Ethereum Co-Founder Thinks The Over $40 Billion Staked ETH Can Be Stolen

It appears that the co-founder of Ethereum, Vitalik Buterin, doesn’t trust the security of infrastructure allowing ETH staking. Consequently, in a recent interview, Buterin stated that he would only stake a limited amount of coins to ensure the network is distributed and remain robust against malicious agents who might try to take over the platform, reversing transactions.

Vitalik Buterin Has Doubts On Ethereum Staking

Buterin has raised concerns about the potential risks of ETH staking through third-party infrastructure, specifically regarding the exposure of private keys and the danger it poses to his entire stake. He believes that implementing a multi-signature system could provide better protection. However, the current process is more difficult to set up, leading to his increased caution.

In a multi-sig system, users have their private key to sign transactions. A specific number of signatures must be provided to approve a transaction, which varies based on the Ethereum wallet’s configuration. This setup boosts security and reduces the risk of unauthorized access to funds.

During the Bankless Podcast, the co-founder explains:

Probably the biggest reason why I personally am not just staking all of my ETH, that I’m instead staking a fairly small portion, is because if you stake your ETH, it has to be all out, like the keys that access it have to be public on some system that’s online, and for safety, it has to be a multi-sig, and multi-sigs for staking are still fairly difficult to set up, and it gets complicated in a bunch of ways.

ETH Prices Stable Below $2,000

His remarks have generated a lot of discussion. Most critics are concerned about the entire security framework of Ethereum. After shifting from a proof-of-work to a proof-of-stake system, Ethereum relies on a network of validators who have to stake at least 32 ETH for a chance to approve a block of transactions and earn block rewards and transaction fees. These validators are also needed to secure the network; without them, the blockchain will be susceptible to attacks.

According to on-chain data, there are over 643,000 validators spread across the globe who have staked over 20.5 million ETH. On average, each validator has staked 32.17 ETH. Notably, the validator count has steadily risen over the years, and the number of ETH staked has sharply increased despite the recent upgrade permitting stakers to unlock their coins.

Charles Hoskinson, the founder of Cardano and one of the original co-founders of Ethereum, said he was “lost for words,” clarifying that all their ADA is staked as expected in a “properly designed proof-of-stake system.”

ETH price on July 1| Source: ETHUSDT on Binance, TradingView
ETH price on July 1 | Source: ETHUSDT on Binance, TradingView

At the time of writing, ETH prices remain firm and weren’t affected by Buterin’s comments. However, the coin is yet to breach $2,000 and trends below April 2023 highs in early July 2023.

Featured image from Canva, chart from TradingView