These concerns revolve around the level of centralization that Ethereum could reach now that the merge to Proof of Stake is complete.
Di Iorio’s concern revolves around the possibility of major exchanges becoming an overwhelming number of the total validators on the network.
At the root of the issue is the requirement to hold 32 ETH to launch a node -so exchanges holding thousands of ETH have an obvious advantage…
That’s a little over $42,000 worth of Ethereum at the time of publishing – and it is reasonable to say this prices out the average person, who previously could have started mining for under $1000 if they were interested in contributing to the network.
When the rule is “More ETH = more nodes,” you immediately see the potential power major exchanges have by holding thousands of users of Ethereum. Even many mid-size exchanges hold enough to launch hundreds of nodes.
However, users must agree to use any ETH they own; exchanges cannot decide how to allocate their holdings without permission.
So they’re getting user permission by offering to share the profits – this factor is why many people see these nodes as decentralized.
More importantly, all these people have the power to pull out whenever they wish.
Can these be considered exchange-owned nodes if their users have the power to shut them down by collectively pulling out?
Still, ETH 2.0 is off to a more centralized start than many expected. Last week nodes launched by just 2 addresses were validating 46% of total transactions. One is a known pool, the other an ‘unknown entity’… which nobody likes to hear.
The move away from GPU mining is a double-edged sword in decentralization…
It may not be as simple as looking at who now has an easier entry to becoming a validator. Still, for many people, Ethereum’s update represents a door opening.
On that note, Di Iorio also acknowledged that the Proof of Stake model allows people from countries that have banned GPU mining to participate again (such as Algeria, Bangladesh, Bolivia, China, Colombia, Egypt, Indonesi and more), many of them pointing to the large amount of electricity consumed by miners as their reasoning, an issue the new Ethereum now solves.
Breaking Crypto News
Disclaimer
Although the material contained in this website was prepared based on information from public and private sources that ampraider.com believes to be reliable, no representation, warranty, or undertaking, stated or implied, is given as to the accuracy of the information contained herein, and ampraider.com expressly disclaims any liability for the accuracy and completeness of the information contained in this website.
