Ethereum may now be more vulnerable to censorship — Blockchain analyst

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Ethereum’s upgrade to proof-of-stake (PoS) may make it more vulnerable to government intervention and censorship, according to Merkle Science’s lead researcher.

Speaking to Cointelegraph after the Ethereum Merge, Coby Morgan, a former FBI analyst, and the Chief Investigator of crypto enforcement and forensics firm Merkle Science expressed his thoughts on some of the risks posed by Ethereum’s transition to PoS.

While centralization issues were widely discussed before The Merger, Moran suggested that the prohibitive cost of becoming a validator could result in the consolidation of validators to the larger crypto firms such as Binance, Coinbase and Kraken.

To become a full validator for the Ethereum network, one must stake 32 Ether (ETH), which is worth around $47,000 at the time of writing.

A Pre-Merge report by blockchain analytics platform Nansen earlier this month revealed that 64% of the stacked ETH is controlled by just five entities.

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Source: Nansen

Morgan went on to say that these larger institutions will be “subject to the whims of governments around the world”, and when validation nodes identify approved addresses they can “have their rewards cut and then later kick in the system”, with businesses prevented from interacting with. them

Or you will comply and you will fly away from such interaction […] or you risk being fined, scrutinized or possibly sanctioned yourself.

Vitalik Buterin talked about this risk in developer of August 18 to callsuggesting one of the forms that censorship could take is validators choosing to exclude or filter approved transactions.

Vitalik went on to say that as long as some validators do not comply with the sanctions, then these transactions will eventually be picked up in later blocks and the censorship would only be temporary.

On August 8, cryptocurrency mixer Tornado Cash became the first smart contract sanctioned by a US government body.

Related: Rep. Emmer calls for clarification on OFAC’s Tornado Cash sanction of Sec. Yellen

In reaction, various entities complied with the sanctions and prevented the sanctioned addresses from accessing their products and services.

The development had a big impact on the Ethereum community, with EthHub co-founder Anthony Sassano tweeting on August 16 that he would consider Ethereum a failure and move on if permanent censorship occurs.