- Szilágyi highlighted the issues with Maximal Extractable Value (MEV), suggesting it could centralize network control.
- Despite concerns, Ethereum continues to develop, with recent upgrades improving cost-efficiency and planning future scalability.
Péter Szilágyi, a team leader at Ethereum, recently voiced concerns about the direction of the network’s development, highlighting a shift towards short-term solutions over maintaining the long-term integrity of the protocol.
Szilágyi shared his apprehensions on the social media platform X, pointing out that the focus on quick fixes might be detrimental to the foundational goals of the Ethereum network.
Y'all know why #Ethereum is gonna get its ETF sooner or later? Because everyone is constantly poking at the protocol rules, so you just have to patiently wait and co-opt tiny decisions here and there, before the entire thing can be captured. Then it's just TradFi as usual.
— Péter Szilágyi (karalabe.eth) (@peter_szilagyi) May 16, 2024
Szilágyi criticized the adjustments made to Ethereum’s core protocols to meet regulatory requirements. He argued that these changes risk transforming Ethereum into a system that resembles traditional financial networks, which could lead to a loss of its key characteristics of decentralization and resistance to external control.
Y’all know why #Ethereum is gonna get its ETF sooner or later? Because everyone is constantly poking at the protocol rules, so you just have to patiently wait and co-opt tiny decisions here and there, before the entire thing can be captured. Then it’s just TradFi as usual.
These concerns are exacerbated by the regulatory attention Ethereum is facing, notably from the United States Securities and Exchange Commission (SEC), which considers ETH as potentially an unregistered security. This situation, Szilágyi implies, necessitates careful to avoid negative outcomes for the network.
Another issue Szilágyi highlighted is related to Maximal Extractable Value (MEV). He explained that validators on the Ethereum network have the capability to rearrange the order of transactions in a block to maximize their financial returns. This practice, if unchecked, could centralize power within the network, which contradicts the principle of decentralization.
MEV became an issue, so instead of trying to find solutions against it, we’ve glorified it and are now catering the protocol and infra around it to proprietary MEV builders instead of local block producers. It’s futile to fight against MEV os might as well lean hard on it, right?
Szilágyi also mentioned concerns about the rise of liquid staking solutions like Lido Finance, which allow ETH holders to earn rewards without operating a validator node. He suggested that this could lead to a concentration of control over the network in the hands of a few operators.
Liquid staking became an issue even before the switch to PoS. Everyone was aware that there’s a danger to the protocol health, so what do people do? Liquid restaking! Stake the stake into more stake. There can only be a handful of winners? Might as well roll with it.
Despite these critical points, development on Ethereum continues with efforts to enhance user experience and reduce operational costs. The recent Dencun upgrade has made it cheaper to trade on secondary protocols such as Base and Arbitrum. Additionally, Ethereum’s roadmap includes plans to scale the mainnet through Sharding in the coming years.
The ongoing discussion about Ethereum’s development strategy and Szilágyi’s remarks reflect a juncture for the network, as developers balance immediate functionalities with foundational principles. The community’s response to these concerns will likely shape Ethereum’s trajectory in the blockchain market.
