Vitalik Buterin reported that PoW consensus has problems with centralization. His revelation came in response to some ETH members saying they wished the network had never switched to PoS. The concern stems from claims that Ethereum PoS has centralization and balance of power risks.
Ethereum co-founder Vitalik Buterin said that the Proof-of-Work (PoW) consensus on which Ethereum previously operated has a significant degree of centralization. Buterin shared this view in a recent post on X. His remark was in response to concerns that some members of the Ethereum community are expressing a desire for the network to remain PoW rather than transition.
Amanda Cassatt, CEO of Serotonin, sparked the conversation by saying she observed people who wanted Ethereum's transition to proof-of-stake (PoS) to never happen. According to her, the main factors contributing to this are the risks of centralization and the balance of power. Cassatt noted that Ethereum has more centralized verification and that PoS consensus has removed the initial checks and balances in the ecosystem.
Joining the conversation, Buterin emphasized that PoW “was also quite centralized”. However, he said, PoW centralization received less attention when it was a consensus mechanism on Ethereum. Buterin backed up his point with a graph illustrating the control he had over Ethereum miners while working on PoW.
PoW was also quite centralized. It was just not talked about as much, because everyone knew it was only a temporary stage until PoS.
And that doesn’t even get into how we probably mostly avoided ASICs only because the upcoming PoS switch meant no incentive to build them. pic.twitter.com/OhaqmRiiGJ
— vitalik.eth (@VitalikButerin) April 26, 2024
According to the chart, Spark Pool controlled as much as 33% of the mining power, while Ethermine controlled 21%.. Other miners with significant control included Zhizhu.top, Nanopool and F2Pool.
Meanwhile, Buterin suggested that the centralization of PoW in Ethereum was not surprising, since stakeholders knew that «this was only a temporary stage before the PoS migration». Additionally, Buterin noted that Ethereum has likely avoided significant ASIC (application-specific integrated circuit) development due to the upcoming transition to PoS, which has removed the incentive to invest in ASICs.
Notably, Ethereum switched to PoS in September 2022. Since then, validators have locked in 32.5 million ETH tokens in the Beacon Chain staking contract. The value of these staked tokens is over $101.5 billion, with ETH priced at $3,125.