Podcast Summary
Ethereum's Censorship Resistance: A Crucial Component of Ultra-Sound Money and Finance Systems: Ethereum, as a censorship-resistant platform, empowers individuals to become censorship resistant in money and finance through the use of core primitives and a strong community. Understanding the difference between weak and strong censorship and the role of social forks is crucial for preserving Ethereum's censorship resistance in the future.
Ethereum, as a censorship-resistant platform, is a crucial component of creating ultra-sound money and finance systems. In this episode of Bankless, Justin Drake, one of Ethereum's top researchers, discussed the question of whether Ethereum can be censored and the measures to preserve its censorship resistance in the future. Drake emphasized the importance of understanding the difference between weak and strong censorship and the role of the community in censoring the censors through a social fork. He also highlighted the power shift towards defenders in the era of blockchains and public key cryptography, enabling individuals to become censorship resistant in money and finance. The episode explored the core primitives to put power in the hands of the defenders and how Ethereum can maintain its censorship resistance over the decades to come. Overall, this podcast aims to help everyone in the world become censorship resistant in the realm of money and finance. So, listen to the episode with Justin Drake and share your thoughts on Ethereum's censorship resistance. For premium subscribers, stick around after the show for the debrief. Thank you to Juno and Lens Protocol for sponsoring this episode.
Decentralized social media and censorship resistance in Web 3: Decentralized platforms like Lens enable user control, while Ethereum's censorship resistance ensures credible neutrality in DeFi and NFTs, and Brave Browser offers secure control in Web 3.
The future of social media lies in decentralized platforms where users have control over their data and relationships, rather than being controlled by apps and algorithms. Lens, a new protocol, aims to enable a thousand web 3 social apps to bloom, allowing users to take their followers and experiences with them. Censorship resistance is a crucial aspect of cryptocurrencies, including Ethereum, as it ensures transactions are valid and included on the chain, leading to economic security and utility. Ethereum's censorship resistance is a pillar to its credible neutrality, making it essential for the platform to fulfill its mission as the settlement layer for the incentive value in the interconnected world of decentralized finance (DeFi) and non-fungible tokens (NFTs). The Brave Browser, with its secure, multi-chain crypto wallet built-in, offers users more control and security in the web 3 space.
Ethereum's fight against economic censorship: Ethereum aims to prevent economic censorship by ensuring equal access to all users through programmability, credible neutrality, and scalability. Users may experience weak or strong censorship, but the community can detect and respond to censorship events, maintaining a fair and open platform.
The Ethereum blockchain, through its pillars of programmability, credible neutrality, and scalability, aims to provide equal access to all users, ensuring inclusion and avoiding economic censorship. Censorship, defined as economic censorship in Ethereum, occurs when valid transactions, paying the base fee, are not included in the next block due to unused gas. This objective definition allows for a binary outcome, detectable by machines and the community, ensuring transparency and accountability. Users experiencing censorship may face different outcomes, such as delayed transactions or inability to complete transactions with censored addresses or Dapps. Two types of censorship exist: weak censorship, where transactions are included with a delay due to some blocks not processing them, and strong censorship, where transactions are completely excluded. Economic censorship does not involve humans but rather the market dynamics of block space availability and unused gas. Users can set up alerts for censorship events, enabling quick community response and action. The user experience of censorship includes longer transaction times or failed transactions, leading to degraded user experience and potential exclusion from the system. The Ethereum community's focus on inclusion and equal access is crucial to the success and legitimacy of the network, ensuring a fair and open platform for all users.
Ethereum's Censorship Resistance Under Threat: Weak and Strong: Ethereum's censorship resistance, crucial for network security and neutrality, is under threat from weak and strong censorship. Attesters hold the power to enforce this censorship, weakening Ethereum's resistance.
Ethereum's censorship resistance, a core pillar of its credible neutrality, is under threat from two forms of censorship: weak and strong. Weak censorship results in delayed inclusion of censored transactions, while strong censorship completely filters out certain transactions from the chain. The attesters, who validate and vote for blocks, hold the power to enforce this censorship. Ethereum today bundles proposing and attesting roles, but on the beacon chain, these roles have been separated. Proposers include blocks on the chain, while attesters vote for the dominant one. Attesters can vote against blocks containing specific transactions, effectively censoring them. This weakens Ethereum's censorship resistance, which is crucial for maintaining credible neutrality and securing the network. We're discussing these two forms of censorship in detail throughout the episode. It's important to note that we're primarily focusing on Ethereum's layer 1 and its censorship resistance in relation to block production. While things outside Ethereum's jurisdiction, like centralized exchanges or apps, don't have to follow Ethereum's rules, the Ethereum nation state and its jurisdiction continue to expand, making censorship resistance a spectrum with varying degrees. Ethereum's censorship resistance today is a topic of ongoing debate.
Ethereum's Censorship Resistance Under Threat: Ethereum values censorship resistance, mitigating weak censorship with tech and preparing for potential strong censorship attacks
Ethereum's censorship resistance, a core value of the network, is under threat from both weak and strong censorship. Weak censorship, which occurs above the protocol layer, can be mitigated with technological solutions, ensuring every transaction is included in a timely manner. However, strong censorship, which targets the Ethereum protocol itself, poses a more significant challenge. While no credible threat exists currently, the community must prepare for potential strong censorship attacks. The good news is that technology and cryptoeconomic systems can help minimize social layer involvement in recovery. Ethereum, as a decentralized "nation," values censorship resistance independently from nation-states. Strong censorship and weak censorship differ, with weak censorship occurring above the protocol layer and strong censorship targeting the protocol itself. By continuing to shift more of the block building process into layer 1, Ethereum can reduce the impact of weak censorship. Ultimately, the Ethereum community is committed to maintaining censorship resistance, both through technological solutions and a strong social layer response.
Ensuring censorship resistance and credible neutrality in Ethereum: Ethereum aims to provide secure, censorship-resistant blockspace as a public good, attracting talent and innovation without permission. Weak censorship can be addressed through various mechanisms in the ecosystem.
While individual participants in a decentralized network like Ethereum may be subject to their own jurisdictions and potentially engage in censorship at the machine consensus level, the desirability of censorship resistance and credible neutrality lies in ensuring that no single geopolitical entity can control the rules of the system. Ethereum's goal is to provide secure, censorship-resistant blockspace as a public good, attracting talent and innovation without the need for permission. Weak censorship, such as longer wait times or higher gas fees for certain transactions, can be addressed through various mechanisms in the Ethereum ecosystem, including RPC endpoint providers and individual block proposers. Understanding the importance of censorship resistance and credible neutrality is crucial for the long-term vision of Ethereum as a global, decentralized platform.
Addressing censorship in Ethereum: The Ethereum community is tackling censorship through initiatives like phasing out relays, decentralizing interfaces, and decentralizing data indexing.
The Ethereum block production pipeline is complex, but progress is being made to mitigate censorship vectors. Searchers, who create transactions, are not a concern, and relays, currently a potential censorship point, will be phased out with protocol builder separation. Interfaces, such as MetaMask, are moving towards decentralization with in-browser clients and decentralized storage solutions like IPFS and Filecoin. Additionally, projects like The Graph aim to decentralize data indexing. A DAO could potentially curate and maintain these decentralized front-end solutions. Overall, while there is still work to be done, the Ethereum community is actively addressing censorship concerns through these various initiatives.
Maintaining Decentralization with Ethereum's Lite Clients: Lite clients enable users to quickly sync with Ethereum's head, bypass censorship, and access important DeFi apps. Strategies like altruistic self-building and MEV smoothing further enhance censorship resistance.
Ethereum's lite clients offer a way for users to achieve censorship resistance and maintain a sovereign vision of the Ethereum chain, even when centralized front ends or RPC providers may be censoring transactions. These lite clients help users sync up to the head of the chain quickly and efficiently, and then make queries to access the full state of Ethereum. This allows users to bypass potential censorship from centralized providers and maintain access to important DeFi applications like Uniswap or Tornado Cash. Additionally, users can build their own blocks through a strategy called altruistic self-building, which can help improve censorship resistance and credible neutrality. Another approach to addressing potential censorship from proposers and validators is through MEV smoothing, which aims to distribute mining rewards more evenly and reduce the incentive for centralization. Overall, these strategies offer ways for Ethereum users to maintain decentralization and access important applications, even in the face of potential censorship.
MEV Smoothing and CR Lists: Decentralizing Ethereum's Block Building Process: MEV smoothing restricts proposers to choose only the most profitable block, while CR lists enable them to include censored transactions without financial loss, promoting decentralization and preventing potential market centralization
Ethereum's MEV (Maximal Extractable Value) and weak censorship resistance are interconnected, leading to the concept of MEV smoothing and censorship resistance lists (CR lists). MEV smoothing is a binary system where proposers have little choice but to accept the most economically paying block or lose all MEV rewards. CR lists allow proposers to include transactions they believe are being censored without financial loss, ensuring blocks remain economically viable. Proposers can advertise these transactions before their slot, imposing a constraint on builders to include them or risk an invalid block. This empowers proposers, or Ethereum stakers, to decentralize the block building process and prevent potential centralization in the market.
Innovations for a more secure, decentralized, and efficient Ethereum network: Solo stakers enforce inclusion of transactions, MEV smoothing ensures fair block auctions, and encrypted mempool prevents censorship, enhancing Ethereum's block building process
Ethereum's block building process is being enhanced through various mechanisms to ensure decentralization, prevent censorship, and improve market efficiency. Solo stakers have the power to accept only blocks with specific transactions, creating a forcing mechanism for all transactions to be included. MEV smoothing aims to remove discretionary power from proposals by asking attesters to only attest to the highest paying bid, ensuring a fair block auction. The next layer is the encrypted mempool, which prevents censorship by encrypting transactions before broadcasting, keeping their contents hidden during the block building process. These innovations aim to create a more secure, decentralized, and efficient Ethereum network.
Fortifying Ethereum against censorship: Ethereum is working on multiple solutions to remove weak censorship, including encryption, proposal irrelevance, and self-building transactions, aiming to make transactions unstoppable once verified. Scaling solutions like Arbitrum provide fast and cheap transactions, enabling new DeFi and NFT opportunities.
Ethereum is working on various technological solutions to address weak censorship, which can delay transactions but not prevent them. These solutions include encryption, removing the relevance of proposals, and self-building transactions. The end goal is to effectively remove weak censorship, making it impossible for transactions to be prevented from being included in a block once they can be verified. This process is like fortifying a castle with multiple defenses and can be thought of as a divide and conquer strategy. The timeline for these solutions is not clear, but the belief is that the technology exists to completely remove weak censorship. Each attack on Ethereum's weak censorship only makes the network stronger, accelerating the inevitable total hardening against censorship. Additionally, Ethereum scaling solutions like Arbitrum offer fast transactions with cheap fees and increased security, allowing users to explore new frontiers of DeFi and NFTs.
Boost Ethereum staking yields with Rocket Pool and ZkSync: Rocket Pool lets Ethereum stakers earn extra rewards and commissions by becoming node operators, while ZkSync is a high-performance layer 2 network pushing the boundaries of decentralized applications.
Rocket Pool offers a unique opportunity for Ethereum stakers to boost their yields by allowing them to stake their ETH and use it in DeFi at the same time. By becoming a node operator in the Rocket Pool network, stakers can earn additional rewards and commissions. Rocket Pool is an accessible staking provider that allows anyone to join their network of Ethereum validating nodes, making it easier than running a solo node. ZkSync, on the other hand, is a layer 2 Ethereum network pushing the boundaries of high-performance blockchains. It's seen as the future foundation for building crypto applications, with its 0-knowledge roll-ups enabling the best user experience possible. Regarding censorship, it's a complex issue with two aspects: prevention and recovery. Strong censorship, or permanent censorship, is a type of 51% attack where the economic majority compromises the liveness of the Ethereum chain. Preventative measures include making it extremely difficult to launch such an attack, while recovery involves forking away and censoring the censor. The recovery process can be automated up to 80%, but human intervention is required for confirmation. Understanding these concepts is crucial for maintaining the security and decentralization of Ethereum.
Maintaining Ethereum's censorship resistance through diversity: Encouraging validators from multiple jurisdictions, having a plurality of staking pools, and supporting DAOs like Lido and Rocket Pool helps ensure Ethereum's censorship resistance by making it harder for any single entity to exert control over the network.
Ensuring Ethereum's censorship resistance requires focus on diversity at various levels. This includes jurisdictional diversity, operator diversity, and geographical diversity. By encouraging validators from multiple jurisdictions, we make it harder for any single nation state to exert control over the network. Similarly, having a plurality of staking pools, each difficult to coerce, reduces the impact of coercion and maintains censorship resistance. Decentralized Autonomous Organizations (DAOs) like Lido and Rocket Pool, which operate as their own jurisdictions, are preferred choices for staking. The social layer plays a crucial role in this battle for diversity, as it's not something that can be designed into the protocol. By fostering a globally distributed network of Ethereum validators and stakers, we create an entity that exists beyond the control of any nation state.
Preventing Ethereum Censorship through Education, Deterrence, and Activist Staking: Ethereum community can foster a staking culture, rebalance stake to maintain decentralization, and use activist staking as a form of protest against censorship. Proof of stake offers stronger censorship resistance than proof of work, but recovery requires forking off and creating a non-censored version of Ethereum.
The Ethereum community can take preventative measures against censorship attacks through various means, primarily focusing on social education, deterrence, and activist staking. These measures include fostering a culture of staking, rebalancing stake to maintain a decentralized network, and even unstaking as a form of activism. However, it's important to note that proof of stake has stronger censorship resistance than proof of work in most aspects, but there's a downside: activist staking does not help with recovery. In the event of a censorship attack, the community may need to fork off and create a non-censored version of Ethereum. This is a complex process and requires coordination among the minority. The focus should be on preventative measures to maintain Ethereum's decentralization and resist censorship.
Automatic Ethereum Forks: Censorship Response or Complex Process?: The possibility of an automatic Ethereum fork as a response to censorship involves code that automatically creates a fork when censorship is detected, but the process requires online observation of the mempool and human intervention for validation and enforcement, leading to two separate Ethereum chains and a complex, messy process.
The discussion revolves around the possibility of an automatic fork in the Ethereum blockchain as a response to censorship. This would involve code that automatically creates a fork when censorship is detected. However, there are limitations to this approach, including the need for online observation of the mempool and the involvement of the social layer to validate and enforce the fork. The process of detecting censorship and creating a fork can be done automatically for full nodes, but the involvement of clients and the social layer requires a more manual approach. The outcome of such a fork would result in two separate Ethereum chains, with the community and market deciding which one to support. This is not a new concept, as seen in past forks with Bitcoin and Ethereum. The goal is to maintain credible neutrality and allow the minority to opt out from the tyranny of the majority. However, the social and human intensive nature of forking makes it a complex and messy process. The ultimate goal is to streamline the process as much as possible through both code and social layer protocols.
The uncensored version of Ethereum may be adopted due to the social layer's ability to shift the market: The uncensored Ethereum can be facilitated by a neutral schedule for forks, education, infrastructure, and the threat of a fork acting as a deterrent.
The uncensorable version of Ethereum, despite potential challenges, has the potential to be adopted due to the social layer's ability to debate, lobby, and gradually shift the market towards uncensored versions. This process can be facilitated by setting a credibly neutral schedule for forks and allowing for a graceful wind down of projects that choose the censored version. The threat of a fork acting as a preventative mechanism also deters potential censors. Education and infrastructure play a crucial role in this process by acting as deterrents and facilitating the transition towards uncensored versions of Ethereum. Ultimately, the goal is to design systems that provide an exit hatch even in the face of malicious actors, ensuring the decentralized nature of Ethereum remains intact.
Decentralized nature and cryptoeconomic incentives make censorship difficult in Ethereum: Ethereum's decentralized structure and cryptoeconomic incentives make censorship and manipulation difficult, with potential penalties for attackers and community power to enforce integrity.
The decentralized nature of cryptocurrencies, specifically Ethereum, makes it difficult for attackers to successfully censor or manipulate the network due to the potential for retaliation and financial penalties. This is because any attempt at censorship puts the attacker in a precarious position, as they can be forked off and penalized by the community. The use of staking as a means of securing the network adds an additional layer of protection, as those who stake their coins have a financial incentive to uphold the integrity of the network. However, there is still a risk for retail investors who stake their coins with centralized providers. In such cases, education and lead time are crucial to minimize potential losses. Additionally, the costs of delegation, including fees and the risk of insider or outsider attacks, should be carefully considered. The community also has the power to penalize bad actors through soft forks, further deterring potential attacks. Overall, the decentralized and cryptoeconomic incentives built into cryptocurrencies make it a robust and resilient system, making censorship or manipulation a difficult and costly proposition.
Penalties for malicious actions in Ethereum staking: In Ethereum's proof of stake system, validators face penalties like inactivity leaks and stake slashing for attacking the network, deterring bad actors and maintaining network integrity.
When it comes to the Ethereum blockchain and the staking process, there are consequences for malicious actions. If a validator attempts to attack the network, they could face penalties such as inactivity leaks and complete slashing of their stake. These penalties are only possible in a proof of stake system and serve as a deterrent for bad actors. Coinbase, as the largest staking provider in the US, has publicly stated that they would rather discontinue their business than engage in censorship. Ultimately, the defender holds the power in these situations, and any attempt at attack is an unstable equilibrium. When you stake your ether on Ethereum, you are giving up some property rights and agreeing to abide by the rules and laws of the Ethereum protocol. These penalties are designed to maintain the integrity of the network and ensure that decentralization is upheld. It's important for stakeholders to understand these risks and the potential consequences of their actions.
Selecting Staking Service Providers: Weighing Security and Convenience: Retail investors must carefully choose staking providers, balancing security and convenience. Solo staking with personal keys offers the best security but requires high deposit and technical expertise. Centralized providers ease entry but relinquish control and risk alignment.
When participating in Ethereum staking, it's crucial for retail investors to carefully select their staking service providers. The responsibility for the security and alignment with the Ethereum protocol lies with the staker. Staking involves surrendering property rights to the Ethereum network, and the risk can be mitigated only through solo staking with one's own keys. However, delegating staking to a centralized provider forfeits this risk minimization aspect. Solo staking is becoming more accessible and efficient with advancements like propose builder separation, MEV smoothing, anti-slashing hardware, single slot finality, and statelessness. These improvements aim to make solo staking almost effortless and cost-effective. Additionally, technologies like dvt and secret shared validators, dynamic deposit sizes, and variable deposit sizes are expected to lower the entry barrier for becoming a validator. Despite the progress, the significant hurdle for solo staking remains the high deposit requirement of 32 ETH. However, as Ethereum's value continues to grow, this requirement may become less prohibitive. It's also worth noting that the benefits of decentralization may not be fully realized until a major "tail risk event" occurs, highlighting the importance of solo staking for censorship resistance. Ethereum's positioning for a strong censorship attack remains a strategic concern, emphasizing the importance of individual stakeholders' commitment to decentralization.
Building Trust and Understanding in Ethereum Community: Education is essential in the short term, prioritizing security research and implementing security defenses are crucial in the medium term, and writing censorship resistance into Ethereum's social contract is vital for the long term.
While we have the technological capability to defend against weak censorship attacks on Ethereum, the strategy for dealing with strong censorship requires a different approach. In the short term, education is key to building trust and understanding in the community. In the medium term, implementing security defenses and prioritizing research is essential. Ethereum needs to remain competitive by focusing on features, but also front-load security research. Long-term, it's crucial to write censorship resistance into Ethereum's social contract. Bitcoin has an advantage in weak censorship resistance due to its simpler transaction system, but in terms of strong censorship, Ethereum and Bitcoin are similarly vulnerable. The key difference lies in the economic majority and the diversity of hash rate distribution. Education, prioritizing security research, and maintaining diversity are crucial steps to ensure Ethereum's censorship resistance.
Bitcoin vs Ethereum: Censorship Resistance Approaches: Bitcoin relies on hash rate for censorship resistance but is vulnerable to 51% attacks. Ethereum is more resilient due to its decentralized nature and community's ability to perform manual recovery in case of attacks. Ethereum researcher Justin Drake expects weak censorship resistance perfection within 5-10 years and strong resistance already in place.
Bitcoin and Ethereum have different approaches to censorship resistance. Bitcoin's censorship resistance relies on its hash rate and the economic security it provides. However, if a powerful entity manages to acquire 51% of the hash rate, they could potentially censor transactions. Ethereum, on the other hand, has a different solution. It is more resilient to censorship due to its decentralized nature and the ability for the community to perform manual recovery in case of a 51% attack. Justin Drake, a researcher at the Ethereum Foundation, expressed confidence that Ethereum will be close to perfection in terms of weak censorship within 5 to 10 years. He also believes that Ethereum is already extremely resilient to strong censorship. The community is working on making this explicit through code and articulating the desire to preserve censorship resistance. If Ethereum were to be attacked before these defenses are in place, the community would be willing to perform a manual recovery. To get involved in preserving censorship resistance, consider joining the solo staking community and donating to crypto lobby groups fighting for our rights in various jurisdictions. Remember, crypto is risky and it's important to be aware of the potential losses. But the potential rewards make it worth the journey.
