Panel：Five questions about the post-merge Ethereum

Written By: DeFiDao

WuBlockchain authorized to republish

What is The merge?

Mindao, Founder of dForce

When we look at the development of crypto, from Bitcoin to the various improved forks and then to the new L1s we see now, the general direction has one characteristic, that is, their consensus algorithms are basically unchanged, for example, Bitcoin POW has not changed until now, and Solana’s POS consensus mechanism has not changed since the beginning. It should be the only L1 that migrates from one consensus algorithm to another completely different consensus algorithm.

The change of consensus algorithm can be made an analogy, Ethereum is a jet plane that keeps flying from 2015 to now, what is it going to do now? Because the consensus change, to replace its engine without interrupting the flight process, and can not let the flight stop, which is a huge difference between a decentralized system upgrade and a centralized system, in the decentralized system, it does not allow to maintain and upgrade in an interrupted time, because it will lead to a lot of protocol clearing and other problems. In fact from the end of 2020, the beacon chain is executing the POS algorithm, but there are no transactions done on the beacon chain, just a system of consensus algorithms running.

After the merge, Ethereum completely stopped the previous POW mining and changed to POS consensus mechanism, and other subsequent upgrades of ETH 2.0 as well as scaling and sharding are based on POS mechanism. The significance of this upgrade for the whole blockchain is not only a simple consensus algorithm, but also a test of a blockchain’s ability to switch from one consensus mechanism to another consensus mechanism, which will be a very big milestone for all blockchain upgrades and hard forks if they can migrate smoothly. Another key point is that if the migration of POS is completed, it basically means that the monopoly position of POS as the infrastructure of public chain has been formed, and all the infrastructure of blockchains may go to POS in the future, which means that the infrastructure resources, developer resources and financing resources of the whole blockchain will be tilted to POS.

However, at present, the merge is only a migration of consensus algorithm, there is no obvious change for users, the cost of gas will not drop, and the expansion of TPS will not be obvious.

Amber group blockchain analyst Lao Bai

The change from POW to POS, there is another image example: POW is to shake the dice together, whoever shakes 6 sixes first, he can get out the block first, but under POS mechanism, the dice shaking is cancelled and it becomes a lottery mechanism, because the subsequent scaling technology of ethereum requires you to use this lottery mechanism, so the consensus mechanism has to be changed, and this change has basically set the tone when it was created in 2014. The POS mechanism has not had much impact on the TPS and GAS of mainnet, and its purpose is to make L2 faster, cheaper and better, and to make the future of L2 brighter after the merger, not to say where L2 should go, which is the opposite of what many people know.

Will ETH 2.0 be more decentralized after the merge? Or will it be even less?

Mindao

Let’s take a look at other POS mechanism of L1, such as Solana, AVAX and other new L1s, they have a characteristic that the token share of VC institutions is particularly large, like Cosmos many new Hubs the first two or three nodes account for more than 1/3 of the proportion, in POS this consensus, more than 1/3 can basically stop a chain. Then Ethereum has a very good foundation and endowment is that it is POW transferred, after such a long time, POW makes its entire token distribution has become very decentralized.

And even after the transfer to POS, I don’t think there will be a verifiable increase in the degree of centralization of Ethereum, or that this increase in node centralization will have much impact on the governance of Ethereum itself, because the governance of Ethereum itself is not a pure on-chain governance, the so-called pure on-chain governance means that you have enough Tokens, you can make an executable proposal on the chain. But I don’t think ETH 2.0 itself will have this problem, now the Ethereum community is pushing for governance through social consensus, and social consensus is not only the role of the coin holders, through this way of social consensus, it can somehow resist the problem of POS node centralization.

For example, Lido is the largest staking service provider in Ethereum, with millions of ETH staked on it. I don’t think it’s a problem of mechanism, the nodes are actually concentrated in these big mining pools under the POW mechanism. The last is the review and regulation of nodes, such as the Tornado cash incident, in fact, from the point of view of POS nodes, in fact, reallocation of voting rights will be much easier than POW, POS transfer your voting rights from one node to another node is very simple, I think in this so-called regulatory matters, I personally feel that the system of POS has a stronger flexibility.

Lao Bai

Regarding the censorship resistance of POW and POS, I think POW is like opening a store, the store is not very good to move away, if it is censored, everything will have to be thrown there, if it is POS, you can always transfer the assets out and then find a staking service provider to stake again.

I think switching from POW to POS will theoretically still add a little bit of centralization, the most a simple example is you buy a bitcoin miner may only need 10 or 20 thousand to build the node, but to do the ethereum miner you need at least 32 ethereum, the latter costs more leading to most individuals will not run their own ethereum nodes. The final situation may be that POS and POW will go the same way, that is, a few large mining pools will form the right structure to hold the blocks, in fact, it is not worthwhile to pay attention to these consensus mechanisms themselves, but there are core figures like Vitalik behind Ethereum, a centralized organization like Ethereum Foundation, infura, metamask, and a large number of AWS Amazon cloud interventions, especially many nodes and some infrastructure are using AWS, these are actually the centralized points of Ethereum at present.

How do you see the POW vs POS consensus mechanism debate?

Pan Zhixiong, Founder of Chainfeeds

It cannot be said that the era of POW is over, because POW is essentially competing for the resources of the whole physical world, such as power resources and chip resources, which are all subject to physical limitations, so POW has a capacity limit, which will lead to fewer and fewer new public chains adopting the POW mechanism. consensus mechanism.

But for older blockchains, especially those led by Bitcoin, they have no reason to convert to POS because they can get better security through POW consensus. So, for some new L1 POS is definitely their preferred option, for old blockchains, probably POW is the only option.

ColinWu, Founder of WuBlockchain

Now the world is facing the energy crisis and the impact of low-carbon environmental protection concept, in such a background, Ethereum transition to POS is more relevant to this concept at least at this stage, now whether it is the United States or the European Union, the environmental issues of POW is met with increasing opposition.

Since Bitcoin has not entered the mass market and mainstream society on a large scale like Ether, and has not produced so many applications on the Ethereum, POW is perfectly adequate for it, but for Ethereum, POS is a necessary transition, which has relatively little to do with the technical route, but more to do with the mainstream values of environmental protection that must be met after entering mainstream society.

Photon co-founder Zuriel

Environmental protection is an additional benefit, mainly because of the performance benefits of POS, the underlying design of POW itself is more complex, and there is less room for improvement. This is an opportunity for everyone to get rid of this technical burden and be reborn. This transformation is mainly friendly to L2, for example, like EIP-4844 will be a great improvement to L2 scaling.

How censorship-resistant are the merged Ethereum nodes?

Stephanie, a core member of the ECN Ethereum Chinese community

The degree of decentralization can be judged from different perspectives, firstly, the number of nodes on the beacon chain is compared with the number of nodes on the original Ethereum, the number of nodes on the original Ethereum is more than 7,000, and the number of nodes on the beacon chain is more than 10,000. Secondly, from the distribution of nodes, the top 5 mining pools in the original Ether account for roughly 65%, in the Ethereum of POS, staking pools account for 41%, exchanges 32%, and giant whales 11.5%, accounting for the top 5 project parties are Lido, Coinbase, kraken, Binance, and Bitcoin Suisse, which collectively account for about 59%, from this From this perspective, POW and POS both do not reflect the more obvious advantages, but the POS mechanism under the relatively low hardware threshold, coupled with decentralized pledge protocols such as Rocket Pool can allow people with less than 32 ETH to go to node operations, so it POS under the node horizontal scalability is relatively easier.

From the perspective of client diversity, the consensus layer client diversity will be much healthier than the implementation layer, the current consensus layer client is more mature has been 5, accounting for the most prysm current percentage is 43.48%, which is much better than the situation under the POW mechanism, so from this aspect of consideration, the POS security will be better. As for privacy and anonymity, there is no obvious improvement in this merge, post-merge nodes to improve the ability to resist censorship, may need to pay attention to a program called PBS, which proposes the separation of the proposer and builder program, can be more effective in improving the ability of the verifier to resist censorship.

ColinWu

First of all it is worth exploring whether the censorship resistance event is a technical or a political issue in itself. For example, Litecoin was taken down by a large number of centralized exchanges after it passed a privacy scheme, so if ETH is made technically censorship resistant enough, will it face a tougher regulatory backlash and eventually become a political issue?

We have seen that Ethermine, the number one mining pool of Ethereum POW, has already refused to package transactions related to the sanctioned mixing protocol, which shows that it is not very meaningful to consider censorship resistance from a technical point of view, but more like a political issue, which requires some community leaders, as well as some big companies and big exchanges to talk to the US government and the EU. If he makes it too strong, it may lead to a stronger regulatory backlash.

Pan Zhixiong

After the Tornado Cash incident, the whole ethereum community still hopes to solve the censorship problem completely, but from another dimension, the bitcoin community will actually put more emphasis on the censorship resistance thing. The node distribution of Bitcoin and the model design of UTXO are inherently more censorship-resistant than Ethereum, but it is not a general-purpose computing network, and it cannot carry smart contracts, while Ethereum uses the account model, so it will be easier to be tracked. There may be more ways to solve this problem gradually in the future.

Zuriel

The anti-censorship event is a hot topic, but not a problem. In the short term, anyone can stake 32 ETH to become a validator and get the right to propose block and vote. If in the most extreme case, all centralized institutional nodes are required not to package, but those private nodes running on personal computers can still package transactions, so there is no full censorship in the short term. In the long term, Ethereum is pushing for separation of block proposer and builder, meaning there will be a bunch of those computers with high performance that packaged the transactions and cast the packaged transactions to the block builder, who don’t know anything about the specific transactions inside, so that the block builder can keep the block builders from being censored.

What are you most looking forward to next?

Pan Zhixiong

At present, Ethereum itself has actually divided the network into several layers, and now it has been divided into at least three layers. Each layer will be iterated and ZK technology will be introduced, which is very difficult and challenging. I think that besides the layering of the network, ZK technology will also bring very big changes and differences to the base layer of Ethereum, which is something I am looking forward to.

Zuriel

The code in ETH 2.0 is written in go language, but the quality of the code is worried, I also found some bugs before, so there will be others who will find bugs and launch some attacks on the merged Ethereum, such as shorting ETH while I attack the network, of course, this attack will only cause the consensus layer of Ethereum not to produce blocks, funds and these are still on the implementation layer,it is ok.

The next concern for me is of course the Shanghai upgrade, for both OP and ZK L2, in the short and medium term OP will be a good choice, but in the long term ZK will be the key, but ZK is actually not a blockchain problem, but a cryptography problem, this kind of cryptography + engineering combined challenge, I think in turn may become the key to Ethereum.

Stephanie

My expectation is that, on the one hand, the scalability of Ethereum can make users gas senseless, and secondly, the cost of running nodes is getting lower and lower, so that it is easier to decentralize, and in terms of challenges and crises, I think the current Ethereum system is getting more and more complex, and with each upgrade, more and more EIPs are superimposed on it, which may lead to no developer being able to have a very familiar and overall solution to the whole protocol. In this case, the seeds of crisis will be sown.

Cryptoleek

My opinion is: the future of Ethereum is L2 and the future of L2 is ZK, because Ethereum really carries a lot of things, and it is very important for Ethereum to be stable, even after the merge really runs, we need to continue to observe, and then for the Shanghai upgrade afterwards, which is very important for Danksharding.