- ethereum dad Co-founder Vitalik Buterin cited centralization as the “biggest risk” of blockchain.
- According to Buterin, approximately 80% of all transactions on Ether are verified or influenced by just two parties.
- The programmers' latest blog post evaluates several methods to deal with increasing centralization, including setting staking limits and creating encrypted memory pools.
- Despite the perceived problems, Ethereum has grown by 11.2% over the past week.
The cryptocurrency market is healthy again, with Ethereum being one of the biggest winners over the past week. Even though many in the community believe that Ether has had an up-and-down year, Ether coin is still up 70% over the past 12 months, with an additional weekly gain of nearly 12%. Masu.
However, even with bullish sentiment, Ethereum still has some issues to address.
Vitalik Buterin, co-developer and industry representative at the DeFi giant, regularly checks the protocol to impart wisdom and resolve some of these issues. In his latest blog post, Buterin outlines Ethereum's biggest existential threats and potential solutions.
Welcome to Scourge.
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Ethereum’s current validator structure is dominated by a select few
Buterin's post states Ethereum's biggest threat quite simply.
Centralization of proof of stake due to economic pressures.
Vitalik Buterin Essentially, this coin's proof-of-stake model relies on validators locking up a portion of their ETH in exchange for completing transactions and receiving rewards. However, the economic requirements for running your own node on Ether are quite high, around AU $130,000 at the time of writing.
So, what ends up happening is that large actors, people who can afford to run nodes, absorb all the delegate votes and end up with a larger verification pie than decentralized protocols ideally offer. will be obtained.
This leads to an increased risk of 51% attacks, transaction censorship, and other crises… There is also the risk of value extraction. That means there is also a risk that a small group could capture the value that should have been passed on to Ethereum users.
Vitalik Buterin According to Buterin, “There are only two actors.” [are responsible for] It selects about 88% of the contents of the Ethereum block. ”
Scourge proposes crypto menpool and staking limits
Buterin proposes “The Scourge” as a future solution to this problem.
The two main goals of this proposal are:
- “Minimizing the risk of centralization in Ethereum’s staking layer.”
- “Minimize the risk of excessive value being extracted from users.”
Buterin has strengths in solving the Maximum Extractable Value (MEV) problem, where a select few validators adopt several DeFi strategies to increase their yield.
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In particular, as centralization among operators on the Ether network increases, blocks with the greatest financial incentives may be prioritized, while other blocks may be sidelined or censored.
To combat this, The Scourge proposes implementing a cryptographic “mempool” (pending Ethereum blocks) that reduces the ability of validators to censor transactions while changing the block generation process. I'm doing it.
Additionally, Buterin said that creating a two-tier staking approach could help lower net worth users remove the inevitable centralization that comes with delegating their Ether tokens to Liquid staking protocols. I'm thinking.
