A misunderstanding and serious design flaw of the Ethereum merger – Cryptonews | Jewelry Dukan

Source: Adobe/meteoritka

Sergey Vasylchuk is the co-founder and CEO of the staking provider Everstake.

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The merger is imminent, and there are some misconceptions about it that even the beautifully written FAQ on the dedicated page cannot answer. Understanding the new reality is paramount, especially as you prepare for it to emerge.

However, I often find people ignoring or misinterpreting very important terms that are inextricably linked to the merger. Considering the immense importance of Ethereum (ETH) becoming a Proof-of-Stake (PoS) blockchain and the impact this will have on the crypto economy (which I’ve talked about elsewhere), I think, that many of us can’t afford to ignore these things.

So I decided to speak directly about it.

There are no 400,000 validators

As we approach the merge into Ethereum, I’m hearing a fairly repetitive narrative that there are about 400,000 validators after it hits full PoS, as there are said to be so many owners of at least ETH 32 (USD 49,500) what is the minimum bet size. But that is simply wrong. Additionally, anyone would be able to run a node without ETH.

As the CEO of a company that makes a living from validating on 50+ different blockchains, I see thousands of people launching nodes, but I can’t see all of them ensuring near 100% uptime. Soon many of them will burn their fingers, lose their money and eventually become completely demotivated or financially unable to start over.

This means that Ethereum’s PoS incarnation won’t have nearly as many validators as some are expecting. Additionally, I don’t expect the node count to be significant enough to satisfy those with a serious decentralization kink. But of course there will be more node operators than Proof-of-Work (PoW) could ever afford.

These efforts risk being overshadowed by a very menacing presence: large centralized exchanges as validators.

Exchanges as validators are a mistake

even now binance, coin baseand octopus hold over 32% of staked ETH. As exchanges move from Ethereum to PoS, risk will only increase.

That exchanges can participate in validation is a personal annoyance. It’s a serious design flaw that I don’t even know how to fix. Maybe one day some project will find a solution, but at the moment it seems impossible.

Validators in PoS are trusted because acting against the interests of the network will cost them a lot of money, and they are aware of this. It motivates them to work diligently and maintain 100 percent uptime, for example.

But exchanges don’t use their own funds for staking. They just shove their users’ money there and make profits that sometimes they don’t even disclose. If they trade against the interests of the network, they lose nothing – unlike their clients, whose tokens may become obsolete due to an exchange’s malicious actions.

Exchanges are big enough to damage an entire ecosystem and get away with it. And knowing the influence and size of Ethereum, it becomes a big problem when the merger happens.

Conclusion

The most important thought, however, is hardly surprising: we are all human, and we draw our human imperfections into even the most perfect technologies. As long as some people fight for power for the sake of power and others chase after a quick buck without considering the importance of technological advances, there will always be politics, including in crypto.

And I fear that the merger will bring more such people into the realm where they can affect the ecosystem. Of course, that’s no reason to fear the merger itself. Its importance to technology and the actual evolution of crypto is hard to underestimate.

Finally, what I mean is that we must all be ready to face this new reality when it finally arrives.
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Learn more:
– Vitalik Buterin says his influence on Ethereum is diminishing as the network nears merger
– Analysts advise Ethereum users to avoid merger day transactions and outline numerous risks

– No “black and white” answer to the “Proof-of-Work vs. Proof-of-Stake” question, says Kraken
– The long-term effects of the merger on Ethereum

– Major bitcoin and crypto companies warn of “extreme” risk in proof-of-stake schemes
– The tradeoffs and benefits of moving from Ethereum to a Proof-of-Stake network

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