It’s been awaited for half a decade, delayed for years, praised, condemned, tweaked, and so its developers say, perfected.
Ready or not, here comes the long-awaited merger of Ethereum. But, given the technological achievement, is there any risk of something going terribly wrong?
Merge—Ethereum’s a . infection from proof-of-work system two proof of stake– sure to be Between September 10 and September 20, During this historic upgrade, the second largest cryptocurrency by market cap on which More than half of all decentralized financial activity has been madeCan your funds and NFTs disappear, or your favorite apps stop working?
Developers say there is nothing to worry about—they are confident that the merge will have no impact on asset security or app functionality. But the confusion surrounding the event could lead to increased instances of fraudsters with uninformed users, and the implications of the merger could have long-term political and even legal implications, given the months and years to come. .
“My only advice is don’t do anything”
The risk related to so-called replay attacks, a rumored merger that has gained particularly traction in recent weeks.
Why did Campaign has emerged to fork, or split, Ethereum and preserve an alternative, proof-of-work version of the network, the possibility exists that all digital assets currently created Ethereum Duplicate will be merged. Following the merger, “real” versions of NFTs and stablecoins will exist on the proof-of-stake Ethereum network, but copies of those assets will also exist on the new, forked proof-of-work network, if this materializes.
Those copies will cost far less than their legitimate counterparts on the Ethereum network, but owners of these assets may still be tempted to sell these surplus tokens for some meager pay.
However, a replay attack could see bad actors copying these transactions which would allow them to steal the real, more valuable version of the asset on real Ethereum. blockchain, After a relatively worthless “copy” asset on the forked chain is sold, a hacker could, theoretically, replicate that transaction on Ethereum and fool the blockchain by creating a fairly real record of the counterfeit transactions.
However, such an attack can only happen if the “real” assets on the Ethereum blockchain and the “copied” assets on the forked chain both have the same chain ID. And no viable forks of ethereum plan to copy ethereum’s chain id for precisely this reason.
ETHPoW founder Chandler Guo—as of now The most prominent campaign to fork Ethereum during the merge– to be confirmed decrypt Their proposed network would replace all chain IDs on its blockchain to prevent such attacks.
“Replay attacks won’t be a problem,” said Marius van der Wijden, Ethereum’s core developer. decrypt,
However, this does not eliminate the possibility that scammers may prey on users who are unsure which assets – real or copied – they are actually selling.
,[A scammer could] Say ‘Hey, you have money on this chain, go dump it and sell it to us. And we’ll give you a lot of money,’ said van der Wiesden. “And in fact, you are transacting on the mainnet, and you are selling your mainnet ether. If you are illiterate, and trying something new, you may run into these scammers,” he said.
For this reason, Terence Tsao, another Ethereum Core developer, has only one urgent piece of advice for users concerned about such scenarios:
“My only advice is to do nothing,” he said. decrypt,
The merge will take approximately 12 minutes to complete, and during that time several major crypto exchanges have announced that they are planning to Stop Deposits and Withdrawals For Ethereum and Ethereum-based tokens. This is completely normal, and there will be no increased risk on user funds during that time.
“There will be no funds at risk,” Van der Wijden said. “I myself wouldn’t send $100 million during those 12 minutes. But 12 minutes later the chain is final. Then all should be well. Then we can start celebrating.”
During those 12 minutes, approximately 150 Ethereum developers will be on high alert, scrutinizing Merge’s software for any bugs. Those bugs, if discovered, would be fixed quickly, and would not affect the security of users’ assets, only the speed of transactions.
In a worst-case scenario, such a bug could delay transactions for “up to five to ten minutes,” Tsao said. “But once it’s going smoothly, it’s going smoothly.”
Politics of ETH
While technical risk may be a relative non-issue, the long-term political and legal issues raised by the merger cannot be so easily dismissed. Ethereum is set to undergo a radical transformation, and the implications of that change may not be immediately clear – but it all comes down to how new ETH will be issued and who will now have the most sway over the network.
Converting Ethereum from Proof of Work to Proof of Stake, the merger will change the way new ETH is created. At the moment, new ETH is generated through the energy-intensive process of “mining”, in which individuals direct large amounts of computer power at difficult-to-solve puzzles and are rewarded with blocks of new ETH. But after the merger, new ETH will be generated from the “stake”. Stackers pledge large amounts of already existing ETH in order to create and earn new ETH.
Mining requires access to specialized hardware and electrical loads; To place a bet requires access to capital. For this reason, most of the major crypto exchanges are ready to participate in betting ETH. Some, like Coinbase, have clearly stated that they are betting their future on betting services, The trick is understandable; The more capital a unit pledges, the higher is the yield. An exchange like Coinbase earns proportionately more than an individual staker by pledging users’ ETH.
a . Large, centralized firms have already provided more than 66% of all holding ETH, according to data compiled in Dune Analytics Dashboard, as well as data from research firm Nansen. This means companies such as Lido, Coinbase, Kraken and Binance will be responsible for validating the lion’s share of transactions on the Ethereum network after the merger.
And within a crypto ecosystem that places a high value on decentralization and privacy, this fact does not sit well with many people.
#ethereum Officially transitioning to a centralized blockchain on September 15th (Merge). I
I have got proof. Four entities account for 60% of the network:
Lido – 31%
Coinbase – 14.7%
Kraken – 8.4%
Binance – 6.7%Total: 60.8%
Anyone think this is not an issue? pic.twitter.com/o3128tseOl
— Duo Nine | YCC (@DU09BTC) 17 August 2022
But beyond doctrinal controversies about the role of centralized corporations in operating the underlying mechanisms of most decentralized finance, very real tests of that relationship may soon emerge.
When the US Treasury Department Approved Privacy-Enhanced Crypto Mixing Tool tornado cash Last month, it blacklisted several wallet addresses associated with the product, effectively declaring any association with these addresses a crime to aid the North Korean government.
the event inspired myriad implications, For example, would one validate a block of Ethereum transactions that involved a crime from a blacklisted address?
Tensions that most Ethereum transactions will soon be validated by a handful of large companies with a major presence in the United States may soon come to a head. CEO of Coinbase recently said That if he were forced to block the censors, he would put his company out of the betting business. But other companies may not be so open to easily turn down such a lucrative opportunity.
Ethereum core developers, meanwhile, are adamantly opposed to validators censoring any Ethereum transactions.
fwiw I voted X in your upvote
— vitalik.eth (@vitalikbuterin) 15 August 2022
“We will monitor these companies to see how they are behaving,” said Tsao, the core developer of Ethereum. “If they behave maliciously, we can force them out through social governance.”
Tsao elaborated that censoring blocks by Ethereum’s core developers would be considered malicious activity.
But many questions still abound. What happens when the Ethereum network boots the entities responsible for validating most Ethereum transactions? Could this lead to another controversial fork – the split between a corporate, compliant ETH and a censorship-resistant ETH? And what happens to ETH that users bet through an exchange if that exchange is penalized or banned from betting?
“It’s hard to say, I don’t know,” Tsao said. “It’s a very complicated question.”
Billions of dollars can rest on the answer.