BUG ON ETHEREUM AND END OF THE DEFLATIONARY ERA OF ETH: IS THE NETWORK STALLING?

Ethereum in trouble . In the current crypto landscape, the Ethereum network remains the main gateway to sectors like DeFi and NFTs. But the chronic increase in transaction costs is forcing investors to turn to layers 2 and other alternative solutions. A stack presented by some as beneficial, while others simply see the limits of this emblematic blockchain.

Because this fragile balance is also being undermined by an increased risk of centralization since its transition to Proof of Stake. And the recent bug encountered in the Nethermind client software once again revives this recurring fear. With, in the background, a Dencun upgrade which could put a stop to the very recent deflationary logic of the ETH cryptocurrency.

ETHEREUM: CRITICAL BUG IN NETHERMIND

The upward trend initiated since the end of last year in the cryptocurrency market seems set to take a break. But every day is enough, if we are to believe the latest news from the Ethereum network . Because this start of the week seems quite chaotic for the second blockchain in the crypto ecosystem.

Indeed, a major bug has just hit one of its execution clients, named Nethermind. Software implemented since the Ethereum network transitioned to Proof of Stake (PoS) , the main function of which is to allow validators to interact with the network. But over the weekend, nothing went as planned.

“If you are affected by the Nethermind consensus bug, you can try resyncing your node. This is a quick fix, but the problem may reappear until we have a proper solution. We are working on it. »DanielC , technical manager at Nethermind

A flaw apparently managed quite quickly . But this bug will still have harmed the 8% of validators  affiliated with Nethermind, because it will have been significant enough to take them offline . Which implies a penalty from the Ethereum network.

Critical bug in Nethermind
Client diversity on the Ethereum network – Source: Client Diversity

However, the real problem lies elsewhere. Because this bug once again highlights the risks inherent in the diversity of clients in the context of securing the Ethereum network. And the main one is the excessive centralization of the latter on the Geth client software (84%). Even the Client Diversity website displays a warning on the subject at the top of its staking page.

According to estimates by Dankrad Feist, researcher for the Ethereum Foundation, a bug of this magnitude with Geth could trigger the finalization of an invalid block . A real “catastrophe” which requires “that no client holds more than 2/3 of the shares” in order not to witness this scenario. To the wise…

END OF THE PARTY FOR THE ETH CRYPTOCURRENCY?

Despite an ambitious road map drawn up by Vitalik Buterin , the Ethereum network is off to a bad start this new year. And to perfect the atmosphere, another piece of information has just fallen like a chopper. Codename: Dencun .

Indeed, the next upgrade of the Ethereum network wants to facilitate layer 2 transactions towards its blockchain , with the help of blockspace. A way to reduce the gas consumption deemed to be highly excessive in this network. But, at the same time, the principle of ETH burn associated with this activity would be significantly slowed down .

“Transactional call data represents 90% of the costs paid by layers 2 in terms of gas fees. But after the Dencun upgrade they will be able to use the new blobspace mechanism, which significantly reduces gas costs. If we expect layer 2s to gradually transition to using this new blobspace mechanism, we could see gas prices stabilize at lower levels, meaning less ether will be burned. »Luke Nolan , CoinShares Ethereum Research Associate

And as Ethereum enthusiasts know, this destruction (burn) of ETH at the time of validation of a transaction is the sine qua non condition of its brand new deflationary character . Would the party be over before it even really started?

The Ethereum network begins this new year with a few grains of sand in its cogs . However, JP Morgan specialists promise to see it outperform Bitcoin in 2024 . And, since its transition to Proof of Stake, few challenges still scare its community of developers.

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