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Ethereum’s quest for decentralization is facing a critical challenge—staking giants and block producers are swallowing the network whole. But Ethereum’s co-creator, Vitalik Buterin, is stepping in with a blueprint to restore balance before the very principles of decentralization are threatened.

In a post on Oct. 20, Buterin laid out his concerns about how Ethereum’s proof-of-stake model is pushing small staking pools toward bigger players, resulting in an alarming centralization of block production. 

Just two entities—Beaverbuild and Titan Builder—are responsible for nearly 89% of all blocks created in early October, a trend Buterin warned could spell trouble for the future of Ethereum.

“The centralization of staking is one of the biggest risks to Ethereum,” Buterin said, highlighting the dangers of transaction censorship and broader systemic crises.

While the 30% of Ether (ETH) currently staked is enough to prevent 51% attacks, Buterin cautioned that higher staking participation could open Pandora’s box of new problems. 

Staking, he noted, would become less profitable and more burdensome for Ether holders, weakening Ethereum’s slashing mechanism—the network's built-in penalty system for bad actors. 

He also pointed out the risk of liquid staking tokens overshadowing Ether as the dominant “money” on the network.

To tackle these issues, Buterin proposed several solutions, including a cap on the amount of Ether any individual can stake and a limit on staking penalties to just 12.5% of the staked funds. He also suggested introducing a two-tier system where staking could be classified as either "risk-bearing" (slashable) or "risk-free" (unslashable).

Ethereum’s current block construction model, where builders craft blocks for proposers to select, has resulted in a monopoly-like situation. 

Buterin’s solution? Hand more power back to the proposers by allowing them to choose transactions themselves, with builders focusing on the order of execution. Alternatively, his "BRAID" proposal would split block production among multiple parties, reducing the complexity for builders and spreading responsibility across the network.

With these proposals, Buterin aims to pull Ethereum back from the edge, ensuring that the very decentralization it champions remains at its core.