Ethereum’s Censorship Trial by Fire

The Breakdown

Blockworks

Investing, Business

4.8 • 786 Ratings

🗓️ 28 August 2022

⏱️ 18 minutes

🔗️ Recording | iTunes | RSS

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Summary

This episode is sponsored by Nexo.io, Chainalysis and FTX US. On this edition of “Long Reads Sunday,” NLW reads Nic Carter’s “If Ethereum Starts Slashing, It Burns.” - Nexo is a security-first platform where you can buy, exchange and borrow against your crypto. The company safeguards your crypto by relying on five key fundamentals including real-time auditing and insurance on custodial assets. Learn more at nexo.io. - Chainalysis is the blockchain data platform. We provide data, software, services and research to government agencies, exchanges, financial institutions and insurance and cybersecurity companies. Our data powers investigation, compliance and market intelligence software that has been used to solve some of the world’s most high-profile criminal cases. For more information, visit www.chainalysis.com. - FTX US is the safe, regulated way to buy Bitcoin, ETH, SOL and other digital assets. Trade crypto with up to 85% lower fees than top competitors and trade ETH and SOL NFTs with no gas fees and subsidized gas on withdrawals. Sign up at FTX.US today. - I.D.E.A.S. 2022 by CoinDesk facilitates capital flow and market growth by connecting the digital economy with traditional finance through the presenter’s mainstage, capital allocation meeting rooms and sponsor expo floor. Use code BREAKDOWN20 for 20% off the General Pass. Learn more and register at coindesk.com/ideas. - “The Breakdown” is written, produced by and features Nathaniel Whittemore, aka NLW, with today’s editing by Eleanor Pahl and research by Scott Hill. Jared Schwartz is our executive producer and our theme music is “Countdown” by Neon Beach. Music behind our sponsors today is “The Now” by Aaron Sprinkle and “The Life We Had” by Moments. Image credit: Yifei Fang/Getty Images, modified by CoinDesk. Join the discussion at discord.gg/VrKRrfKCz8.

Transcript

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0:00.0	Welcome back to The Breakdown with me, NLW.
0:09.2	It's a daily podcast on macro, Bitcoin, and the big picture power shifts remaking our world.
0:14.8	The breakdown is sponsored by nexus.i.o, chain aliasis, and FtX, and produced and distributed by CoinDes.
0:22.8	What's going on, guys? It is Sunday, August 28, and that means it's time for Long Read Sunday.
0:28.9	Before we get into that, however, if you are enjoying the breakdown, please go subscribe to it,
0:33.0	give it a rating, give it a review, or if you want to dive deeper into the conversation,
0:36.8	come join us on
0:37.5	the Breakers Discord. You can find a link in the show notes or go to bit.ly slash breakdown pod.
0:43.0	Also a disclosure, as always. In addition to them being a sponsor of the show, I also work with
0:47.5	FTX. This week for Longread Sunday, we're continuing the theme of censorship discussions
0:53.5	in the wake of OFAC sanctions
0:55.5	of tornado cash. We're going to be reading a new piece by Nick Carter called If Ethereum
1:00.7	starts slashing, it burns. Before we get into that, though, let me do an admittedly, radically
1:06.2	simplified overview to help set the frame. Ethereum, as you well know, is moving from proof of work to proof of stake.
1:13.9	In the upcoming proof of stake model, validators put Ethereum tokens at stake as a way to
1:18.8	participate in proof of stake consensus. There is then a random assignment of the right to propose
1:23.6	the next block among validators and a random committee of validators are assigned to sign the
1:27.7	block is valid or not. Validators are in control of which transactions they place in the block or
1:32.7	exclude from the block to a certain extent. A control that's also present in proof of work.
1:37.8	The mechanism to control bad behavior in Ethereum proof of state consensus is called slashing.
1:42.3	If a validator refuses to sign valid blocks
1:44.5	or proposes blocks that do not conform to the protocol rules, then their stake can be slashed.
	...

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