Ethereum‘s co-founder Vitalik Buterin recently stated that the previously used Proof of Work (PoW) system had significant centralization disadvantages. He shared this perspective in a recent post. Buterin’s comments were in response to some members of the Ethereum community who preferred staying with PoW instead of transitioning.
The Core of the Discussion
Serotonin’s CEO Amanda Cassatt initiated the discussion by claiming that there are individuals who wish Ethereum’s transition to Proof of Stake (PoS) had never happened. According to her, centralization risks and power imbalances are among the main contributing factors. Cassatt mentioned that Ethereum’s PoS system removed the initial checks and balances in the ecosystem, leading to more centralized validation.
Joining the conversation, Buterin emphasized that PoW was also “quite centralized.” However, he noted that the centralization of PoW was less noticeable when it was the consensus mechanism in Ethereum. Buterin supported his view with a chart showing the control Ethereum miners had while operating under PoW.
According to the chart, Spark Pool controlled 33% of the mining power, while Ethermine had 21%. Other miners with significant control included Zhizhu.top, Nanopool, and F2Pool.
Highlighting the Elimination of Incentives for ASIC Investments
Meanwhile, Buterin pointed out that the centralization of Ethereum’s PoW went unnoticed because stakeholders knew it was only a temporary phase until the transition to PoS. He also highlighted that Ethereum’s approach to PoS might have avoided significant developments in ASIC (Application-Specific Integrated Circuit), thereby eliminating the incentives for investing in ASICs.
Specifically, the cryptocurrency Ethereum transitioned to PoS in September 2022. Since then, validators have staked 32.5 million ETH tokens in the Beacon Chain stake contract, valued at over $101.5 billion.
In the world of cryptocurrency, altcoin leader and Ethereum co-founder Vitalik Buterin openly acknowledges the centralization issues of PoW. Buterin’s statement has attracted attention in the crypto world as it responds to the view of some ETH members who wished the network never transitioned to PoS.
