Ethereum co-creator Vitalik Buterin has introduced several proposals to minimize block and staking centralization in the 'Scourge' phase of Ethereum's technical roadmap.

Centralization Issues in Staking

On October 20, Buterin expressed concerns about economies of scale in staking, leading smaller staking pools to shift to larger ones, with two entities constructing 88% of Ethereum blocks during the month's first two weeks. He emphasized staking centralization as 'one of the biggest risks' to Ethereum, potentially leading to transaction censorship and other crises.

Decentralization Solutions

Buterin recommended capping the amount of Ether a user can stake and reducing staking penalties to 12.5% of staked Ether. This could be achieved through a two-tier staking model with 'risk-bearing' (slashable) and 'risk-free' (unslashable) elements.

Block Centralization Consequences

Recent data showed that two Ethereum block builders, Beaverbuild and Titan Builder, constructed 88.7% of all Ethereum blocks in the first two weeks of October. Buterin is concerned about the increased risk of transaction censorship and market manipulation. He proposed a 'fork-choice-enforced inclusion lists' concept where transaction selection returns to the staker.

Buterin continues to discuss and propose potential ways to reduce centralization in the Ethereum ecosystem to maintain its security and decentralized nature.