Incentives to transforming Ethereum validator dynamics
Liquid staking bifurcates Ethereum’s validation into distinct economic and validation contributions. While reducing entry barriers for economic contributors, this approach consolidates validation contributions within a limited number of specialized node providers. This paper outlines Heroglyphs, a protocol whose use creates incentives for "Complete Validators," which are entities that are both economic and validation contributors, by refining Graffiti, a small piece of arbitrary data that validators can include in the blocks they propose. Heroglyphs consists of an Encoder for densely embedding information in Graffiti and a Translator for transforming this information into a variety of on-chain operations, including but not limited to the creation, emission, transfer, and transformation of various tokens. Heroglyphs token mining ensures that all complete validators receive rewards for their participation, regardless of whether they are selected as block proposers and irrespective of their stake size, providing smaller validators with a stronger economic foundation. While we believe Heroglyphs will have applications far beyond the mining of tokens, for now Heroglyphs token mining returns fair token distribution mechanisms, pioneered by Bitcoin’s Proof-of-Work, to an Ethereum that has transitioned to Proof-Of-Stake.