Vitalik Buterin, the co-founder of Ethereum, recently expressed his concerns about the centralization drawbacks of the Proof of Work (PoW) system that was previously used. He shared his views in a recent post, responding to members of the Ethereum community who favored sticking with PoW instead of transitioning to a different system.
The Core of the Discussion
The discussion was initiated by Amanda Cassatt, the CEO of Serotonin, who claimed that there are individuals who regret Ethereum’s transition to Proof of Stake (PoS). According to Cassatt, the main reasons for this regret are the risks of centralization and power imbalances. She mentioned that Ethereum’s PoS system removed the initial checks and balances in the ecosystem, leading to a more centralized validation process.
Joining the conversation, Buterin emphasized that PoW was also quite centralized, although it was less noticeable when it was the consensus mechanism in Ethereum. To support his point, Buterin presented a chart showing the control that Ethereum miners had under the PoW system.
According to the chart, Spark Pool had 33% of the mining power, while Ethermine had 21%. Other miners with significant control included Zhizhu.top, Nanopool, and F2Pool.
Highlighting the Elimination of Incentives for ASIC Investments
Buterin also pointed out that the centralization of Ethereum’s PoW went unnoticed because stakeholders knew it was only temporary until the transition to PoS. He also mentioned that Ethereum’s approach to PoS may have prevented significant developments in ASIC (Application-Specific Integrated Circuit) and eliminated the incentives for investing in ASICs.
In September 2022, Ethereum transitioned to PoS, and since then, validators have staked 32.5 million ETH tokens in the Beacon Chain stake contract, which is valued at over $101.5 billion.
Vitalik Buterin’s acknowledgment of the centralization issues of PoW has attracted attention in the cryptocurrency world. It addresses the views of some ETH members who wished that the network had never transitioned to PoS.
Disclaimer: This article does not provide investment advice. Investors should be aware of the high volatility and risks associated with cryptocurrencies and should conduct their own research.
