Ethereum (ETH) co-founder Vitalik Buterin said he was “definitely” concerned about the centralization risks following The Merge, the event that saw the current Ethereum mainnet merge with the Beacon Chain Proof-of-Stake (PoS) system .
This is what the Ethereum mastermind noticed Lido Financethe largest provider of staking services for Ethereum, with which around a third of the staked ETH (stETH) was deposited, could theoretically disrupt the Ethereum network after the merger.
“But I also think it’s important not to overly catastrophize the issue,” he added.
“First of all, if you have a third [of staked Ether deposits on the Beacon chain]You can’t undo the chain or whatever,” Buterin said in an interview with Fortune, adding:
“But realistically, the worst thing you could do is stop the finality for about a day or so, which is uncomfortable, but it’s not that bad.”
Buterin also mentioned that Lido doesn’t operate as a single entity, but that “they have about 21 delegates and nodes running these validators within Lido,” he said, claiming that “there’s a lot of good decentralization between them.” “
Lido is the largest provider of Ethereum staking services. In general, users who want to become Ethereum 2.0 validators and earn rewards need to stake at least ETH 32, which is a steep price.
However, Lido allows users to pool their ETH and participate in staking even if they do not have the required ETH 32. The protocol distributes stETH tokens to users in return for their staked coins, which can be redeemed for ETH or traded for other coins in the future.
The Merge is Ethereum’s long-awaited update, which is expected to happen by the end of the year.
The upgrade has several benefits, Buterin said, noting that it makes Ethereum more environmentally friendly compared to the current Proof-of-Work (PoW) mechanism. According to last year’s estimate by a researcher at the Ethereum Foundationthis upgrade can reduce the energy consumption of the Ethereum network by at least 99.95%.
“Moreover, the Proof of Stake can increase the security of the system. This makes attacks more expensive,” Buterin told Fortune. “It makes it easier to recover from an attack, which people don’t think about.”
Another benefit is that PoS is more censorship resistant. That’s because, Buterin says, “miners are easier to detect and shut down than just computers running validator nodes.”
Meanwhile, ETH is trading at $1,156 as of 10:33 UTC, up 3% over the past 24 hours and down 4% over the past 7 days. The coin is also down more than 76% from its all-time high of $4,878 recorded in November of last year.
– Dominant staking pool Lido, dealing “long-lasting” damage to Ethereum but looking to improve
– Ethereum’s Ropsten test is “almost” error-free, two more testnets are about to merge
– Major bitcoin and crypto companies warn of “extreme” risk in proof-of-stake schemes
– The tradeoffs and benefits of moving from Ethereum to a Proof-of-Stake network
– Contradictory Vitalik Buterin says he wants a more Bitcoin-like Ethereum
– The most important non-financial blockchain applications according to Vitalik Buterin
– Ethereum Beacon Chain experienced a 7-block reorganization, more work needed before the merger
– Ethereum merger could reduce demand for Bitcoin, but regulatory and technical challenges remain