Ethereum co-founder Vitalik Buterin has proposed a method to improve decentralization in Ethereum by penalizing correlated failures among validators. Buterin shared his ideas on the Ethereum Research forum, suggesting that if multiple validators controlled by the same entity fail together, they would face a higher penalty than if they failed independently.

The proposal aims to address the issue of validators within the same cluster experiencing correlated failures, possibly due to shared infrastructure. By penalizing validators based on the deviation from the average failure rate, the proposal could reduce the advantage of large Ethereum stakers over smaller ones, as larger entities are more likely to cause spikes in the failure rate due to correlated failures.

In addition to incentivizing decentralization by promoting a separate infrastructure for each validator and making solo staking more economically competitive, Buterin also proposed different penalty schemes to address the advantage big validators have over smaller ones. He did not mention the possibility of reducing the solo staking amount from 32 ETH, which is currently equivalent to roughly $111,500.

Staking pools and liquid staking services, like Lido, have remained popular as they allow stakers to participate with a smaller amount of ETH. However, concerns have been raised over Lido's dominance and potential cartelization, which could lead to outsized profits compared to non-pooled capital.