Crypto news

An initiative has emerged on the Ethereum Research forum that could fundamentally change the economics of staking. The proposal, named Validator Redirected Revenue, suggests implementing a mechanism via a hard fork that would redirect up to 10% of validator rewards to fund ecosystem projects.

The key point is its mandatory nature. If 51% of validator votes support a rate above 0%, it becomes binding for all network participants. This is not an option, but a new protocol-level tax.

Numbers and Mechanics

According to the authors' estimates, with the current volume of 35–40 million ETH locked in staking and an annual yield of around 1.91%, validators collectively receive approximately 700,000 ETH per year. Redirecting 5–10% of this amount would provide the ecosystem with an additional 50,000 to 70,000 ETH annually. This is a significant resource for funding infrastructure, research, and security.

The distribution mechanism is proposed to be implemented through a smart contract distributor. Validators will be able to set addresses and shares, with preferences recorded at the execution layer. Every 128 blocks (approximately every five minutes), a new distribution option can be proposed. The one that best matches the majority's preferences will remain in effect.

The authors compare the selection model to a "king of the hill" game, where the winner is determined through pairwise comparison of alternatives. This is an elegant but risky solution.

Risks and "Cartelization"

The developers honestly list the main threats:

• "Cartelization" of validators — large staking operators could coordinate and push through the rates they want.
• Conflict of interest between operators and ETH holders who do not participate in staking.
• Excessive issuance — if the fees go to projects that do not directly benefit the network.

Particularly concerning is the fact that about 90% of coins are currently locked through operators, not solo participants. With coordination among most platforms, the rate could theoretically be raised to the maximum of 10% without real resistance.

The "Public Goods" Problem

The authors emphasize that the goal of the publication is not to push a specific model, but to spark a discussion about the chronic underfunding of "public goods" in Ethereum. Infrastructure, research, security, and tools are needed by everyone, but individual participants find it unprofitable to pay alone while others benefit for free.

"Everyone benefits from shared improvements, but no single participant wants to pay when others can enjoy the advantages for free. This creates persistent efficiency losses that weaken Ethereum's long-term competitiveness," the proposal states.

Currently, structural costs are often borne by the Ethereum Foundation, donors, or individual teams. The authors describe a vicious cycle: concerns about future funding lower expectations for Ethereum's success, pressure ETH's valuation, and lead to a decline in the asset's price. Recall that in June, former Ethereum Foundation employee Trent Van Epps already warned about the risk of a blockchain funding crisis.

My comment: The initiative is ambitious but highly controversial. Forcibly taking a portion of rewards is a direct path to centralization and conflicts. On one hand, Ethereum truly needs sustainable development funding, but on the other, such mechanisms could deter small validators and increase dependence on large pools. A solution must be found through a balance of incentives, not through coercion.