Stake centralization occurs in proof-of-stake blockchain networks when a disproportionately large amount of the total staked cryptocurrency is controlled by a small number of validators or entities. This concentration of power can lead to concerns about network security, censorship resistance, and governance influence. It presents a potential vulnerability where a few large holders could collude to manipulate the network. Addressing this is vital for maintaining decentralization.
Context
Stake centralization is a persistent concern within the proof-of-stake ecosystem, often highlighted in discussions about network health and security. News reports frequently analyze the distribution of staked assets and the implications for network governance. Efforts to mitigate this involve protocol design adjustments, such as delegated staking limits or liquid staking solutions, to promote broader participation.
A new mechanism dynamically scales slashing penalties by stake concentration, creating a self-regulating security equilibrium that disincentivizes validator centralization.
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