Ethereum
Are developers prioritizing short-term fixes?
Ethereum is an existing network, but it has evolved quickly. It has adapted to environmental needs, for example, while looking for ways to expand. Several difficult choices were made, including moving from a proof-of-work system to a proof-of-stake system.
However, Péter Szilágyi, developer and team lead at Ethereum, is concerned on how Ethereum becomes “malleable”.
Ethereum prioritizes short-term fixes over protocol integrity?
Regarding X, Szilágyi criticized the direction of the project’s development. The team lead noted a growing trend among developers to prioritize short-term fixes over the long-term health of the protocol.
This criticism comes at a time when regulators are scrutinizing Ethereum, and even the U.S. Securities and Exchange Commission (SEC) is reportedly considering ETH an unregistered security. It is the decision that was taken on this matter that worries Szilágyi.
The developer fears that constantly reworking the protocol’s core rules to appease regulators is a recipe for disaster. This “co-optation of small decisions here and there,” said the team leader, risks transforming Ethereum into a clone of traditional finance (TradFi).
When this happens, the fundamental principles of decentralization and the technically elusive “censorship resistance” functionality of TradFi will be sacrificed.
Szilágyi believes that Ethereum is on a losing path, especially regarding the issue of maximum extractable value (MEV). In Ethereum, validators, responsible for approving transactions in no particular order but based on associated gas fees, can “capture” value by changing the order of transactions within a block.
Danger of centralization: unresolved MEV issues, suspicions of liquid staking
The developer said the negative effects of the MEV have not yet been resolved. However, instead of spending the time and effort to solve this problem, the focus has shifted to “providing the protocol and the infrastructure around it to proprietary MEV builders.” By taking this route, Szilágyi argues that Ethereum developers are essentially catering to a centralized lot, thereby watering decentralization into the second most valuable network.
Beyond MEV, the developer is also thinking about the rise of liquid staking solutions like Financing of the Lido will destabilize the network.
ETH holders can earn rewards through liquid staking platforms without running a validator node. Over time, the Szilágyis fear that only a few operators will exert strong control over the network, increasing concentration.
It remains to be seen whether the developers will take Szilágyi’s concerns into account. However, what is clear is that developers have introduced mainnet implementations to improve user experience and reduce costs.
In the latest update, Dencun, the developers made it cheaper to trade on layer 2 protocols like Base and Arbitrum. As the Ethereum roadmap shows, additional efforts will also be made to scale the mainnet via Sharding in the coming years.
Featured image from Canva, chart from TradingView