ethereum validators and stakers to “re-stake” their assets onto other emerging networks. However, Buterin pointed out that this poses centralization risks, as trustworthy stakers would be valued more by the system, making them less likely to get slashed.
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Sreeram Kaanan, the founder of EigenLayer, highlighted the “complex risks” associated with re-staking and emphasized the importance of taking a constrained approach in building restaking. Constraints should be based on what is good for the ecosystem and what new innovation can be unleashed using this concept.
This recent statement by Buterin echoes his earlier remarks in a blog post on June 9, where he stated that the Ethereum blockchain “fails” without sufficient scaling infrastructure to make transactions cheap. He also mentioned the challenges associated with smart contract wallets, explaining that when users have control over multiple addresses at once, the user experience can become complex.
These discussions shed light on the complexities and challenges faced by Ethereum and other blockchain networks as they strive to improve scalability, security, and usability. While staking can be a lucrative opportunity for investors, it is clear that there are still technical hurdles to overcome and improvements to be made in the implementation of staking mechanisms.
As the crypto industry continues to evolve, it is crucial for developers, validators, and stakeholders to collaborate and find innovative solutions that address these challenges. Only by addressing these complexities can blockchain networks like Ethereum and Cardano reach their full potential and offer a seamless user experience for all participants.
