As a seasoned crypto investor with over a decade of experience in this wild and ever-evolving digital frontier, I find myself intrigued by Vitalik Buterin’s latest insights into Ethereum’s next upgrade, The Scourge. Having witnessed the meteoric rise of Ethereum from its humble beginnings to becoming the second largest cryptocurrency by market cap, I can attest to the importance of addressing centralization concerns in any blockchain network.
As a researcher delving into the world of blockchain technology, I’m excited to share that Vitalik Buterin, one of Ethereum‘s founders, has provided valuable insights about the upcoming enhancement in Ethereum’s technical roadmap – aptly named “The Scourge.” This upgrade promises significant advancements for the Ethereum network.
As a researcher delving into the realm of Ethereum, I am focused on addressing centralization concerns that arise during its staking and block production processes. Proposing solutions to these challenges that Ethereum’s layer-1 blockchain encounters has been my recent focus, following in the footsteps of Vitalik Buterin’s pioneering work.
Ethereum’s Scourge to Reduce PoS Centralization
After Ethereum’s Merge upgrade in late 2022, the smart contract blockchain shifted from using a proof-of-work (mining) consensus method to a proof-of-stake (holding and validating) model. This change enabled ETH holders to deposit their coins for extra incentives, participate in block creation, and bolster network security.
As a researcher delving into the intricacies of this blockchain technology, I cannot ignore the benefits it has brought to our ecosystem. However, Vitalik Buterin, its creator, has underscored that the centralization of staking poses “one of the most significant threats” to the L1 chain. This centralization, if unchecked, could potentially spawn additional complexities within our network.
In a blog post from October 2020, Buterin pointed out that the advantage of economies of scale in Proof-of-Stake systems could lead major staking pools to take over the market, with smaller stakeholders often joining larger pools.
Approximately one-third of Ethereum’s total supply is currently locked in staking. Vitalik Buterin, Ethereum’s co-founder, noted that this level of staking helps secure the blockchain against a potential 51% attack. However, if the percentage of staked ETH increases substantially, it could lead to potential risks. These include the possibility that staking might become obligatory for all Ethereum holders, a single Liquid Staking Token (LST) gaining control over most of the staked amount, and the influence of the “money” network effect from the blockchain weakening. The credibility of the slashing mechanism could also be undermined.
As a researcher delving into the realm of Ethereum, I’ve come across an intriguing proposition put forth by one of its co-founders. This solution aims to maintain balance within our community: it caps the amount of ETH each user can lock for staking and restricts penalties for unstaking to a maximum of 12.5% of the staked coins. Furthermore, he proposes a two-tier staking system, where the staked Ether can be either slashable or unslashable, providing an additional layer of safety and flexibility in our ecosystem.
The Scourge to Fix Block Construction Challenges
In the context of Ethereum’s block creation, a researcher from the Ethereum Foundation revealed that during the initial fortnight of this month, two entities – Beaverbuild and Titan Builder – accounted for 88.7% of all ETH blocks mined. This revelation has fueled apprehensions about potential centralization issues.
Currently, Ethereum utilizes the Proposer-Builder model for block creation, which involves builders constructing blocks that proposers then evaluate. However, Vitalik Buterin noted that roles carrying out “specialized” functions might inadvertently develop into a centralized entity.
According to Buterin, Beaverbuild and Titan Builder don’t have the power to independently censor transactions because they don’t create all the network’s blocks. However, there’s a possibility that transactions could be delayed up to 114 seconds instead of the usual 6 seconds. This prolonged delay can potentially cause issues with time-critical transactions and may expose them to ‘sandwich attacks’.
The individual who created Ethereum proposed two potential resolutions for the problem at hand. One of these proposals is known as fork-choice-enforced inclusion lists (FOCIL). With this approach, either proposers or stakers would choose which transactions to include, while builders would determine the sequence in which these transactions are processed and new ones added.
This strategy incorporates the use of several simultaneous proposal systems, such as BRAID, where the creation of blocks is shared among numerous parties. In this setup, each contributor requires a moderate level of expertise to optimize their earnings.
Read More
- W PREDICTION. W cryptocurrency
- PENDLE PREDICTION. PENDLE cryptocurrency
- AAVE PREDICTION. AAVE cryptocurrency
- AEVO PREDICTION. AEVO cryptocurrency
- REF PREDICTION. REF cryptocurrency
- SOL PREDICTION. SOL cryptocurrency
- FLOKI PREDICTION. FLOKI cryptocurrency
- HIFI PREDICTION. HIFI cryptocurrency
- CGPT PREDICTION. CGPT cryptocurrency
- AKT PREDICTION. AKT cryptocurrency
2024-10-21 16:17