Censorship resistance means the ability for anyone to use protocols like Bitcoin and Ethereum regardless of who they are. However, some experts believe that this network has moved too far from decentralization, one of the three principles of blockchain, by moving to proof of stake; An important issue for the world’s largest Defi platform, the result of which will be nothing but more government pressure for censorship
Coby Morgan, former FBI analyst and chief researcher of Merkle Science’s crime and enforcement unit in Conversation With Cointelegraph he shared his thoughts on some of the risks involved in Ethereum’s transition to proof-of-stake.
Ethereum’s upgrade to proof-of-stake could make it more vulnerable to government interference and censorship.
Despite the fact that there have been many discussions about the issue of Ethereum centralization before Marj was done; Morgan emphasizes that the high cost of becoming a validator can lead to an increase in the density of validator nodes on major cryptocurrency exchanges such as Binance, Coinbase, and Kraken.
To become a full validating node on the Ethereum network, you need to stake 32 Ether tokens in the network. The value of this amount, taking into account the price of Ethereum at the time of writing the article, is about $47,000.
Earlier this month, ahead of the merger, blockchain analytics firm Nansen published a report showing that just 5 entities control 64% of staked Ethereum.
Morgan went on to say that these big institutions will follow the illusory wishes of world governments. When these validator nodes detect banned addresses, they can drastically reduce their reward and then kick them out of the system by preventing other businesses from interacting.
Either you comply with the rules or you lose engagement (with other businesses) … or you risk fines, scrutiny, and possible sanctions.
Vitalik Buterin talked about this risk with the developers in a phone call on August 18. He noted that removing or filtering sanctioned transactions at the discretion of validators can be a form of censorship.
Buterin further said that this censorship will be temporary until some validators do not comply with the sanctions; Because these transactions will be processed in the next blocks.
Cryptocurrency mixer Tornado Cash was the first smart contract to be sanctioned by a US government agency on August 8. In response, various organizations have complied with the ban and prevented the banned addresses from accessing their products and services.
This new development had a huge impact on the Ethereum community, with Anthony Sassano, co-founder of EthHub, tweeting in August that he considered Ethereum a failure and would leave if the censorship became permanent.