Vitalik’s Comprehensive Response to Concerns over Ethereum’s Decentralization: MEV, Liquidity Staking, and Hardware Thresholds
Contents
Toggle
Co-founder of Ethereum, Vitalik, responds to criticism
MEV: Balancing centralized risks
Liquidity staking and node operations
Hardware requirements for nodes
Engaging the community in addressing issues and embracing open debate
Co-founder of Ethereum, Vitalik Buterin, responded to recent criticism regarding centralization in blockchain in a detailed article. He delved into three main issues: Miner Extractable Value (MEV), liquidity staking, and the hardware costs of running individual nodes.
In the article published on May 17th, Vitalik first discussed the issue of MEV, which refers to the financial gains node operators can obtain by reordering transactions within a block. Vitalik outlined two main approaches to address MEV: “minimization” and “quarantining.”
Minimization: This approach aims to reduce MEV through smart protocol designs, such as CowSwap.
Quarantining: This technique attempts to completely eliminate MEV through methods within the protocol.
While quarantining MEV seems promising, Vitalik warned of the centralized risks it may bring. He pointed out, “If builders can completely exclude transactions from blocks, then attacks become easy.” However, Vitalik supports the development of MEV isolation through concepts like transaction inclusion lists, which limit builders’ ability to exclude transactions. He concluded, “The idea of pushing the isolation box as small as possible is very interesting, and I support this direction.”
Vitalik also highlighted the issue of low individual Ethereum stakers. Many choose to stake through service providers like Coinbase or decentralized platforms like Lido or RocketPool due to the complexity of running a standalone Ethereum node, hardware requirements, and the minimum requirement of 32 ETH.
Vitalik acknowledged efforts to reduce these barriers but stressed the need for further work. Potential solutions include shortening the withdrawal time for staked Ether or lowering the minimum requirement of 32 ETH. He warned that incorrect solutions could lead Ethereum towards centralization, similar to traditional financial systems. Conversely, the right solutions can foster a diverse ecosystem of individual stakers and decentralized staking pools.
When discussing the high hardware requirements for running nodes, Vitalik noted that this problem is more challenging. However, with advancements in technologies like Verkle Trees and the upcoming EIP-4444, he foresees significant reductions in hardware requirements, possibly even less than 100GB or close to zero for non-staking nodes.
Vitalik concluded his blog article by urging the Ethereum community to address these important issues. He emphasized, “We should deeply respect the characteristics that make Ethereum unique and strive to maintain and improve these characteristics while Ethereum expands.”
Vitalik also expressed support for rational debates among community members on Twitter. He wrote, “I am proud that Ethereum has an open culture that allows people to freely express their views, even if these views have very negative sentiments towards the protocol or ecosystem’s key things. Some people wave the ideal of ‘open discussion’ as a flag, and some take it seriously.”
MEV
Vitalik
Liquidity staking
