Ispoke about them point-blank, so I decided to elaborate on it. Sergey Vasylchuk is the Co-founder and CEO of Everstake.
It’s time to face the Merge, and some of the things you read about it are inaccurate. You must be well informed if you want to prepare for it. Despite what some people may think, the importance of Ethereum becoming a proof-of-stake (PoS) blockchain and the impact it will have on the crypto economy is not debatable. To be honest, we simply can’t afford to ignore those issues. I talked about them point-blank.
Ethereum 400,000 validators
The statement that there are 400,000 validators after full PoS on Ethereum as there are allegedly over 400,000 owners of at least ETH 32 (USD 49,500) seems to be correct. However, anyone can run a node without any ETH.
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At a firm that makes its bread by validating on more than 50 different blockchains, I can see thousands of people launching nodes, but I cannot see all of them doing so nearly 100% of the time. As they lose funds and subsequently are unable to start up again, many of them will eventually be left with no alternative but to cut their losses and become destitute.
I don’t anticipate that the number of nodes will be significant enough to satisfy those who want a serious decentralization bend in Ethereum’s PoS incarnation. On the other hand, node operators will certainly be more plentiful than the PoW proof-of-work could ever be.
There is a very strong possibility that major centralized exchanges will become validators, given that those efforts are at risk of being eclipsed by a very ominous presence: major centralized exchanges as validators.
Exchanges are a problem because they are used as validators
Binance, Coinbase, and Kraken currently hold over 32% of staked ETH. With Ethereum switching to PoS, the risk from exchanges will only increase.
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I absolutely despise the fact that exchanges can participate in validation. It is a terribly designed flaw that I don’t even recognize. It might be possible to remedy this in the future, but right now it seems impossible.
The PoS Validators are aware that acting against the network’s interest will cost them a lot of money, and that encourages them to work diligently. For example, 100% uptime would be maintained.
Exchanges do not hold their own funds; they simply push them there and make profits they don’t reveal ever. If they undermine the interests of the network, they will not lose anything –which is much worse for their customers, whose tokens may decline as a consequence of an ill-tempered action.
An entire ecosystem can be harmed by exchanges that are large enough to damage a cryptocurrency economy. In the Merge, it will become a huge problem.
What We Learnt
Despite what seemed to be a certain truth, the most significant idea is hardly unexpected: we all have human flaws, and these flaws are even present in perfect technologies. Until some people seek power for their own sake and others seek quick money without regard for technological progress, there will always be politics, no matter what.
I fear that more people like that would be added to the Merge ecosystem if it comes. Technology and the very evolution of crypto are both hard to imagine without it.
It is, in essence, a point I am endeavoring to make: That we have to be ready to face this new situation when it finally arrives.
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