Crypto

Vitalik Buterin worried about Ethereum after the Merge

Renowned Ethereum co-founder Vitalik Buterin expressed some concerns about the decentralization of Ethereum after the Merge.

Buterin’s doubts about the level of decentralization of the Ethereum network post-Merge

Vitalik Buterin reveals he is concerned about the level of decentralization of the Ethereum blockchain after the Merge

He did so during an interview with Fortune, when asked explicitly if he had any doubts about the Merge, and in particular about Lido Finance and the risk of centralization.
In fact, Lido Finance is the largest provider of staking services for Ethereum 2.0, to the extent that around one-third of the ETH in staking (stETH) are deposited there today.
Buterin’s response was crystal clear:

“YEAH. I MEAN, I’M DEFINITELY WORRIED”. 

He went on to say that he considers this one of the most important issues they are considering at this stage of the transition to the new consensus algorithm.
In this regard, it is worth mentioning that Proof-of-Stake (PoS) is based on the concept that those who own ETH and stake them, can validate transactions. This effectively means that whoever owns more and stacks more will validate more blocks.
In contrast, with the current Proof-of-Work (PoW), those who have the most hashrate will validate more blocks, regardless of how many ETH they own.
However, Buterin also makes it clear that it is important not to catastrophize the problem too much.

The market share of the Lido Finance platform

He points out that Lido has about a third of the ETH in staking on the Beacon Chain, far less than they need to take control of it. So they can neither modify the chain nor create blocks at will.
In this situation, the worst that could happen is that Lido could “make finality stop happening for about a day or so”, i.e. something uncomfortable, but according to Buterin “not that terrible”.
Moreover, Lido is not a single operator, because it has about 21 nodes validating transactions, which are fairly well decentralized and located in different places.
This is why Buterin does not consider Lido a centralized staking platform.
He then added:

“AT THE SAME TIME, I THINK WE IN THE ETHEREUM COMMUNITY, WE DO SET VERY HIGH STANDARDS FOR OURSELVES, AND AN EVEN HIGHER LEVEL OF DECENTRALIZATION IS DEFINITELY SOMETHING THAT WE’RE ACTIVELY TRYING TO SHOOT FOR”.

The fact is that after the Merge that will replace PoW with PoS, it will be the validator nodes with ETH in staking that will create the new blocks that validate transactions and add them to the blockchain. If these nodes, as it seems, will be less decentralized than the current ones, then Ethereum’s level of decentralization would decrease after the Merge.
It is worth noting that in recent times, several PoS-based blockchains have had precisely problems with over-centralization, such as the existence of single-point-of-failures that can also arbitrarily cause total service interruption.
So, as Buterin says, the risk that the move to PoS may create a few more problems, perhaps even consisting only of temporary inefficiencies, is there.

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *