The Ethereum community is divided on how best to respond to the threat of protocol-level transaction censorship following US government sanctions on addresses connected to Tornado Cash.
Over the past week, members of the Ethereum community have suggested implementing social cuts or even a user-activated soft fork (UASF) as possible responses to transaction-level censorship on Ethereum, with some calling it a “trap ” will do more. harm than good, with others saying they need to provide “credible neutrality and censorship resistance properties” on Ethereum.
This heated debate comes after Ethereum miner Ethermine chose not to process transactions from the now US-approved Tornado Cash privacy tool, sparking concern among members of the Ethereum community.
The Ethereum community is also debating the effectiveness of the social slash to combat censorship on the Ethereum network, as the strategy could lead to chain splitting, with some validators processing chain transactions without censorship and others validating only an OFAC-compliant chain.
Social discounting is the process by which collectors are reduced in percentage of their stake if they do not properly validate incoming transactions or act dishonestly.
This could become a significant issue if regulators require major centralized staking services like Coinbase and other large centralized pools, which collectively hold more than 50% of the Ether (ETH) in the Ethereum Beacon 2.0 chain, to validate than OFAC compliant strings.
Founder of Cyber Capital Justin Bons declares that slashing is a trap “that represents a greater risk than OFAC regulations” and that it will not be a viable solution to combat censorship at the protocol level.
1/21) We are now at a critical crossroads for Ethereum
With OFAC regulation coming over ETH; censorship
However, the biggest threat comes from within
Discussion of “social slashing,” multiple forks & unclear governance
It shows the potential for disaster in ETH:
— Justin Bons (@Justin_Bons) August 22, 2022
1/21) We are now at a critical crossroads for Ethereum OFAC regulation threatens ETH, as well as the threat of censorship. However, the biggest threat comes from within Discussion of “social slashing”, multiple forks, and unclear governance. Potential disaster for ETH: — Justin Bons (@Justin_Bons) August 22, 2022.
In a 21-part Twitter thread Monday, Bons said that exchanges that engage in social slashing “could rob innocent users of their deposits,” which would “violate their property rights.” »
Bons added that too much law enforcement validation on Ethereum would “lead to chain splitting,” as “censors start ignoring or not attesting to blocks containing TXs that violate the ‘OFAC.’
The founder of the Ethereum podcast The Daily Gwei, Anthony Sassano, wrote on Twitter on Saturday that “collateral damage is inevitable in social slicing. […] Ethereum’s credible neutrality and censorship resistance properties are worth defending.”
That’s a less bearish outcome than the Ethereum network engaging in permanent censorship.
Social slashing has inevitable collateral damage – but at some point it’s worth defending against Ethereum’s credible neutrality and censorship-resistance properties.
— sassal.eth (@sassal0x) August 20, 2022
This is a less bearish result than the Ethereum network’s commitment to permanent censorship. Collateral damage is inevitable with social cuts – but at some point Ethereum’s credible neutrality and censorship resistance properties are worth protecting. — sassal.eth (@sassal0x) August 20, 2022.
Geth developer Marius Van Der Wijgen has a similar view, saying that preserving censorship on the Ethereum network should be a top priority for the Ethereum community:
“If we allow censorship of user transactions on the network, we have fundamentally failed. This is the *hill I am willing to die on. »
“If we start allowing users to censor Ethereum, then the whole thing doesn’t make sense and I will leave the ecosystem. […] I think censorship resistance is the highest goal of Ethereum and the blockchain space in general, so if we compromise on that, there’s not much else to do, in my opinion,” he said.
Also read: Tornado Cash’s ban could be devastating for other privacy protocols – Manta co-founder
Cryptocurrency researcher Eric Wall added that censorship resistance has been a core property of the Ethereum network so far and while we’re seeing some censorship on the front end, “it’s only going to get worse if the censorship starts to happen alongside Ethereum itself.”
The censorship debacle that sparked Tornado Cash has plagued the Ethereum community for over a week now.