Try Quests to earn cryptoDecentralization Post Merge
Introduction
What Is a Beacon Chain?
The Beacon Chain lies at the core of Ethereum 2.0; it stores and manages the registry of validators and coordinates the shard chains. The Beacon Chain went live on Dec. 1, 2020 at noon UTC.
The Beacon Chain is a brand-new, proof-of-stake blockchain. It can be poetically described as the spine that supports the whole of the new Ethereum 2.0 system, the heartbeat that keeps the system alive, the conductor coordinating all the players. Another good metaphor is to think of the Beacon Chain as of a big lighthouse, rising above a blue sea of transaction data. It’s constantly scanning, validating, collecting votes and doling out rewards to the validators that correctly attest to blocks, deducting rewards for those not online and slashing the ETH rewards from malicious actors.
The key function of the Beacon Chain is to manage the proof-of-stake protocol itself and all of the shard chains. There are a number of aspects to this: managing validators and their stakes; nominating the chosen block proposer for each shard at each step; organizing validators into committees to vote on the proposed blocks; applying the consensus rules; applying rewards and penalties to validators; and, being an anchor point on which the shards register their states to facilitate cross-shard transactions. The important note though is that the Beacon chain cannot run smart contracts, that’s what the shard chains will be for.
The Beacon Chain is the coordination mechanism of the new network, responsible for creating new blocks, making sure those new blocks are valid and rewarding validators with ETH for keeping the network secure. Proof-of-stake has long been part of Ethereum’s roadmap, and addresses some of the weaknesses of proof-of-work blockchains such as accessibility, centralization and scalability. Instead of miners expending energy to validate blocks, randomly selected validators (each containing their stake of 32 ETH) propose new blocks, which are voted on by other validators.
With the Beacon Chain and proof-of-stake system now in place, the next stage of Ethereum 2.0 is establishing shard chains, which will upgrade Ethereum’s data capacity, making the network faster and more scalable. Ethereum 2.0 will spread the network load across 64 separate shards, with one Beacon Chain to rule them all.
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Methodology
In this dashboard, we will analyze decentralization post merge status with ethereum beacon chain, using the ==ethereum beacon chain tables==, which is available on Flipside, from different aspects.
Decentralization isn’t a spectrum. It is one side of a sliding scale. And in crypto, finding an objective middle that distinguishes between centralized and decentralized projects is close to impossible. It is a subjective endeavor where projects can only measure their degree of decentralization or centralization in relation to each other. And because this measurement is essential to communicating how resistant a blockchain is against censorship and attacks, centralization accusations from competing projects are a common and persistent occurrence.
It is no surprise, then, that the debate on Ethereum decentralization surged after its transition to proof-of-stake. After such a major event, investors and builders across the crypto community were motivated to defend the decentralization ranking of their consensus protocol. Therefore, we will use the following information to investigate this issue:
Technical:
> Ethereum Tables:
> ethereum.beacon_chain.fact_deposits > > ethereum.beacon_chain.fact_attestations > > ethereum.beacon_chain.fact_blocks > > Ethereum Merge Date: > > 2022-09-15
Findings
In the chart, we can see the number of deposits made on a daily basis since September 15, 2022. Please note that Ethereum Merge occurred on September 15, 2022. On September 15, 143 deposits have been made, which is the lowest number. A day after the event of the Ethereum Merge, on September 16, a total of 1173 deposits have been made. That is, we see a 720% increase in deposit transactions, which is a sign of trust in the Ethereum team, which has successfully carried out Merge operations and managed to gain the trust of users. It should be considered, before the Ethereum merge, there were many news and rumors that the merge will not be successful and will cause Ethereum to be destroyed and all altcoins to be destroyed. These news and rumors were spread by Bitcoin fans.
Findings
In the two charts on the right, we can see the status of the validators. As we can see in the graph, the largest number of validators were active on September 23, 2022. Almost 3,500 validators were active on September 23, of which 1,726 are new validators. The Ethereum merger event happened on September 15th, and we can see that a week after the Ethereum merger, users' trust in the operation of the merger has increased, causing 1,726 new validators to be added to Ethereum. From September 28 to October 19, we see a decrease in the number of validators. From October 19 to November 8, the status of validators is normal. But on November 9, we see a decrease again, the main reason of which can be the fear of crypto market activists due to the FTX exchange crisis. Of course, the crisis of the FTX exchange has caused the entire crypto market to face a serious crisis and the market value has fallen sharply.
In the cumulative chart, we can see that the number of validators has reached 36092 since September 15, which indicates the increase in the participation of users under the title of validator.
Findings
In the chart on the left, we see the number of slots and validators on a daily basis. The highest number of slots and validators was on September 23, 2022. On this date, there were 1803 validators in 118 slots. The lowest number of validators and slots was on September 15th, the time of Ethereum Merge operation.
Findings
In two charts we can see the status of slashing in the blocks. More than 407,000 blocks have been in unslashed state and have been created successfully. And only 23 blocks have been slashed. As we can see, after the ethereum merge, the performance of the blocks has increased and the amount of slashing has reached its lowest value, which indicates the success of the ethereum merge operation and the increase in the performance of the ethereum network.
Conclusion
In this dashboard, we will analyze Decentralization Post Merge status with ethereum beacon chain, using the ethereum beacon chain tables. We observed that the number of validators has increased significantly after the Ethereum merge, and this has led to an increase in the number of deposits. The slashing status of the blocks has improved and almost 100% of the blocks are without slashing, which has increased the performance of the Ethereum network. We also found that validators generally understand the value of decentralization and the threat centralization poses to network credibility. The continuing rise of validator participation after the Merge is a sign that the network is maintaining a healthy level of participation and isn’t facing an existential risk of exploitation. Validators also understand the threat that decentralization poses to Ethereum.
Some of the items we reviewed in this dashboard:
> Total Number of Deposits: 38.6k > > Total Number of Active Validators: 36.1k > > Number of New Validators Per Day: 622 > > Total Number of Slots: 2500 > > Total Volume of Deposit: 1.151M ETH > > Average Volume of Deposit: 29.9 ETH > > Minimum Volume of Deposit: 1 ETH > > Maximum Volume of Deposit: 32 ETH > > Average Number of Deposits: 39
Findings
We understand from the charts, validators generally understand the value of decentralization and the threat centralization poses to network credibility. The continuing rise of validator participation after the Merge is a sign that the network is maintaining a healthy level of participation and isn’t facing an existential risk of exploitation.
Validators also understand the threat that decentralization poses to Ethereum. It has been a contested topic, especially since 2018, when former SEC Director Bill Hinman gave his thoughts. In short, he made a statement that alluded to how a digital asset trumps the Howey test. He assessed that an investment contract would no longer exist if a crypto asset or DeFi platform were sufficiently decentralized.
The key to passing this test was that a platform or protocol would no longer require the promoter or original operator to perform “entrepreneurial efforts.” If that key moment happened, then the “information asymmetries between that enterprise and its investors might diminish to the point where the protections of the securities laws were no longer necessary.”
Regulators tend to agree today that blockchains fall along this scale of centralization to decentralization. They, like the competing protocols, cannot agree on the exact degree to which a project achieves an exemption from security laws enforcement.
Regardless of where they settle, core Ethereum developers continue to make efforts and commitments to further decentralization. Since April 2022, Ethereum’s decentralization level has risen by 50%.