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According to Buterin, “systemic risks” may occur

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Over 700,000 validators, staked Ethereum for 42 billion US dollars: Since the “merge”, Ethereum has served as a model blockchain for the proof-of-stake process – other networks also want to benefit from its success. However, re-using the staking apparatus to secure other networks, as re-staked by projects such as Eigenlayer, could lead to risks says Vitalik Buterin. According to the Ethereum founder, the security model should focus on the core functions of the network.

Re-Staking: Opportunity or Danger?

The pulse of a blockchain is its consensus process – the regular agreement of several participants about a certain network status. This gives transactions validity and blockchains become capable of acting. However, building a decentralized security network takes time and money. Resources that could save smaller projects, for example by attaching to Ethereum’s validator set.

However, Buterin speaks of “high systemic risks for the ecosystem”. In the model known as re-staking, conflicts of interest could arise that compromise the actual function of the validators – hedging one Blockchain – endanger.

Ethereum is said to preserve “minimalism”.

According to Buterin, there is a natural urge to “expand the core of the blockchain with more and more functionality.” This comes at a price: “Any such extension makes the core itself more vulnerable”. The social consensus is “a fragile thing”, says Buterin, and should therefore “be used sparingly”. The Ethereum founder also mentions the protection of oracles – data transfer to and from a blockchain – as a potential gateway for security risks: “As soon as a blockchain tries to latch onto the outside world, the conflicts in the outside world also affect the blockchain” .

Buterin therefore advises preserving “the minimalism of the blockchain”. At the same time, he warns against “broadening the scope of blockchain consensus to anything other than verifying the core rules of the Ethereum protocol.” Such applications could “very easily conflict with the goals of the community as a whole”.

In addition, the costs and risks of network security could increase: “Validators have to take on the human effort to pay attention and to run and update additional software to ensure that they act correctly according to the other protocols that are put in place”. This forces the Ethereum community to “make far more decisions, each of which carries some risk of causing a split in the community.”

All content in this article is for informational purposes only and in no way serves as investment advice. Investing in cryptocurrencies, commodities and stocks is very risky and can lead to capital losses.