When Ethereum switched from POW to POS, I wrote some articles expressing my reservations about it, believing that its decentralization was challenged and that there might be hidden dangers as an infrastructure protocol.
Recently, the Ethereum Foundation admitted that Ethereum currently faces "corporatization, centralization and systemic threats". This month, it urgently included EIP7514, which is used to alleviate the rapid growth of pledge, into the Cancun upgrade, and admitted that there is no good solution at present. The Ethereum Foundation represented by Vitalik as a whole made a collective mistake of being overly optimistic about POS before going online, insufficiently predicting risks, and being in a hurry to post puddings everywhere after going online.
The above mentioned problems are actually very serious, and more importantly, "admit that there is no good solution at present". In the one year since Ethereum switched to POS, the centralization problem has become increasingly serious. Lido is about to approach the first safety line of 33% of the total pledged amount. After several other LSD projects recently promised to limit themselves to less than 22%, Lido has remained indifferent. Why is it indifferent? Because in Lido's view, their own interests are obviously the first priority. As for the safety and health of the network, they only promise "no evil, no problems".
We should all have a consensus: in the face of interests, any promise is worthless. So many financial institutions pat their chests and guarantee that they are the safest and will not mess around before problems arise, but they are very unambiguous when the crisis occurs.
In May last year, Vitalik optimistically said that any liquidity staking pool should not exceed 15%. If it exceeds, certain measures can be taken to limit it. However, Lido is about to exceed 33% and is "indifferent" to the self-restriction measures taken by other projects. The industry has also proposed some solutions: decentralized staking pools and decentralized staking services to alleviate the problem, but the Ethereum Foundation itself admits that "there is no good solution at present."
Other public chains are more centralized, but no one has criticized them too much. Why is the centralization of Ethereum always a concern in the market? Bitcoin mining pools are also centralized, so why are there few criticisms? Is there any harm in the centralization of Ethereum? How harmful is it? Let me share my opinion:
First of all, we still need to figure out why the soul of blockchain is "decentralization". I have communicated with many friends, but many people do not really understand the "decentralization" of blockchain. If this core issue is not clear, you cannot truly understand blockchain.
In fact, blockchain is not for "decentralization", but for building a "better center". Please note that it is for the service of a better center. Centralized systems are low-cost, high-efficiency, and good experience, which is very good. When the centralized system is "worm-eaten" and leads to low efficiency and high loss, "decentralization" is needed. Blockchain is actually a means to implant "worms" into the system to make the centralized system work better. Let's take an example to understand: the government serves the people. When it is controlled by a few people to do evil and make private profits and no longer serves the people, the people will take measures to resist, and the most extreme way is violent war.
All the resistance measures taken by the people are essentially "decentralized means". When the government serves the people wholeheartedly, these measures will not be used. On the contrary, the people will resist. Resistance measures (decentralized means) can be used, but they cannot be absent! These resistance measures are obviously to ensure the healthy operation of a high-quality centralized government.
By now you should understand: centralization is not a problem, no one cares whether it is centralized or not, and Bitcoin is centralized because the centralized mining pool has low costs. After centralization, the key is whether there are countermeasures to counter the evil deeds of the minority who control the center. POW can be done because it is violent governance, while POS is currently difficult. After centralization, Lido is "indifferent" and the Ethereum Foundation also admits that there is no good solution, which indirectly illustrates the problem.
How harmful is Lido's 33% control? Of course, it is harmful, but not as big as imagined. There are 21 operators behind Lido. Currently, these 21 operators are designated by Lido and no one else can enter. In simple terms, these 21 people control Lido, and Lido already has a 33% weight that can have a greater impact on the security of the Ethereum network. Driven by interests, they have the ability to do evil, but they do not have very effective resistance measures.
Other public chains or projects are more inclined towards ecology, so they do not have such high requirements for centralization, but Ethereum is an underlying infrastructure protocol. If there are security risks, it is questionable whether it can remain the "king of ecology" for a long time.
If there is the ability and motivation to do evil, corresponding resistance measures must be taken to ensure "decentralization", otherwise the system will have problems sooner or later.
I've finished writing, keep going! I'm Brother Ming, an old leek who sincerely wishes you to get rich in the cryptocurrency circle. You can send me a private message and we can chat together.
