Vitalik Buterin, co-founder of Ethereum, warned that using Ethereum’s proof-of-stake consensus mechanism for purposes other than network security could pose significant systemic risks and should be discouraged.
Role of Consensus Mechanism
The consensus mechanism is the process of validating blocks using the proof-of-stake mechanism implemented with “the Merge” in September 2022.
This mechanism allows validators to stake ETH and earn rewards for proposing and attesting to new blocks. In addition to protecting the network from malicious attacks, the consensus mechanism penalizes dishonest or inactive validators.
Buterin published a blog post on May 21, 2023, warning against the potential risks of “stretching” Ethereum’s consensus mechanism beyond its core functions of validating blocks and securing the network.
He argued that using ETH’s network consensus for other purposes could make the core more susceptible to bugs and attacks.
The Cases of Consensus Stretching
Buterin explained that people have proposed other uses for Ethereum social consensus, such as oracles, re-staking, and layer-1 forks.
However, he believes extending the blockchain’s core with more functionality could make it more fragile.
Buterin expressed concern about a certain subset of these techniques, which he believes could pose “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, resulting in a “fork out the bad participants’ money” if there is disagreement.
Despite the need for improved oracles, Buterin proposed a case-by-case approach because various problems are “inherently so different” from each other.
On Preserving Minimalism
In conclusion, extending the “duties” of ETH’s consensus raises the costs, complexities, and risks of running a validator.
Buterin advises caution for application-layer projects that “risk increasing the ‘scope’ of blockchain consensus to anything other than verifying the core Ethereum protocol rules”.
Instead, he suggested keeping the chain minimal, avoiding risky re-staking uses, and finding alternative security strategies.
In September of the previous year, ETH transitioned from proof-of-work to proof-of-stake as its consensus mechanism. The April 12 Shapella upgrade also made staked Ethereum available for withdrawal.
This explains the increased scrutiny of validator roles and security risks on the world’s largest smart contract network.
