Big Ethereum upgrade could make network more centralised

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The much-anticipated upgrade of Ethereum will create new participants called builders in the blockchain ecosystem, a move that risks altering the power structure of what is arguably the most commercially important cryptocurrency network.

Under the current system, networks of computers known as miners pluck transactions out of a special data pool, and arrange them into blocks that are added to the blockchain.After the planned September upgrade known as the Merge, the builders will gather transactions into blocks, which they will then send to the validators.This seemingly geeky change, part of a portion of the software upgrade that is called MEV-Boost, could potentially make Ethereum more centralised, at least initially.

“If wallets begin sending transactions directly to a handful of block builders, it kills decentralisation,” said Uri Klarman, chief executive officer of BloXroute Labs, which has a network of servers that let traders send transactions to miners faster. A wallet service could favor one builder over all others and even decide to act as a builder, thus controlling the flow of transactions, Klarman said.

“MetaMask’s value is derived from being a gateway to an exciting, vibrant, diverse and fair ecosystem. For that reason, MetaMask will always strive to make decisions that promote a healthy and decentralised Ethereum.” Earlier this month, Flashbots blacklisted wallets associated with Tornado Cash, after the mixer protocol was sanctioned by the US Treasury Department.

Builders can also capitalise on their users’ order flow. If a builder knows that a lot of users are placing orders for a particular token, they could buy a long position in it, for example.

 

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