For fear that the Ethereum made vulnerable by centralization, Vitalik Buterinefounder of the cryptocurrency, proposes changes to the project. THE text Published this Sunday (20) is the third in a series posted by the developer in recent days.
The proposal, called “The Scourge” (The Scourge, in literal translation), shows that Buterin is not satisfied with the current Ethereum model, which is already This is even observed by the US Central Bank in a study on censorship.
“In addition to the risk of centralization, there are also risks of value extraction: a small group capturing value that would otherwise go to Ethereum users.”
“Over the past year, our insight into these risks has increased significantly”Vitalik continued, pointing to “building blocks” And “providing capital for strike”.
Ethereum’s founder proposes changes to his cryptocurrency
Although Ethereum’s Proof-of-Stake model seems simple, there are several layers behind a block. In addition to validators, there are also block builders and relays.
One of Vitalik Buterin’s proposals is reduce the limit for validators, from the current 32 ETH (R$489,000) to just 1 ETH (R$15,300)allowing more people to participate in the network.
However, this alone would not be enough. After all, small validators would earn less than larger ones because they wouldn’t be able to use tools called MEV Bots to maximize their earnings, and they would end up delegating their ethers to third parties.
That’s why Buterin presented three solutions.
Policy | Necessary decision |
Risks to be analyzed |
Don’t do anything | Implementation of MEV combustion, if applicable |
Nearly 100% of ETH staked, likely in LSTs (perhaps dominant) / Macroeconomic Risks |
Betting limit (via change in the issue curve) | Reward function and parameters (especially what the threshold is) / MEV brand implementation |
Open question about which strikers enter and leave, possibility of centralization of remains |
Staking on two levels | The role of the risk-free level / Parameters (e.g. the economics that determine the value deployed at the risky level) / MEV combustion implementation |
Open question which strikers enter and leave, possibility to centralize the level with risk |
This could change the way Ethereum blocks are created. For example, in this comparison, some functions would transfer from one player to another.
Encrypted transactions in the mempool
Another major problem with Ethereum is that MEV bots can access transactions before they are recorded on the blockchain. With this information, they can manipulate the network and pass on other transactions to make a profit.
One case that explains this well was when one of these bots was attacked by a validator, causing him to lose R$126,000 in April 2023.
To solve this, Vitalik Buterin suggested encrypting transactions in the mempool. In other words, no one would know their contents before they were published.
“The main challenge in implementing encrypted mempools is creating a design that ensures that transactions are later made public: a simple ‘commit and reveal’ scheme does not work, because if disclosure is voluntary, the choice is whether not to make it public, in itself a kind of ‘last mover’ influence on a bloc that could be exploited.”wrote Buterin.
“The two main techniques for this are threshold decoding and delay encoding, a primitive closely related to verifiable delay functions (VDFs).”
In terms of censorship, Ethereum has become more open since early July, with censorship for builders dropping from 60% to less than 3%. However, this just shows how centralized cryptocurrency is, as this decline reflected the change of a single player.
Finally, Ethereum’s founder has been more active in developing the project in recent months. One reason may be the criticism received over ether’s poor performance against Bitcoin since The Merge.
Even the reduction in inflation and even ETH ETFs were not enough to make the project stand out in the market. At the time of writing, Ethereum is trading at $2,675, a far cry from its high of $4,900 three years ago.
Source: Live Coins
Barry Siefert is an accomplished journalist and author at The Nation View. He is known for his expertise in the field of cryptocurrency, and has written extensively on the topic. With a background in finance and economics, Barry has a deep understanding of the underlying technology and market forces that drive the crypto industry.