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Vitalik Buterin Optimistic About Ethereum Future, Says Things “Not Hopeless” But Will SEC Change His Mind?

Last Updated May 21, 2024 3:31 PM
Shraddha Sharma
Last Updated May 21, 2024 3:31 PM

Key Takeaways

  • Vitalik Buterin remains optimistic about Ethereum’s course of development.
  • The Ethereum co-founder proposes solutions to improve efficiency and reduce the burden on a single node. 
  • ETH faces potential regulatory challenges with ETF approval and security classification.

Vitalik Buterin, co-founder of Ethereum, remains positive about the network’s future, despite acknowledging significant concerns. Ethereum faces criticisms about potential centralization and the development direction that impacts the protocol integrity.

In the meantime, the approval of an Ethereum ETF hangs in the balance and the classification of Ethereum as a security has ignited debates. 

Ethereum Criticism Around Centralization

Ethereum co-founder Vitalik Buterin believes  that key improvements like PeerDAS where data is shared between validators, the Verkle tree transition for verification, and decentralized history storage (EIP 4444) to reduce reliance on one node are speeding up development on the network. 

He notes, “From my own perspective, it feels like the pace of Ethereum development, and our capacity to ship large and important features that meaningfully improve the experience for node operators and (L1 and L2) users, is increasing.”

However, Buterin also acknowledges concerns raised by core developer Peter Szilagyi about the direction of development

Szilagyi worries that constant modifications to the protocol rules might lead to Ethereum being captured by traditional finance (TradFi) interests. He has also criticized the trend of outsourcing problem-solving to external entities, which he feels compromises the protocol’s integrity.

In addition, Szilagyi raises concerns about Ethereum’s development trends that he believes are moving away from its decentralized and open principles. He notes that MEV has become problematic and benefits proprietary builders over local producers; liquid staking concentrates power; increasing hardware requirements may exclude individual node operators; and certain features risk centralizing Ethereum, making it resemble traditional banking systems.

In response, Buterin said, “I also do not think that the situation is anywhere near as hopeless as Peter’s tweets imply;”

The debate arises at a critical time, as the approval of an Ethereum ETF remains uncertain, and the classification of Ethereum as a security could spark legislative battles.

CCN previously reported that the Ethereum Foundation is under scrutiny with a main focus on the Ethereum network’s operations and transactions rather than the foundation itself.

Improvement Proposals Addressing Weaknesses

In the blog post, Buterin suggests a two-pronged approach to address the issues raised by Peter regarding Miner Extractable Value (MEV) and builder dependence. First, he advocates for MEV minimization by promoting MEV-free alternatives and using in-protocol techniques like encrypted mempools to reduce the information available to block producers. 

To address concerns about liquid staking centralizing power, the blog post emphasizes developing a robust solo staking ecosystem. He acknowledges challenges like the 32 ETH minimum requirement and technical difficulties of running a validator node. Solutions include Verkle trees and EIP-4444, which reduce hard disk requirements and simplify node setup. 

Additionally, Buterin proposes leveraging EIP-4444 and Verkle trees to reduce node storage to address the issue of high hardware requirements for running Ethereum nodes. 

However, the Ethereum co-founder agrees that the trend of relying on large actors for node responsibilities could lead to centralization. He highlights progress in Ethereum protocol proposals that aim for true decentralization, such as stateless nodes, MEV mitigations, and single-slot finality. 

The blog also advocates for enhancing light client technology, decentralized cross-L2 bridges, and improving log scanning through decentralized protocols.

Buterin emphasizes that Ethereum should maintain its unique properties of decentralization and security, even as it scales, rather than following projects that prioritize speed over decentralization.

In a separate post, the Ethereum co-founder suggests creating a decentralized protocol for easily moving assets between L2s, integrated into wallet interfaces. He notes that while L2s are better than before, they don’t yet feel like a unified Ethereum experience. 

Buterin proposes focusing on cross-L2 standards for common tasks like token transfers and smart contract updates to make them as easy as on the main Ethereum chain (L1). He also highlights the need for improvements in L2 security, reliability, and proof systems to match L1 standards.

Ethereum Network Development

Vitalik Buterin addresses the Ethereum developer’s centralization concerns with various improvement proposals. Ethereum is reportedly focusing on MEV minimization, supporting solo staking, and lowering hardware requirements to improve efficiency.

In addition, Ethereum is moving towards decentralized solutions like stateless nodes and enhanced light client technology with improvement proposals. While Buterin insists that Ethereum must prioritize decentralization, it is in regulatory limbo. 

While Ethereum must focus on technological development, it will have to navigate the legislative hurdles on the sidelines. Especially since the SEC’s investigation into the Ethereum network raises questions about its classification as a security, potentially impacting its future and its position in the broader crypto market.

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