A Beacon of Hope - The Daily Gwei #446
Admiring the magic that is the Beacon Chain.
The Ethereum Beacon Chain (aka the “consensus layer”) has come a long way since its launch on December 1st, 2020. There are almost 300,000 active validators, the network has run almost without issue for over a year now, and as of today there is 10 million total ETH staked on it. In a few months, the Beacon Chain will be merged with the “eth1” chain (aka the “execution layer”) resulting in Ethereum becoming a full Proof of Stake network.
At current prices, 10 million ETH is worth around $26 billion which is obviously nothing to scoff at. This figure represents the “economic security” that the Beacon Chain has to protect itself against would-be attackers. For example, in order to acquire enough ETH to attack the Beacon Chain, an attacker would have to spend billions of dollars and wait a long time for their validators to go through the deposit queue in order to come online. If they do end up reaching the point where an attack is possible (already highly unlikely), they can really only do the attack once - after they do it, the network will slash their validators which effectively deletes a large portion of their ETH and it will also kick them out of the active validator set.
The Beacon Chain really is one extremely resilient piece of software - and not just because of the high cost to attack. The topic of ‘client diversity’ has been brought up a lot recently and this plays a major role in keeping the Beacon Chain secure, healthy, decentralized and resilient. Of course, the current state of client diversity leaves much to be desired (one client - Prysm - has a supermajority of over 66% of the network) but that is slowly changing as individuals and large staking operations are making a concerted effort to use minority clients. On top of this, Ethereum’s social layer is incredibly strong and there is a very clear overlap between Ethereum users, developers & community members and those who are staking their ETH.
Obviously there is an endless debate about what’s “better” between Proof of Stake and Proof of Work but I don’t think that’s really a debate worth having anymore. It is really a no-win scenario because there isn’t an “objective” answer to any of the debate topics since PoW and PoS are just 2 entirely different beasts. In saying that, the only relevant Proof of Work network that’ll be left after The Merge will be Bitcoin - and honestly I hope Bitcoin stays as Proof of Work because I’d like to see that experiment keep being run at such a large scale.
I personally believe that the Beacon Chain has a strong chance at becoming the most secure consensus layer in existence. This is, of course, exactly what we want because after all, we can’t have a decentralized and credibly neutral base-layer if it’s not secured against nation-state level attacks. Though let’s not celebrate just yet - there’s still plenty of work to do to get the Beacon Chain and Ethereum as a whole to where we need it to be - so let’s keep on building!
Have a great weekend everyone,
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All information presented above is for educational purposes only and should not be taken as investment advice.