Ethereum Redesign Pose Danger Of Generating A New Class Of Crypto Kingpins

The much-anticipated upgrade of Ethereum will introduce new blockchain participants known as builders, a move that risks altering the power structure of what is arguably the most commercially significant cryptocurrency network.

Under the current system, networks of computers known as miners extract transactions from a unique data pool and organize them into blocks that are added to the blockchain.

The elimination of the miners is part of a strategy to reduce energy consumption.

After the scheduled September upgrade referred to as the Merge, the builders will compile transactions into blocks, which they will then send to the validators.

The validators will ratify the sequence of blocks that will comprise the upgraded blockchain.

This seemingly nerdy change, which is part of the MEV-Boost software upgrade, has the potential to initially increase Ethereum's centralization.

While more than 416,000 validators are already lined up to process transactions, only a handful of participants have committed to serving as builders.

The largest is Flashbots, which produces open-source trading bot software.

Flashbots is currently the dominant method for miners to collect transaction fees from traders by allowing their transactions to front-run or otherwise bypass others.

Others are considering becoming builders out of apprehension that Flashbots and similar entities will gain too much power.

It kills decentralization, according to Uri Klarman, CEO of BloXroute Labs, a network of servers that allows traders to send transactions to miners more quickly.

Approximately forty percent of the total trading volume of decentralized finance applications, which allow users to trade, lend, and borrow coins, is routed through the network, he stated.

Klarman warned that a powerful digital wallet such as MetaMask, which allows users to buy, sell, and receive cryptocurrency, could become a "kingmaker."

With 30 million users, MetaMask is the most popular non-custodial cryptocurrency wallet.

Klarman stated that a wallet service could favor one builder over all others or decide to act as a builder, thereby controlling the flow of transactions.

MetaMask is owned by ConsenSys, a New York-based company founded by Joseph Lubin, co-founder of Ethereum. The software company disregards the issue.

Taylor Monahan, global product lead for MetaMask, stated, "We will never send all of MetaMask's transactions to a single builder or provider."

"The value of MetaMask derives from its role as a portal to an exciting, vibrant, diverse, and fair ecosystem.

MetaMask will always strive to make decisions that promote a decentralized and healthy Ethereum."

The builder-validator role split was conceived as a means to increase Ethereum's decentralization and strip validators of their power.

However, having too few builders on the upgraded Ethereum chain raises the possibility of complications.

They could prohibit certain transactions from being added to blocks.

This month, Flashbots blacklisted wallets associated with Tornado Cash after the US Treasury Department sanctioned the mixer protocol.