Ethereum may now be more vulnerable to censorship

Ethereum may now be more vulnerable to censorship

Ethereum’s upgrade to Proof-of-Stake (PoS) could make it more vulnerable to government intervention and censorship, according to lead researcher Merkle Science.

Speaking to Cointelegraph after the Ethereum Merge upgrade, Coby Morgan, former FBI analyst and lead investigator at cryptocurrency compliance and forensics firm Merkle Science, shared his thoughts on some of the risks associated with the transition from Ethereum to PoS .

While centralization issues were widely discussed before The Merge, Moran suggested that the prohibitive cost of being an aggregator for larger cryptocurrency companies like Binance, Coinbase and Kraken could lead to the consolidation of validator nodes.

To become a full-fledged collector on the Ethereum network, one must take 32 ether (ETH), which is worth about $47,000 at the time of writing.

A report by The Merge, compiled by blockchain analytics platform Nansen earlier this month, found that 64% of the ETH in question is controlled by five entities.

Source: Nansen

Morgan continued to say that these large institutions “will be subject to the whims of governments around the world”, and when the validation of nodes to identify approved addresses, they may be “hungry for rewards and then finally expel west from the system”, the companies are. forbidden to interact with:

“Either you will comply and you will not hide this kind of interaction […]or you risk being fined, scrutinized or sanctioned”.

Vitalik Buterin talked about this risk during a developer call on August 18, suggesting that one form of censorship could take is validators choosing to exclude or filter approved transactions.

Vitalik said that as long as some validators do not comply with the sanctions, those transactions will resume in later blocks and the censorship will only be temporary.

On August 8, cryptocurrency mixer Tornado Cash became the first smart contract approved by a US government agency.

ALSO READ: Cash Tornado: Republican Emmer is demanding an explanation from Secretary Yellen

In response, various entities complied with the sanctions and blocked the approved addresses from accessing their products and services.

This development had a major impact on the Ethereum community, with EthHub co-founder Anthony Sassano tweeting on August 16 that he would consider Ethereum to fail and move on if permanent censorship occurred.

I want to be very clear on this point: If the Ethereum base layer ends up engaging in *permanent* censorship, I will consider the Ethereum experiment a failure and move on. Fortunately, I believe the Ethereum community is strong enough to fight base layer censorship.
— sassal.eth (@sassal0x) August 16, 2022

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