What will happen to Ethereum after the merger. Why the second cryptocurrency can still fall? — Crypto on vc.ru

Vitalik Buterin fears more Ethereum centralization after POW merger and P.O.S. During an interview with Fortune, he was asked directly if he had any doubts about the transition of the Ethereum blockchain to a new consensus algorithm, and in particular about Lido Finance. and the risk of blockchain centralization due to the accumulation of a large amount of ETH in the hands of the DAO.

Buterin’s answer was very clear:

“Yeah. That’s what I mean, I’m definitely worried.”

Vitalik Buterin and his dad Dima Buterin, an engineer and programmer who emigrated to Canada “Father and son develop the DeFI sector together” // Source Fortune

Vitalik Buterin said that he considers the issue of centralization to be one of the biggest issues the team is considering at this stage of the transition to the new Proof-of-Stake (PoS) consensus algorithm.

Proof-of-Stake (PoS) is based on the concept that anyone who owns ETH and stakes it can confirm transactions.

What this actually means is that whoever has the most tokens validates blocks and transactions, leaving other participants [валидаторов] overboard.

With the current Proof-of-Work (PoW) algorithm in the Etherum blockchain, the one whoever has the most hashrate checks more blocks. And it does not depend on how much ETH he has on his balance.

https://lido.fi/ Lido, according to Buterin, is a decentralized staking platform

Lido Finance platform market share

Lido holds about a third of all ETH placed on the Beacon network. At the same time, as Buterin says, this amount is absolutely not enough to take control of the entire network [изменять цепочку и создавать блоки по своему желанию].

In this situation, the worst thing that can happen is that Lido can “

slow down online transactions for a day or so”. And according to Buterin, – “

it’s not so terrible “.

Lido is not a single operator. In total, DAO has 21 nodes that verify transactions, while they are “well decentralized and located in different places,” according to the official website of Lido.

After the merge, which will replace PoW with PoS, validating nodes with ETH staking will start creating new blocks that will start validating transactions and adding them to the blockchain

Thus, if the new nodes are less centralized than the existing ones, the merger will lead to a loss of decentralization, and there is such a risk, Vitalik Buterin himself admits it.

It should be noted that recently several PoS-based chains have had problems due to high centralization, up to the presence of “single point of failure” and how consequence – service interruption



The only thing that comes to mind in this case regarding the transition of Ethereum from POW to POS is “Or maybe they don’t change horses at the crossing?”

At the same time, the ETH rate marked a local minimum:

“If you can spare the money to buy a small amount of Eth do it [например, на Binance,BybitилиPhemex] This is a good time to get Ethereum tokens at such low Fibonacci levels.” – Analyst TradingView aeloxcom.

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