Why we don't need to worry about centralization after Ethereum merger

As long as the projects built in the ecology are committed to decentralization, the foundation layer will remain safe.

Written by: 0xB4ff

Compiled by: aidiaojp eth,Foresight News


After Tornado Cash, the currency mixing agreement, was sanctioned, many discussions about the bottom review began to flow more and more intensely.

Tornado Cash was sanctioned for providing services for cyber hacking criminal activities. One of its main founders was arrested and imprisoned in Amsterdam. Concerned about being involved, a large number of dApp developers, stable currency issuers and exchanges began to consider blacklisting the addresses they had exchanged with Tornado Cash.

In this context, Ethereum is also getting closer to the merger. People began to worry that in order to prevent the occurrence of illegal transactions, the network verifier might be forced to review the block content. Currently includes Coinbase Centralized exchanges, such as Binance, control a large number of pledged tokens, and most users participate in encryption activities through the products provided by these centralized exchanges.

These concerns seem to have been exaggerated. As the basic layer, Ethereum has a very low probability of being reviewed, and the probability of being reviewed after the merger will not be higher than that before the merger.

Short term considerations

First, let's take a look at the composition of the current pledged Ethereum:

Obviously, the main participants are still entities with a high degree of centralization: Lido, Kraken, Binance, Coinbase. Of course, there are also projects with weak centralization like Ankr or RocketPool. However, this is only 11% of the total circulation supply of Ethereum, and the balance of Ethereum pledge is higher than 50% of the total circulation.

Solana circulation share:

Solana uses fewer verifiers to achieve this, but it has the disadvantages of higher operating costs and fewer liquidity pledge options. It is obviously unreasonable to regard Ethereum as a center just because it contains less than 25% of the snapshots of the total supply.

No need to worry about the foundation layer

It cannot be denied that the centralized exchange is the main participant in the pledge activities at present.

The centralized exchange has deposited about 4.2 million to the beacon chain ETHThe reserves shown by these exchanges in CryptoQuant are 36 billion US dollars, about 22.542 million Ethereum. On the basis of not purchasing a large amount of Ethereum, if the exchange uses all the reserves for pledge, they can only control 20% of the total liquid supply of pledge. At the same time, the liquidity pledge agreement will have a way to achieve full decentralization. Before the centralized exchange is enough to pose a threat to the market, the liquidity pledge service will improve the degree of decentralization to achieve the purpose of non censorship.

For the mobile pledge service, "non censorable decentralization" means that two conditions need to be met: anyone can participate in activities without any permission, RocketPool does not have permission, but Lido does not; Central verifiers such as government agencies cannot sanction any service.

The fallacy of "plutocracy"

The biggest criticism of PoS is that it has created a chaebol system, which only allows a few whale players to maintain a stable position and allow them to achieve monopoly. However, PoW's completely "low threshold" entry feature does not cause such problems at all.

The facts are indeed quite different, and the workload proves to have similar problems. Due to the PoW operating structure, it may actually become worse.

In the PoW structure, miners have always been the net sellers and highest cost extractors of Ethereum tokens. They have direct conflicts of interest with communities or development teams working on the chain, so they may also bring huge potential problems to the network. The best example is from 2016 to 2018BitcoinBlock war poses a real threat to the network at a certain time. The killing of Bitcoin's computing power by Wu Shihan and others in Bitcoin seems to be a joke, but it seems to be a real threat at the fiercest moment of the war. If the miners are allied together, they will have great influence. The worst case is that the merger will be deadlocked again. They will not try to decentralize, but turn the network into a digital version of the U.S. Congress, but the rights and interests prove that they do not need a centralized network.

The proof of Ethereum's rights and interests also has a certain degree of complexity, which can reduce the pressure of additional centralization trend caused by relying on pledged capital. First, the maximum balance parameter, which is set to 32ETH, is not only the minimum balance required by the verifier, but also the maximum quantity limit used to calculate the reward. If the verifier earned 1.44ETH in the first year but did not withdraw the reward, the income in the second year is still 1.44ETH. In other words, the combined network equity will not be merged into a single verifier, thus allowing a large number of verifiers to participate.

The second function to help the network achieve balance is to calculate the basic reward, which is inversely proportional to the square root of the total active pledge:

The basic reward determines most other forms of reward and punishment

This means that with the increase of active pledge, the reward will decrease rapidly, which helps alleviate the situation that the main participants deploy thousands of nodes too quickly.

Future: PBS and sharding design

In the future, Ethereum will introduce some form of data fragmentation to increase the network throughput and reduce the costs of the main chain and roll up users, so as to reflect the advantages after the merger. We do not know the specific details about it, nor when it will appear before our eyes, but the latest discussion focuses on PBS (EIP-4488).

The proposal introduces a new partition design of "proto bank sharing". It will introduce an additional data called "blob", up to 1MB. "Blob" is mainly introduced to reduce the computing load of the verifier. Similar to the working mode of MEV, the block construction under this plan will be carried out by a new group of participants, and then bid to the verifier.

In this setting, the verifier will no longer be able to review transactions and select transactions in blocks. They will blindly verify the highest bid block, instead of processing all the included transactions. Theoretically, the verifier can review the block builder, but how this will happen is still unknown. The review may not be allowed due to the increased degree of decentralization of builders.

Vitalik Buterin: In order to avoid high systematic requirements for the verifier in this design, we introduced PBS: special category of participant block builders bid to select the transaction content. The proposer only needs to select the effective block header with the highest bid, and only the block builder needs to process the entire block (a third-party decentralized oracle protocol can be used to implement the distributed block generator)

Therefore, we are not only in the early stage of pledge service, but also in the medium and long term, the verifier may not be able to review at all. Exchange verifiers will lose the option to include specific transactions, while block builders themselves have a path to decentralization. The government can easily sanction the issuer of stable currency and other central project parties, but as long as the projects built in the ecology are committed to decentralization, the basic layer will remain safe.


It is not worth relying on the basic level to review relevant laws. The government always lags behind in formulating relevant laws. What's more, there are many targets in the market that are more cost-effective than attacking the infrastructure verifier. Therefore, when worrying about the security of Ethereum, you may want to consider centralized stable currency, multi signature wallet and DAO first. DApp urgently needs to achieve decentralization, and hopes that the potential of bottom review will not become a stumbling block to the development of the project in the future.