Vitalik Buterin, the co-founder of Ethereum, recently expressed his concerns about the centralization disadvantages of the Proof of Work (PoW) system that was previously used. Buterin’s comments came in response to members of the Ethereum community who preferred to stick with PoW instead of transitioning to a new system.
The main point of discussion centered around the elimination of incentives for ASIC investments. Amanda Cassatt, the CEO of Serotonin, initiated the conversation by stating that there are individuals who regret Ethereum’s transition to Proof of Stake (PoS) due to the risks of centralization and power imbalances. Cassatt argued that the PoS system removed the initial checks and balances in the ecosystem, leading to a more centralized validation process.
Buterin joined the discussion and acknowledged that PoW was also prone to centralization. However, he pointed out that the centralization of PoW was less evident when it was the consensus mechanism in Ethereum. To support his viewpoint, Buterin presented a chart showing the control that Ethereum miners had under PoW. The chart revealed that Spark Pool controlled 33% of the mining power, while Ethermine had 21%. Other significant miners included Zhizhu.top, Nanopool, and F2Pool.
Buterin further emphasized that the centralization of Ethereum’s PoW went unnoticed because stakeholders knew it was a temporary phase until the transition to PoS. He also highlighted that Ethereum’s approach to PoS may have prevented significant developments in ASICs, thereby eliminating the incentives for investing in them.
Notably, Ethereum transitioned to PoS in September 2022, and since then, validators have staked 32.5 million ETH tokens in the Beacon Chain stake contract, with a total value of over $101.5 billion.
Vitalik Buterin’s acknowledgement of the centralization issues of PoW has generated interest in the cryptocurrency world. His statement addresses the concerns of ETH members who preferred the network to remain under the PoW system.
Disclaimer: This article should not be considered as investment advice. Investors should be aware of the high volatility and risk associated with cryptocurrencies and should conduct their own research.