Vitalik Buterin, the co-founder of Ethereum (ETH) recently caused a stir when he revealed that he was staking only a tiny portion of his Ethereum holdings.
Given Buterin’s influential position and significant ETH holdings, many wondered why he chose to risk only a fraction of his assets.
Buterin’s Stance on Staking
During a recent episode of the Bankless podcast on June 29, Buterin highlighted an important factor related to the security and accessibility of staked ETH. Buterin pointed out that when staking ETH, the keys that provide access to the funds must be stored on a subsystem that is online.
To ensure the safety of these keys, a Multisig setup is necessary. Multisig refers to a security mechanism that requires multiple signatures from different parties to authorize a transaction or access funds.
Vitalik Buterin Exercises Caution
However, Buterin noted that setting up a Multisig for staking is still relatively complex and can present several challenges. The process involves technical intricacies and considerations that can complicate the setup and management of the keys responsible for staked ETH.
By staking only a small portion of his ETH, Buterin may be taking a cautious approach to minimize potential security risks associated with storing and managing his staked assets. Notably, Buterin’s comments come shortly after revealing in an earlier report that Ethereum’s biggest challenge is privacy.
Hoskinson’s Opposing Views
Charles Hoskinson, the founder of Cardano and a prominent figure in the crypto community, has expressed his surprise and confusion regarding Buterin’s decision to stake only a small portion of his Ether holdings.
On a Twitter post, Hoskinson stated that he had to listen to Buterin’s interview multiple times and emphasized all of his Ada (Cardano’s native crypto) is staked. Additionally, he highlighted that he views this as the ideal approach, aligning with the original intent and design of a Proof-of-Stake (PoS) system.
Buterin Discusses the EigenLayer protocol
During the Bankless podcast episode, Vitalik Buterin also touched upon the EigenLayer protocol, which introduces the concept of “re-staking” assets from Ethereum onto other emerging networks.
Buterin emphasized the challenges associated with this protocol, particularly in relation to potential centralization risks. The EigenLayer protocol, according to Buterin, creates a method in which trustworthy stakeholders are valued more by the system than untrustworthy stakeholders.
While acknowledging these challenges, Sreeram Kaanan, the founder of EigenLayer emphasized the need for a constrained approach when implementing restaking mechanisms to ensure the long-term benefits for the ecosystem.