The number of Ethereum validators surpasses one million, raising concerns about staking centralization.

The Ethereum network recently reached an important milestone, with the number of active validators surpassing 1 million. This significant growth has sparked enthusiastic discussions in the market, while also raising concerns about potential technological and centralization challenges.

Validators, as the core of the Ethereum Proof of Stake (PoS) mechanism, are crucial for the rapid growth of the network. Especially after the Shapella upgrade, the number of validators has surged significantly. However, this growth has also brought a series of issues that need to be addressed.

Data shows that currently about 850,000 validators come from users staking ETH on centralized platforms. This is mainly because most ETH holders either do not have more than 32 ETH or are unable to cope with the complex staking operations. This situation has raised concerns about the risks of staking centralization.

As the number of validators increases, each validator needs to independently download the latest data and verify state changes within a limited time, which means that more powerful computing capabilities are required to handle larger data blocks. If network bandwidth continues to grow, validators with substantial computing resources may suppress individual self-hosted nodes, pushing the network towards centralization, which contradicts the fundamental philosophy of Ethereum.

To address this challenge, the co-founder of Ethereum proposed the "anti-correlated incentives" plan. This plan aims to enhance the decentralization and fairness of the Ethereum stake mechanism by increasing the penalties for large validators that fail. Specifically, if multiple validators controlled by the same entity fail simultaneously, they will incur higher penalties than if they were individual validators failing.

The purpose of this proposal is to reduce the advantages of large staking platforms, as large entities are more likely to experience a spike in failure rates due to related faults. By encouraging the establishment of independent infrastructure for each validator and enhancing the economic competitiveness of individual stakes relative to staking pools, this plan aims to promote network decentralization.

In addition, at the Eth Taipei conference, Ethereum co-founder also analyzed the concept of "Rainbow staking." This approach aims to encourage diversity among service providers as a potential means to address Ethereum's centralization issues. Rainbow staking is divided into heavy staking and light staking, attempting to combine the security of both methods.

The core goal of Rainbow staking is to allow small ETH stakers to participate in network validation in a lightweight manner, partially offsetting the centralization impact brought by large institutions and protocols that hold a significant amount of staked ETH by increasing the number of participants. This framework also aims to address the emergence of liquidity tokens that may replace ETH as the main currency of the Ethereum network.

However, before rainbow staking becomes a viable design for Ethereum, more research and development work is needed. The biggest challenge may not be at the technical level, but at the philosophical level. Achieving a balance between the growth of the number of validators and the fundamental principles of network decentralization and usability remains a key challenge for Ethereum.