- Ethereum is all set to go for a transition to Proof of Stake.
- Ethereum merge will impact the system, giving rise to new stakeholders, ‘builders.’
- These builders will change the power structure as they come to the fore.
- Ethereum management said they are monitoring the situation and will take the required actions to prevent centralization.
Ethereum merge is drawing closer as the developers suggest successfully completing the required steps. The transition will be complete by 15 September, according to the timeframe given by Ethereum developers. As the transition is complete, Ethereum will shift from Proof of Work to Proof of Stake consensus. Every change comes with possible repercussions, and the case is no different for Ethereum.
As Ethereum experiences a transition from Proof of Work to Proof of Stake, its stakeholders might see a change in their power. The said changes will mainly affect miners who ensure the system’s smooth flow through mining. They will be replaced by those who work on staking. Analysts suggest that these changes will bring Ethereum to centralization, strengthening the control of the few. There is no certainty, but the possibility of it can’t be shrugged off.
Here is a brief overview of the ongoing changes resulting from the Ethereum merge and whether it will lead toward centralization.
Ethereum merge and its impacts
Ethereum merge will substantially change the system of this blockchain for good. Currently, computer networks called miners pluck transactions and arrange them according to the specific pattern required in blocks. They are the key players in running the system. The new changes are mainly aimed at bringing energy use to lows, and the result would be the elimination of miners.
The much-anticipated merge will reduce energy consumption by more than 90%, but it has certain repercussions for users and the system. The recent changes in the value of $ETH indicate the difficulties that Ethereum might have to go through. The new consensus system will have builders as the main players, which will gather and arrange transactions to blocks. The validators will sign off, and thus the upgraded blockchain system will work.
MEV-boost is the software change that is expected to speed up the system. The uncanny thing about this change is the potential centralization due to this software upgrade. As the transition takes place, many validators plan to become builders as the dominance of a single group will have an impact on the system.
Is it a road to centralization?
Flashbots or other entities that plan to become builders might use extra control over the system. Also, the Metamask wallet is another reason that might pose threats to the decentralization of Ethereum. The said wallet has more than 30 million users, while it also controls about 40% of the transactions of DApps and other DeFi users.
Metamask can favor one builder over another or even have intentions to become one. Thus, it will kill the competition in the market and create a monopoly. Metamask founder Joseph Lubin has dismissed such concerns related to changes after the Ethereum merge. According to Lubin, they will never favor a specific builder. Instead, they prefer to help thrive in a healthy and decentralized ecosystem.
If the builders are too few, they can censor transactions, and certain users might be affected. Thus, the possibility of certain issues has caused alarms amongst the users. Builders can also command a high fee as they control validators. The said change will bring validator earnings to lows. Ethereum management has said that they are closely monitoring the situation. If there is any possible change that leads to centralization, they will take immediate action. Thus, the users can rest assured that the Ethereum merge won’t result in possible centralization.
Ethereum merge is drawing closer as there are about three weeks left in it taking place. Ethereum will shift from Proof of Work to Proof of Stake. The new change is expected to lead to the rise of new power holders called ‘builders.’ There are fears regarding the centralization of the system if the builders wield too much power. Ethereum management has ensured that they won’t let it happen.