The long-awaited update for Ethereum called The Merge is planned to take place by the end of the year.
In the aftermath of the Merge, when the current Ethereum Mainnet merged with the beacon chain proof-of-stake (PoS) system, Vitalik Buterin, the co-founder of Ethereum (ETH), declared that he is “absolutely” concerned about centralization threats. The mastermind behind Ethereum pointed out that Lido Finance, the biggest Ethereum staking service provider, where around a third of staked ETH (stETH) has been put, theoretically has the power to interfere with the Ethereum network after the Merge.
He went further to say “But I also think it’s important to not overly catastrophize the issue.”
Buterin in an interview with Fortune said “First of all, if you have a third [of staked Ether deposits on the Beacon chain], you can’t revert the chain or whatever.” He went further to say “But realistically, the worst that you could do is make finality stop happening for about a day or so, which is inconvenient, but it’s not that terrible.” Buterin further affirmed that Lido does not act as a single entity; rather, “they have something like 21 delegates and nodes that are running these validators that are inside of Lido,” he said, claiming that “there’s a lot of good decentralization between them.”
The biggest supplier of staking services for Ethereum is Lido. Typically, individuals must stake a minimum of ETH 32, which is a considerable amount, in order to become Ethereum 2.0 validators and receive rewards. Lido, however, allows users to pool their ETH and take part in staking even if they lack the necessary ETH 32. In exchange for their staked currencies, users receive stETH tokens from the protocol. These tokens can later be exchanged for ETH or other currency.
Buterin said that compared to the present proof-of-work (PoW) technique, the change makes Ethereum more ecologically friendly. This improvement can reduce the energy needed by the Ethereum network by at least 99.95%, according to a researcher’s estimate from the Ethereum Foundation from last year. He added that “Also, proof of stake can increase the safety of the system. It makes it more expensive to attack,” Buterin told Fortune. “It makes it easier to recover from an attack, which is something people don’t think about.” PoS is more censorship-resistant, which is an additional advantage. In contrast to computers that are only running validator nodes, Buterin explains that miners are easier to detect and easier to shut down.
Featured Image: Megapixl © Mejikyc