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New post on EthResear.ch!
Validator Redirected Revenue
By:
- clesaege
🔗 ethresear.ch/t/25248
Highlights:
- Ethereum faces a persistent coordination failure: many ecosystem improvements are public goods, so voluntary funding tends to underprovide them, creating deadweight loss and harming long-term competitiveness.
- Validators are structurally aligned with ecosystem growth (more usage → more demand for blockspace → more ETH burn/value), but they still get stuck in a prisoner’s-dilemma equilibrium where they hesitate to contribute unless others also commit.
- The proposal adds a protocol-level mechanism where validators signal a redirect rate: if a majority (e.g., 51%) supports a non-zero rate, that rate becomes mandatory for all validators, solving intra-validator free-riding; the rate is capped (suggested max 10%, min 0%).
- Validators also signal preferred funding recipients and allocations; execution clients aggregate these into a “splitter” contract using a king-of-the-hill / Condorcet-winner style process with simple protocol choices (KEEP vs CHANGE), aiming to minimize governance overhead (“set and forget”).
- Key open risks include validator cartelization (majority could redirect funds to themselves), principal–agent problems (staking operators controlling votes vs delegators’ preferences), and the possibility that willingness to redirect rewards is interpreted as evidence issuance could be reduced.
ELI5:
Ethereum needs shared things (like security tools and maintenance) that help everyone, but it’s hard to get people to voluntarily pay because each person hopes others will cover the cost (the “free-rider” problem). This article suggests a built-in way for Ethereum validators (the people who earn staking rewards) to collectively agree to donate a small, capped slice of their rewards to fund important ecosystem work. Validators would also collectively choose where the money goes using a simple voting/competition process, so funding can happen without lots of meetings or bureaucracy—while still acknowledging risks like validators teaming up (cartels) or staking companies voting in their own interest instead of users’.
