Vitalik Buterin, co-founder of Ethereum, has expressed concerns about decentralized autonomous organizations (DAOs) gaining control over the selection of node operators in liquidity staking pools. In a recent blog post, Buterin warned about the potential risks that DAO governance could bring, as malicious actors could exploit the system. He highlighted the example of Lido DAO, a liquid staking provider that validates node operators, but emphasized that relying on just one layer of protection may not be enough. Buterin also mentioned Rocket Pool, which allows anyone to become a node operator by placing an 8 ETH deposit, but cautioned that this approach could expose the network to 51% attacks. He emphasized the need for a mechanism to determine who can act as node operators, but also suggested encouraging participants to utilize various liquid staking providers to mitigate risks.
While Buterin acknowledges the importance of having systems in place for selecting node operators in liquidity staking pools, he raises concerns about the potential monopolistic power that DAOs could wield. He warns that if a single staking token dominates, it could result in a vulnerable governance structure controlling a significant portion of Ethereum validators. Buterin praises certain protocols like Lido DAO for implementing safeguards, but cautions that one layer of defense might not be sufficient. He introduces Rocket Pool as an alternative approach, allowing anyone to become a node operator with an ETH deposit. However, he acknowledges the risks associated with this method, particularly the potential for 51% attacks. To address this issue, Buterin suggests encouraging participants to diversify their usage of liquid staking providers, reducing the likelihood of a single provider becoming too powerful and posing a systemic risk.
Buterin emphasizes that it is crucial to strike a balance between openness and security when selecting node operators in liquidity staking pools. While the unrestrained entry of attackers would amplify risks, restricting access entirely would hinder decentralization efforts. He warns against relying solely on moralistic pressure to solve these problems, as it is an unstable solution in the long term. Instead, he suggests promoting a diverse ecosystem of liquid staking providers to ensure a more resilient and secure network. By utilizing multiple providers, the likelihood of a single provider gaining excessive control and threatening the system would be reduced.