- Vitalik plans to redesign Ethereum staking and completely solve all the issues that are affecting its performance.
- The Unspent Transaction Output (UTXO) payment system model was praised for its features.
- Cardano used the UTXO payment system and got it right the first time.
Vitalik Buterin, Ethereum co-founder, has proposed redesigning Ethereum staking. He praised UTXO, which Cardano got right the first time, for its various features. St₳kΣ with Pride, a platform for secure staking, shared a tweet on Vitalik’s saying, on the X platform.
Buterin shared his views about incorporating various new protocols into the Ethereum code blockchain. He specifically mentioned the private mempools, account abstraction protocol ERC-4337, code precompiles, ZK-EVMs, and liquid staking.
Out of these, he favored integrating protocols like account abstraction protocol ERC-4337, while protocols like mempools require more discretion. He said that no matter what protocols are going to be integrated, it involves balancing factors like development flexibility, performance advantages, and centralization risks.
Buterin also expressed concerns over the ever-increasing concentration of Ethereum liquid staking in the hands of the providers in the proof-of-stake model. Ethereum liquid staking providers Lido and Rocket Pool have over 32% of the staked supply. He claimed that although they have safety mechanisms in place, it might not be enough.
He suggested that further decentralization of the mechanisms might strengthen network security. Instead of relying only on ethical pressure, it would be a good idea to tweak the protocols to diversify staking participation or give a committee of small shareholders extra governance powers.
A UTXO is the amount of currency a person will have remaining after a cryptocurrency transaction; basically, it is like the change received after buying an item. The remaining money will be deposited back into the database as input so that it can be used for other transactions.
New UTXOs are created through the consumption of existing UTXOs. Every transaction is composed of input and output, and in this case, input will consume the existing UTXO, and the output will create a new UTXO.
UTXO model is different from other such models, as it does not incorporate wallets at the protocol level. It also does not use accounts or balances; instead, it is transferred between users like physical cash. One of the main advantages of UTXO is that it enables users to track ownership of all the portions of a particular crypto.
Most blockchains like Cardano use the UTXO model, unlike Ethereum, which uses an accounting system to keep track of the user’s balance. Embracing the UTXO model could make Ethereum transactions more secure by not permitting third parties to trace them.
