Bittime - Vitalik Buterin, co-founder of Ethereum, announced a new staking concept called "Rainbow Staking." This innovation aims to change the economic structure of the Ethereum network by implementing a dual staking mechanism.
This mechanism differentiates between heavy and light services, thus having an impact on the distribution of rewards. What is Rainbow Staking? Come on, let's discuss it together.
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What is Rainbow Staking?
According to Vitalik Buterin , Rainbow Staking introduces a “Two-Dimensional Minimum Viable Issuance” (2-D MVI). This model aims to optimize reward allocation between heavy services that require large staking support and play an important role in network operations, and light services that are flexible and can increase network preference entropy.
High preference entropy is important for censorship-resistant networks, as it ensures a wide range of transactions and interactions can take place.
Another major focus of Rainbow Staking is increasing the role and value of individual stakers in the Ethereum ecosystem.
Also read: What is MEV Ethereum
Usually, individual stakers cannot compete with larger staking pools . However, with Rainbow Staking, individual stakers are recognized for their contribution to network resilience.
They act as a buffer against potential major operator failures, thereby helping to maintain network activity during downtime.
"With Rainbow Staking, we offer an alternative to 2-D MVI where individual stakers become highly effective participants in their own right, achieving the goals that many people list: Competitive economic rewards with the ability to translate their preferences into chain execution, e.g. as the ultimate guarantor of chain liveness or censorship-resistant agent," wrote Barnabé Monnot, Researcher at the Ethereum Foundation.
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The image below will explain how Rainbow Staking works:
Sumber: Ether Research
Towards a More Inclusive Ecosystem
Therefore, Buterin proposed adjusting the reward distribution to encourage participation from individual stakers and small operators. This strategy is designed to change the competition model from a single resource battle to a more diverse and fair ecosystem.
Also read: What is Ethereum (ETH) 2.0 and how is it different from Ethereum
The announcement of Rainbow Staking sparked discussion in the crypto community about its potential impact on the Ethereum network. Proponents argue that incentivizing more participants could lead to a more resilient and decentralized network.
However, critics question the implementation challenges and potential unintended consequences. In particular, regarding network security and the dynamics between individual staking and staking pools.
"The biggest drawbacks I see with your proposal are that it is complicated, difficult to implement, and difficult to predict follow-up effects. The first two points may have no other alternative than a clear specification definition. For the last point, I would encourage further research into areas such as claim tokenization, restaking, and so on," said Matt Stam, Founder of Engineering at Succinct.
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While the full impact of this new staking model is yet to be seen, it reflects Ethereum's efforts to explore innovative solutions that support its growth and sustainability.
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Also read:
Ethereum History Story: How Ethereum Became Popular
What is Ethereum Casper? Why is it Important?
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