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Ethereum is not good enough

Ethereum is not good enough

Etherum Reddit

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Ethereum will merely degenerate into the very thing it sought to replace. Increased barriers of entry staking by making Ethereum a deflationary asset, alongside massive institutional and retail demand will make the market price of the asset appreciate massively. Although this may be good for our pockets, increased barriers of entry makes blockchain practically insignificant as we hand network to technocrats or the wealthy. The same is applicable for the various protocols that use the governance token model, which is implemented by most of the top Ethereum protocols. If you invested early, or simply have enough money, you can swing a proposal further in your favor. Popular DEX aggregator 1Inch has 41% of their tokens held by one Ethereum wallet owned by the Binance exchange.

Numerous reformation movements in the United States have made changes to our country to combat corruption that have become practically insignificant. For example, during the progressive era in the 1920's Americans were given the right to vote for senators. Most rational people would not advocate for us no long voting for senators, however we have lost a significant amount of influence over public policy through these senators being captured by their donors, and also evident do their very low approval rating. Hence it was practically insignificant because although we can regard democracy as an improvement, practically our freedom and autonomy remains unchanged.

When talking about financial institutions, banks or central banks, it is apparent the improvements a protocol like Compound and AAVE due to its decentralization, however in the long run, practically the protocol will be in defacto control by the wealthy, early investors in the project, as they have significantly higher voting power.

Ive often heard arguments about "those people invested longer, they should reap the rewards" or "they know more about the protocol, they should have a higher say", however this will inevitably lead back into a financial system run by technicians. Practically, a protocol defacto run by early developers, or wealthy investors is not too dissimilar to a traditional financial institution, like a bank. You cannot have your cake and eat it to. Unfortunately, I am unsure of any improvements that can be made to this model. If anyone has any ideas, please let me know. One way I can see to at the very least temporarily remedy this issue is by making the issuance of the governance tokens pretty high, to put downward pressures on the market price. This way later investors can buy in at similar prices than early investors. This of course does not solve the issue of someone having enough capital to buy more of the token however.

Something similar is happening with Ethereum, with increased barriers of entry to open a staking node, as well as nodes with higher Ether stake being preferred, as well as upward pressure on prices through supply shock with transition to POS consensus, Ether being burned, locked in Defi protocols, and being staked. Although an appreciating Ethereum may be great for our pockets, we need to question what this will do to the long term decentralization of the network. 32 Ether being required for a staking node is high even now, at over $100,000. This will only worsen as the market price of this asset increases, which will likely happen very dramatically. The spread currently of staking nodes is sufficient now, however I fear how people will stake their Ether, ie on an exchange like coinbase which can take up a very significant share of the validator nodes on Ethereum. Staking on exchanges will only be more popular as the barriers of entry for validating becomes higher.

I have heard of decentralized staking pools. I am not too familiar with how they work. Could be a potential solution. Please feel free to prove me wrong and tell me if they work. I am unsure how governance on Ethereum will change if decentralized staking becomes popular.

submitted by /u/Swole_Bodry
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