The emergence of Ethereum 2.0 is billed to change a lot of things for Ethereum in the coming days and while the merits are innumerable, there are also defined demerits that can surface.
The Ethereum community is patiently anticipating The Merge, the event that will fuse the Proof-of-Work (PoW) consensus model with the Proof-of-Stake (PoS). As the merge is fast approaching, community members have been asking tough questions about the operational sanctity of the protocol, and how the community will protect against any form of censorship that is sponsored by regulators.
Ethereum founder Vitalik Buterin participated in a poll yesterday in which the initiator of the poll, Eric Wall sought to know if the Ethereum community will “consider the censorship an attack on Ethereum and burn their stake via social consensus,” or “Tolerate the censorship.” if and when it comes.
The launched poll was based in part on an earlier tweet from Lefteris Karapetsas who wanted to know if the broader community will comply with any regulator’s demand to censor the protocol with their validators, naming the five biggest including Lido Finance, Coinbase, Krakenfx, Stakedus, and BitcoinSuisseAG.
Vitalik Buterin said he chose the poll option to burn the stakes of any validator who censors the protocol, a position that about 62% of Twitter crypto voters currently align with.
fwiw I voted X in your above poll
— vitalik.eth (@VitalikButerin) August 15, 2022
Ethereum 2.0 and the Potential Community Strain
The emergence of Ethereum 2.0 is billed to change a lot of things for Ethereum in the coming days and while the merits are innumerable, there are also defined demerits that can surface. Amongst the anticipated merits includes energy efficiency as no high-energy computing validators are required to validate transactions through the process of the mining as we have it in the Proof-of-Work consensus model.
The Ethereum 2.0 version is also bound to be more scalable and efficient in terms of transaction processing, a development that may be well significant in helping to lower the high gas fees that are typically associated with Ethereum.
The context of the disadvantages of the new protocol is one of the subject matters that is being voted on. With addresses linked to the now sanctioned cryptocurrency mixing service, Tornado Cash being blocked by Circle, the startup in charge of the USDC stablecoin, the concerns that more of these related sanctions are inbound.
Regulators are generally more aggressive when it comes to the digital currency ecosystem at this time. With crimes linked to cryptocurrencies on the rise, and the possibility that sanctioned countries like Iran and Russia are now taking to digital assets to bypass sanctions from the US, the Treasury Department and the Office of Foreign Assets and Control (OFAC) will not sleep on its oars and let these transactions thrive.
Should the poll be representative of what the Ethereum Foundation will hope to implement in the near term, then validators who may fall prey to censoring the Ethereum network may have to rethink their position as their stakes may be gone. Eitherway, it will be a tough battle ahead for all stakeholders ahead and the regulators.