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Ethereum co-founder Vitalik Buterin has released the third part of his article, “Possible futures of the Ethereum protocol, part 3: The Scourge.” In this document, the crypto boss starts by pointing out that proof-of-stake centralization due to economic pressures is one of the biggest risks of Ethereum Layer-1.
The Scourge Brings Solution to Ethereum’s Centralization Risks
Buterin further spoke about economies-of-scale participation in core proof of stake mechanisms. In his opinion, this situation could ordinarily lead to the dominance of large stakers while smaller stakers are relegated to the background. These small stakers have no option but to join a large staking pool. Unfortunately, such occurrences support the risk of 51% attacks and transaction censorship, among other crises.
Apart from the centralization risk, a small group could capture value meant to go to Ethereum’s users. Noteworthy, the network is working on implementing the Scourge to deal with most of these challenges. It is aimed at minimizing the centralization risks at Ethereum’s staking layer and the risks associated with excessive value extraction from users.
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Impact of Higher Volume of Staked Ethereum
Vitalik Buterin mentioned that about 30% of the ETH supply is actively staking. This percentage is believed to be far more than enough to shield Ethereum from 51% attacks. Should the percentage increase further, researchers are concerned about the risks that would arise. Instead of being a profitable task for specialists, staking could become a duty for all ETH holders.
Additionally, the credibility of the slashing mechanism could become questionable once many ETHs are staked. If much care is not taken, a 51% attack may be unavoidable, with a single liquid staking token taking over the bulk of the stake and even taking over “money” network effects from ETH itself.
Fight For Dominance Between Ethereum and Solana
Amidst Buterin’s preparation to debut the Scourge, Ethereum, and Solana continue their fierce competition for dominance. Their comparison is centered around the limits of speed, scalability, and innovation. While Solana boasts its high throughput and transaction speed, Ethereum is still the leading smart contract blockchain.
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With the implementation of The Merge, Ethereum’s dominance, scalability, security, and energy efficiency improved. In the meantime, Buterin is exploring various strategies to boost the network’s scalability.
