Vitalik Buterin Unveils Ethereum Consensus Limitations

Key Points:

• Ethereum co-founder Vitalik Buterin warns against overloading Ethereum’s consensus beyond its core functions of validating blocks and securing the network, promoting the preservation of blockchain minimalism.
• Overloading the network with additional functions increases costs and risks of running a validator.
• High systemic risks to the ecosystem are possible if Ethereum’s social consensus is used for other purposes.

Ethereum co-founder Vitalik Buterin published a blog post on May 21, 2023, warning against the potential dangers of “stretching” Ethereum’s consensus mechanism beyond its core functions of validating blocks and securing the network.

The consensus mechanism is the process by which blocks are validated using the proof-of-stake mechanism that was implemented in September 2022 with “the Merge”. Buterin cautioned that using ETH’s network consensus for other purposes could pose “high systemic risks to the ecosystem and should be discouraged and resisted.”

The co-founder went on to explain that over the years, several proposals or ideas have been floated around suggesting the use of Ethereum social consensus for other purposes, such as price and data oracles, re-staking initiatives, and using layer-1 soft forks to recover layer-2 projects should they have any issues. However, he believes that extending the blockchain’s core with more functionality could make the core itself more fragile.

Buterin expressed concern about a certain subset of these techniques, which he believes could bring “high systemic risks” to the ecosystem, such as bugs or an intentional 51% attack. For instance, he mentioned the creation of ETH/USD price oracles, in which ETH holders or validators can be bribed to vote, which may result in a “fork out the bad participants’ money” if there is disagreement. Despite the need for better oracles, Buterin proposed a case-by-case approach because various problems are “inherently so different” from each other.

In conclusion, any extension of the “duties” of ETH’s consensus increases the costs, complexities, and risks of running a validator. Therefore, according to Buterin, application-layer projects “taking actions that risk increasing the ‘scope’ of blockchain consensus to anything other than verifying the core Ethereum protocol rules,” should be approached with caution. Instead, he suggested preserving the chain’s minimalism, supporting uses of re-staking that do not look like slippery slopes to extending the role of Ethereum consensus, and helping developers find alternate strategies to achieve their security goals.

ETH consensus mechanism switched from proof-of-work to proof-of-stake in September the previous year. Also, staked Ethereum has only just been released for withdrawal with the Shapella upgrade on April 12. This explains the increased scrutiny of validator roles and security risks on the world’s largest smart contract network.

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