Vitalik Buterin shows solutions to overcome threats to decentralization on Ethereum
In his latest blog post, Vitalik Buterin highlighted three main threats affecting decentralization on Ethereum and proposed solutions to overcome this problem in the near future.
Vitalik Buterin shows solutions to overcome threats to decentralization on Ethereum
On October 16, famous developer in the Ethereum community, Peter Szilagyi, highlighted three major issues that threaten the decentralization of the current protocol including MEV, Liquid Staking and hardware requirements in nodes. These factors eliminate small individuals participating in network validation and concentrate power in the hands of forces with more powerful resources.
Y'all know why #Ethereum is gonna get its ETF sooner or later? Because everyone is constantly poking at the protocol rules, so you just have to patiently wait and co-opt tiny decisions here and there, before the entire thing can be captured. Then it's just TradFi as usual.
— Péter Szilágyi (karalabe.eth) (@peter_szilagyi) May 16, 2024
Vitalik Buterin soon posted a blog post supporting Szilagyi's views, asserting that the Ethereum community has long been aware of these concerns. In the article, Vitalik went into depth analyzing the problems that Szilagyi raised and the accompanying solutions to overcome these challenges.
Grats @dankrad @peter_szilagyi you got me to interrupt my work on EIPs and make a twitter response that turned into an unscheduled poast 😀https://t.co/mmVaiEV68K— vitalik.eth (@VitalikButerin) May 17, 2024
Issue 1: Should MEV depend on validators?
In 2020, a new concept called Maximal Extractable Value (MEV) emerged where block creators can change the order of transactions to maximize their profits.
The problem occurs when the process of creating Ethereum blocks with MEV is no longer as “fair” as before: large actors have the ability to optimize the algorithm to gain more profits and bad actors can use bots. MEV attacks profit in each block.
To solve this problem, there are two strategies: “MEV mitigation” and “MEV isolation”. “Minimize MEV” aims to develop MEV-free options, reducing information for transaction validators. “MEV isolation” accepts MEV but limits its impact by separating the task of selecting transactions from validators to protocol builders.
However, MEV will not decrease to 0, or close to 0. Therefore, it is necessary to combine the two solutions together with the inclusion lists model:
Operational model of iclusion lists
Inclusion lists will only tell validators to select transactions that must be included in a block. Then validators will not have to optimize transactions; they just need to participate in staking, choose the transaction and accept the highest profit received. The arrangement of transactions will authorize the builders, they can add transactions but are not allowed to remove transactions by validators to ensure the decentralization of the network, avoiding attacks.
This solution will also reduce the risk of MEV bot attacks such as the recent $25 million theft from the pair of brothers or the MEV bot's record profit from Ethena transactions, as builders always prioritize the integrity of the protocol rather than the profits earned. Buterin concluded:
“I support ideas going in this direction and it is necessary to make the MEV Isolation as small as possible.”
Issue 2: Liquid Staking
Currently in the Ethereum protocol, individuals staking themselves only account for a small portion, while the majority of users stake through platforms that provide staking such as from centralized organizations to DAOs such as Lido, Rocket Pool or ether. .fi.
Staking market share by category. Source: Dune - @21co (May 20, 2024)
Users often choose to participate in staking via different protocols instead of becoming a validator themselves. This is mainly due to the minimum staking requirement of 32 ETH (about 100k USD) which is a significant investment. However, what makes users more apprehensive are the technical difficulties involved in operating and maintaining a node, creating barriers for users to become a validator.
Users staking across protocols can lead to centralization of power, affecting the decentralization of the network.
To solve these challenges, Vitalik said his team is researching and focusing on a number of solutions such as:
Technological enhancements such as Verkle Tree and EIP-4444 to reduce hardware requirements and simplify the process of setting up validator nodes.
Find ways to reduce the minimum ETH staking level to ease the financial burden on users.
Optimized the Ethereum client to reduce user ease in operating the validator node.
Research regulations on penalties and credentials to be less strict and support decentralized staking pools.
The ultimate goal is to build private, protocol-agnostic staking system that increases decentralization while maintaining Ethereum's stability and security.
Issue 3: Hardware requirements of validator nodes
Running an Ethereum node is currently quite complicated and takes up a lot of storage space in hardware, making it impossible for many people to do.
From there, Ethereum needs to reduce its hardware requirements so that anyone can easily install a validator node, perhaps even later on the mobile phone itself.
According to Vitalik Buterin, EIP-4444 and Verkle Tree can be used to reduce the amount of storage required as they use a distributed network to store data, reducing dependence on large actors and increasing decentralization. central. At the same time, ZK-EVM technology, when developed, can verify transactions without the need for complex calculations.
Under ideal conditions, all of these technologies would align together. Even EVM wallets like MetaMask and Rabby have an integrated node to verify transactions. This vision is called “The Verge".
The Verge's vision of the future
Reducing the hardware requirements of validator nodes will make it easier for anyone to run the node, contributing to the decentralization and decentralization of Ethereum.
Buterin concluded his article by calling on the Ethereum community to face the difficult problems at hand instead of avoiding them:
“We should cherish the qualities that make Ethereum unique and continue working to preserve and improve those qualities as Ethereum evolves.”
In a post on X, Buterin expressed satisfaction at witnessing debate among community members with the goal of developing the Ethereum ecosystem now and in the future.
I'm really proud that ethereum does not have any culture of trying to prevent people from speaking their minds, even when they have very negative feelings major toward things in the protocol or ecosystem.
Some wave the ideal of "open discourse" as a flag, some take it seriously.
— vitalik.eth (@VitalikButerin) May 18, 2024
