Lefteris Karapetsas warns Ethereum funding proposal invites cartels

The proposal, known as Validator Redirected Revenue, suggests that if a majority of validators agree, a portion of rewards could be diverted to infrastructure and core development projects. Karapetsas contends this mechanism creates a dangerous precedent: top-tier staking entities could form a cartel, effectively controlling the flow of funds and forcing smaller, dissenting validators to subsidize choices they did not make.

Beyond the immediate threat of centralization, Karapetsas voiced frustration with the current state of Ethereum’s core development. He described the protocol as increasingly burdened by technical complexity—citing standards like RLP and SSZ—and argued that the leadership has lost touch with the needs of everyday developers. Instead of the proposed reward redirection, he suggested that using burned ETH fees would be a more equitable funding model, despite its own technical hurdles.

Proponents of the plan argue that it addresses the "free-rider" issue, where many entities benefit from Ethereum’s shared infrastructure without contributing to its maintenance. Estimates suggest a 5% to 10% redirection rate could generate up to 70,000 ETH annually. However, the governance of such a fund remains an open question, leaving the proposal in the research phase as the community weighs the need for sustainable funding against the risks of concentrated power.