Don't expect CeFi to save Ethereum
Original title: Don 39; t count on CeFi to protect the Ethernet network
Original author: Nothing ResearchOriginal compilation:Jack(0x137)，BlockBeats
Nothing is absolute. We must evaluate the advantages and disadvantages of Ethereum PoS and PoW from different perspectives.But if we compare security with decentralization, just like comparing apples with oranges, the discussion will be meaningless.
We can think about censorship resistance from at least two perspectives:
1. If reviewed, how long will your online trading be blocked?
2. If reviewed, can you ensure that your transaction can still be packaged and linked in the future?
To prevent 51% attacks, let's consider the following two aspects:
1. How much does hacker attack cost?
2. How likely are they to rent enough mining equipment?
For Ethereum merger, we should not simply say that the decentralization and security level of PoS is "higher" or "lower" than that of PoW. The scope of these problems is too wide. So let's analyze them one by one.
First, security. There is no doubt that the attack cost under PoS has indeed become higher. This has been discussed many times. If you try to attack the PoW network with your crazy hash rate, your actual cost is just your electricity bill. Attacking the network will not change your computing power, especially when the proportion of video card miners in the market is high. Even if your attack fails, you can dismantle the encryption mining facilities and sell these graphics cards.
But if you attack the PoS network, you may lose all pledged ETH. This increases the attack cost hundreds of times. We must realize that the cost of attacking PoW is temporary, but for PoS, it is permanent.
However, when considering renting mining equipment, the situation of PoS will be slightly worse. In view of the physical characteristics of PoW mining, miners are scattered around the world, which makes it difficult for you to rent 51% of ETH's total budget. This is not a cost issue, but a "one or zero" issue.
PoS is different. At present, 120 million ETHs are in circulation, of which more than 13 million are pledged on the beacon chain. In theory, as long as you can "borrow" 5% of the circulating ETH, you can conduct 51% attacks. Of course, I'm not saying it's easy. It's still very difficult, but it's not as difficult as PoW.
In a centralized world, lending may require some collateral, or may rely on reputation, or even power, such as regulators. So here comes our second problem - anti censorship, which is part of the characteristics of decentralization.
At least 2/3 of the Ethereum beacon chain nodes are under the jurisdiction of the US regulators, which may lead to damage to the anti censorship. The discussion on this issue starts with this tweet:
After the merger, the top four entities are Lido, Coinbase, Kraken and Binance, accounting for more than 55% in total.
Let's take Tornado Cash as an example. If US regulations require that 2/3 of the ore pools prohibit a transaction, it will take longer for Tornado related transactions to be on the chain. It used to take about 12 seconds, but it may take more than 30 seconds in the future. If you are unlucky, it may even take a minute or two.
It can be seen from the following curve that the probability of banning a transaction for one minute is about 7%, which is somewhat disappointing.
But in fact, this is not a consensus issue of PoS. This is about the change of miners. In the past, the top 10 mining pools of PoW accounted for 78% of computing power. In theory, they can also jointly review your transaction and prevent it from being linked.
Many of them are ore pools with continental background, and some are located in Russia and Central Asia. China and Russia are among the few regions in the world that the United States cannot directly sanction. Therefore, resistance review has nothing to do with technology, but with the location of the miners.
Today's PoS pools, whether Lido, Coinbase or Kraken, are all in the United States, so they are strictly restricted. Although they are making positive statements now, it is only a matter of time before regulators examine illegal transactions in the future. PoS is actually worse than PoW in terms of anti censorship.
Another indicator can evaluate the pros and cons of PoW and PoS. This is the worst case, that is, whether you can ensure that your transaction will at least be on the chain. Let's continue the above calculation. If we still assume that 2/3 of the nodes are under review, the probability of a transaction being linked in 10 blocks is still 98%. You can always find mines that ignore the regulatory requirements of the United States. The only thing you have to do is wait.
What if the ruling government finds that you can always wait longer to get rid of sanctions and decides to roll back your transaction?
First of all, this issue is no longer within the scope of anti censorship discussion. This is almost like a direct attack on the network. The probability of this happening is very small, but it is not zero.
For example, a Tornado Cash related transaction was finally linked through a node not subject to government supervision. At this point, the supervisor who controls 2/3 nodes can directly branch the network, remove the block containing this transaction, and make it never go on the chain. Although they cannot delete the transaction, they can simply discard the block, which can be done in a single echo under PoS.
In this case, some Ethereum community members proposed "Social Slashing", that is, confiscating the ETH pledged by these nodes. However, this may lead to a new totalitarianism. Ethereum should not adopt rules that do not exist on the blockchain.
In addition, the current pool node is usually connected to MEV tools such as Flashbot. However, Flashbot is also regulated. This means that transactions that do not meet regulatory requirements will not appear in the Flashbot transaction list at all, and the nodes containing these transactions will be affected. Therefore, nodes need more MEV tools.
Last month, coinbase stood out and said that they would rather withdraw from the pledge business of Ethereum than review the network to comply with the sanctions. However, the profit of pledge service is very rich. It is estimated that the annual interest rate of pledge can reach 6-8%, and the commission can be 10% - 20%. If Coinbase stops providing the Staking service, it will lose up to a few tens of thousands of ETH every year based on the 1 million ETH in their cold wallet.
Therefore, this business will certainly continue. Of course, regulators will continue to supervise.
Therefore, we can't really expect CeFi to save the Ethereum network, whether it is Coinbase, Lido (semi CeFi) or Flashbot (centralized tool). On the contrary, we must improve and optimize the chain itself. There is still a long way to go.
But only in this way can we protect our Ethereum network.