Ethereum pos security is not looking so good as many experts suggest there are vulnerabilities in the PoS consensus mechanism
Ethereum network completes a transition to Proof-of-Stake but at what cost?
The Ethereum Merge was arguably one of the most anticipated events in crypto history because of the long launch anticipation. The crypto community waited for so long that many thought It was never going to happen. It did happen. And we all were glad it was successful.
The Ethereum network now runs on a proof-of-stake (PoS) mechanism joining the likes of Cardano and Polkadot. The mechanism has proven more energy efficient and gives room for better scalability.
However, proof-of-stake (PoS) has been heavily criticized by many experts due to its decreased decentralization compared to Proof-of-Work (PoW).
Let’s dive deeper into the POS consensus to give you an idea of how it works.
The Proof of Stake Consensus
Proof-of-stake is a cryptocurrency consensus mechanism for processing transactions and creating new blocks in a blockchain. It requires less computational power to validate blocks, unlike the PoW, where a lot of computational power is needed.
In PoS, cryptocurrency owners can validate transaction blocks based on the total number of coins they’ve staked, though every network has its own rules on how many coins will be staked. The Ethereum network requires at least 32 ETH before you can be a validator. However, anyone can participate by joining a pool.
The network selects the next block randomly, with “higher odds being assigned to nodes with bigger stake positions”.
Proof of Stake vs Proof of Work
The main difference between PoS and PoW is that PoS validators only need to buy enough tokens to stake. In PoW, miners must buy lots of computers that consume much energy in order to solve the computational puzzle that decides who appends the next block.
PoS and PoW have pros and cons, and it’s hard to declare which is best. PoS solved the energy crisis of PoW, but there are concerns about its security and decentralization.
The Blockchain Trilemma
There is a belief that blockchains can’t solve these three issues at once: decentralization, scalability, and security. In order for a network to stay completely decentralized, it will sacrifice scalability. That is what is currently happening to bitcoin.
Bitcoin is secure and decentralized but can only handle 7 transactions per second (TPS). Other networks like Solana can handle an insane 65k TPS. But Solana has a big problem; it has suffered from many security issues.
Other networks that solved the security and scalability issues are more centralized, which flies in the face of the decentralized mantra of most crypto enthusiasts.
The Ethereum Merge and Security
Now that Ethereum leaves the energy-consuming PoW consensus for PoS, let’s look at the problems it is bound to face. First of all, the PoS mechanism usually assigns higher odds to nodes that have bigger stakes.
“The PoS network selects the next block randomly, with higher odds being assigned to nodes with bigger stake positions.”
Ethereum pos security
That statement alone clearly suggests that there is less decentralization in the PoS consensus. If higher odds are assigned to nodes with more stake positions, then people can buy more coins to get more odds. In general, this is what cryptocurrency is against.
Decentralization means no one entity can have more power over the network. But, when someone has greater odds because they have more money to buy coins than the other nodes, one must question the level of decentralization.
Apart from decentralization issues, many experts have expressed that the PoS is less secure compared to PoW. A blockchain developer and security expert who prefers to remain anonymous recently explained to Cointelegraph in an interview that the network is now theoretically vulnerable to attacks.
Ethereum pos security
Speaking to Cointelegraph: “If you control two consecutive blocks, you can start an exploit on block N and finish it on block N+1 without having any arbitrage bot coming in and fixing the price that you have manipulated in between.” “From an economic security standpoint, [this vulnerability] makes these attacks relatively easier to pull off.” “As we stand right now [with] the Ethereum proof-of-work versus Ethereum proof-of-stake, Ethereum proof-of-work does have stronger security [...] and economic guarantees.” “But that being said [...] proof-of-stake [still] has sufficient practical security [and] it doesn't really matter that it's theoretically not as secure as proof-of-work. It's still a very secure system,” he added.
Ethereum Networks’ Security After The Merge
The Ethereum network is still secure, just maybe not quite as secure as when they were using the PoW consensus mechanism.
I believe most developers are aware of the potential security risks with Ethereum PoS and are working diligently toward solutions.