Ethereum is a legacy network, but it is rapidly evolving. For example, we have adapted to environmental needs while finding ways to scale up. Some difficult choices have been made, such as moving from a proof-of-work system to a proof-of-stake system.
However, Peter Sillage, Ethereum's developer and team leader, Concerned About how “flexible” Ethereum is becoming.
Does Ethereum prioritize short-term fixes over protocol integrity?
Mr. Siraj took up X and criticized the development direction of the project. Team leaders noted an increasing tendency for developers to prioritize short-term fixes over the long-term health of the protocol.
The criticism comes as regulators are scrutinizing Ethereum, with even the U.S. Securities and Exchange Commission (SEC) reportedly considering ETH an unregistered security. It is the decisions taken in this regard that concern Siraj.
Developers worry that constantly tinkering with core protocol rules to appease regulators could spell disaster. This “adopting small decisions here and there” risks turning Ethereum into a clone of traditional finance (TradFi), the team leader said.
When this happens, it sacrifices the core tenets of decentralization and TradFi’s technically elusive “censorship resistance” capabilities.
Siraj believes Ethereum is on a losing path, especially when it comes to the Maximum Extractable Value (MEV) issue. In Ethereum, validators tasked with approving transactions according to an attached gas fee rather than in a specific order can “capture” value by changing the transaction order within a block.
The dangers of centralization: MEV issues not addressed, liquid staking allegations
The developers said they have not yet addressed the negative effects of MEV. But instead of spending time and effort fixing it, the focus has shifted to “providing the protocol and surrounding infrastructure to our own MEV builders.” Siraj argues that by taking this path, Ethereum developers are essentially handing over a centralized lot and undermining decentralization in the second-most valuable network.
Beyond MEV, developers believe that the rise of liquid staking solutions like Lido Finance will destabilize the network.
ETH holders can earn rewards through the Liquid staking platform without running a validator node. Mr. Siraj worries that over time, only a small number of carriers will exercise strong network control, leading to increased concentration.
It remains to be seen whether developers will heed Siraj's concerns. However, what is clear is that developers are introducing implementations to the mainnet to improve the user's experience and reduce costs.
With the latest upgrade, Dencun, the developers have made it cheaper to trade on layer 2 protocols like Base and Arbitrum. As we can see from Ethereum's roadmap, there will also be more efforts to expand the mainnet via sharding in the coming years.
Featured image from Canva, chart from TradingView
