Blockchain journalist Martin Hiesboeck shared an analysis that raised several concerns regarding Ethereum‘s centralization.
To be more precise, the study delves deeper into, investigates and analyzes the centralization arising from the MEV-Boost auction mechanism, which is part of centralization.
It is worth noting that MEV-Boost (Maximal Extractable Value Boost) is a protocol that implements block auctions in Ethereum. Its operation is based on block builders creating candidate blocks. In this way, these blocks are offered in an auction and finally the validators select the most profitable block to propose to the network.
It’s a pretty clever mechanism, but analysis reveals that Only three developers create more than 90% of Ethereum blocks. Which implies a high degree of centralization in said block production.
Interesting report
🧐 Is Ethereum Really Decentralized with 3 Players Building 90% of Blocks?
While blockchains like Ethereum are praised for decentralization and security, this study reveals that Ethereum’s block production has become highly centralized. Despite being a… pic.twitter.com/vqXngL0zho
— Dr Martin Hiesboeck (@MHiesboeck) September 1, 2024
“Is Ethereum really decentralized with 3 players building 90% of blocks? While blockchains like Ethereum are praised for decentralization and security, this study reveals that Ethereum block production has become highly centralized. Despite being a permissionless system, three builders are responsible for over 90% of blocks on Ethereum.”
Understanding Ethereum Centralization in Depth
To understand precisely how such centralization arises and how three “players” build 90% of the blocks, let’s analyze the following factors:
The consequences of centralization in Ethereum
In a post about this news on Reddit, users of the social network expressed their concerns that centralization is advancing in Ethereum and one of the first questions is what the consequences of greater centralization are.
The first response to this is that the network should not allow itself to become centralized, as it could face risks such as a greater likelihood of censorship, less security and decreased user confidence.
A centralized Ethereum network is unthinkable for users due to the image and reputation that this blockchain has in terms of decentralization.
Other users complained that Ethereum resembles BNB Chain, but it is worth noting that while Ethereum introduced this centralization, it does not necessarily have to achieve the centralization of the BNB Chain.
Finally, several possible solutions were also discussed, such as reducing entry costs, increasing transparency in auctions, diversifying revenue sources, and improving governance mechanisms.
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