Vitalik Buterin, the co-founder of Ethereum (ETH), has recently discussed the benefits the leading blockchain would derive from switching to the proof-of-stake (PoS) consensus algorithm, which has been in the works for a couple of years.
Vitalik and his father, Dima Buterin, sat with Fortune on Father’s Day to discuss crypto, decentralized finance (DeFi), Ethereum’s The Merge, and why proof-of-stake (PoS) is a better mechanism for the network.
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Many Benefits for Ethereum in Switching To Proof-of-Stake (PoS)
According to Vitalik, switching to PoS has a number of benefits for the Ethereum network, such as lower energy consumption, improved network security, more censorship-resistant, and lots more.
Vitalik Buterin noted:
“I think the environmental one, just generally, making the Ethereum ecosystem consume a much lower amount of resources is a really good and really important one. Also, proof of stake can increase the safety of the system. It makes it more expensive to attack.
“It makes it easier to recover from an attack, which is something people don’t think about. It’s more censorship resistant, like miners are easier to detect and easier to shut down than just computers that are running validator nodes. So, it actually has this whole list of different advantages.”
Vitalik’s father Dima also sees the huge reduction in energy consumption as a big deal for the Ethereum blockchain, as well as the enhanced safety PoS is bringing to the network. He said, “I’m firmly convinced based on all of the research that I have seen that this is a good thing. This is really important for the network.”
However, Dima thinks proof-of-stake is not the final perfect technology. He’s of the opinion that the algorithm will still be superseded at some point due to advancements in technology.
About Lido Finance and Risk of Centralization Post-Merge
When asked about post-merge concerns such as Lido Finance and risk of centralization, Vitalik said he’s worried but it’s “important to not overly catastrophize the issue, because that is what a lot of people do.”
Regarding the issue of possible centralization after the merge, he said:
“Even with Lido, for example. Lido has about a third [of staked Ether deposits on the Beacon chain]. First of all, if you have a third, you can’t revert the chain or whatever. There’s some things that you can do. But realistically, the worst that you could do is make finality stop happening for about a day or so, which is inconvenient, but it’s not that terrible. So, that’s one thing.
“Another thing is that Lido is not a single actor. I think they have something like 21 delegates and nodes that are running these validators that are inside of Lido, and there’s a lot of good decentralization between them…
“Even things as they are today, I think, are quite manageable, and it’s still a healthy, decentralized proof of stake system. But at the same time, I think we in the Ethereum community, we do set very high standards for ourselves, and an even higher level of decentralization is definitely something that we’re actively trying to shoot for.”
Conclusively, Vitalik pointed out that one of the important things right now is to continue to improve the Ethereum network by making it a more secure and energy-efficient system.