The number of Ethereum validators has surpassed one million, raising concerns about the centralization of staking.

Recently, the number of active validators on the Ethereum network has surpassed 1 million, a milestone event that has garnered widespread attention in the market. As a core component of Ethereum's Proof of Stake ( mechanism, the development of validators is crucial for the entire network. Especially after the Shapella upgrade, the significant increase in the number of validators has not only brought excitement but also raised some concerns, primarily focused on technical challenges and centralization risks.

According to the data, on March 28, the number of Ethereum validators officially surpassed 1 million. This growth trend became more apparent after the Shapella upgrade, which allowed for more flexible withdrawal of staked funds in Ethereum. This is seen as an important step for Ethereum's evolution towards a more scalable and energy-efficient network. However, 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.

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Data statistics show that there are currently at least 850,000 validators belonging to users who delegate their ETH to centralized platforms for staking. This is mainly because most ETH holders either do not have more than 32 ETH or cannot cope with the complex staking operations. This situation has raised concerns about increasing centralization risks. If the continuous growth of network bandwidth allows validators with substantial computing resources to continue participating efficiently, it could lead to institutional data centers suppressing individual self-hosted nodes, thereby pushing the Ethereum network towards centralization, which contradicts its fundamental ideology.

It is worth noting that validators do not represent a single entity. Running a validator requires 32 ETH, but a single server can run multiple validators. Although Ethereum's transition to the PoS verification mechanism is crucial for improving efficiency, maintaining a balance between the growth of the number of validators and the fundamental principles of network decentralization and availability remains an important challenge.

To address the centralization issue of validators, an innovative plan has been proposed. This plan aims to enhance the decentralization and fairness of the Ethereum staking mechanism by increasing penalties for large validators in case of failures. This scheme is known as "anti-correlation incentives," and its core idea is to penalize validators for correlated failures, thereby encouraging them to broaden their validator activity.

According to this proposal, if multiple validators controlled by the same entity fail simultaneously, they will incur higher penalties than if a single validator fails. This is because any error from a large validator will be replicated across all identities it controls. For example, validators in the same cluster are more likely to experience correlated failures, which may be due to shared infrastructure.

The proposal suggests imposing corresponding penalties on validators that deviate from the average failure rate. If multiple validators fail within a given time period, the fine for each failure will be higher. Simulation results indicate that this approach can reduce the advantages of large staking platforms, as larger entities are more likely to experience a surge in failure rates due to related failures.

In addition, other proposals have been put forward, such as different penalty schemes, to minimize the advantages of large validators and assess the impact on geographical and customer decentralization. Although Ethereum already has penalty mechanisms like confiscation to address serious violations, the new proposals incorporate penalties into regular network operations, emphasizing the promotion of genuine diversity among validators.

Another concept worth following is "Rainbow Staking", which encourages diversity among service providers and can serve as a means to address the centralization issues of Ethereum. Currently, the number of individual validators in the Ethereum network is insufficient, mainly due to technical challenges and financial constraints. As a result, many users who wish to stake ETH can only obtain yields through liquid staking solutions.

Rainbow staking can be divided into heavy staking and light staking. Heavy staking is forfeitable and has signatures in each period. In contrast, light staking is non-forfeitable and is signed through a lottery system. This method attempts to separate the two types of staking and may require both to sign on the same block to ensure finality.

The core purpose of Rainbow staking is to allow small ETH stakers to participate in network validation in a lightweight manner. By increasing the number of participants, it partially offsets the centralized influence of major institutions and protocols that hold a large amount of staked ETH. In addition, this framework aims to address the emergence of liquidity tokens that could potentially replace ETH as the primary currency of the Ethereum network, and to provide competitive participation by enhancing the economic value of individual stakers.

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However, before rainbow staking becomes a viable design for Ethereum, more research and development work is still needed. The biggest challenge may not be technical, but philosophical. How to achieve true decentralization while maintaining network security and efficiency will be a question that the Ethereum community needs to continuously discuss and solve.