5 ms·

I think it will become centralized, but not in the way that you think. We're likely to see base-layer transaction censorship, since nodes are no longer allowed

I think it will become centralized, but not in the way that you think. We're likely to see base-layer transaction censorship, since nodes are no longer allowed to disagree with each other (or they'll be slashed), and far more than 33% of staked value is in the USA (and subject to OFAC compliance). I explained in more detail here: https://news.ycombinator.com/item?id=32532604 https://news.ycombinator.com/item?id=32532604

spywaregorilla 4y ago
Who gets to decide if something should be slashed
- jsheard 4y ago
  It's determined by the majority of validators. There's two ways this can go - either the majority of validators enforce OFAC sanctions, effectively giving OFAC authority over the entire Ethereum network since validators who go against it will be slashed, or the majority of validators don't enforce sanctions, in which case validators with any presence in the US must put themselves in legal jeopardy to avoid getting slashed.
  - spywaregorilla 4y ago
    So if I acquire 51% of validation power, and you catch me cheating, the person who gets to decide if I get punished is me?
    - jsheard 4y ago
      Technically yes, but I think the idea is that it would be incredibly expensive and unproductive to pull off such an attack. You'd first have to acquire billions of dollars worth of Ethereum, and then launching that attack would torpedo any trust in the network and send the value of Ethereum to zero, lighting your billions of dollars on fire. The theory is that it's too expensive to realistically do for the lulz or out of spite, and it wouldn't make economic sense to do it for profit. As for how that theory will interact with reality, who knows.
      - TakeBlaster16 4y ago
        Or you could be a government with billions staked in your jurisdiction, and bureaucratic indifference to the outcome of your regulatory actions.
        dane-pgp 4y ago
        A government spending billions of taxpayer dollars on an attack which can be reversed in an afternoon with a new software update is more likely to be an existential threat to that government than to Ethereum. The sort of software update I'm imagining is one which just zeroes the holdings of the government wallet(s), and continues the chain from just before they launched their attack.
        TakeBlaster16 4y ago
        I think you lost the context of the thread. I'm not suggesting they will spend billions on crypto. I'm suggesting they will use their regulatory teeth to compel USA companies that have already staked billions worth of their customers' ETH to comply with the sanctions on Tornado Cash addresses, consequences/slashing be damned. OFAC has lawyers on payroll, so this would literally be free for them.
        dane-pgp 4y ago
        > I'm suggesting they will use their regulatory teeth to compel USA companies... If there's one group that the government care more about the finances of than taxpayers, it's companies. Destroying the wealth of these companies in their jurisdiction is an attack that can only be performed once, and provides no long term benefit, except for people outside their jurisdiction.
      - spywaregorilla 4y ago
        So what happens if I instead submit a billion slasher reports that claim the eth foundation nodes have all lied, none of which contain valid evidence, and continue to do so every second. If there's no gatekeeper for these reports, then they're all valid. And they still need to be voted on, right?
  - cypress66 4y ago
    Sorry that's not correct. See https://news.ycombinator.com/item?id=32582316 https://news.ycombinator.com/item?id=32582316
    - deleted 4y ago
      [deleted]
- cypress66 4y ago
  It's baked into the protocol. A single validator can cryptographically prove that some other validator did something not allowed, and generate a special transaction that slashes that validator and gives you some ETH as a reward. A common misconception here is that slashing happens based on what transactions you include or not. False. Slashing happens because of things such as proposing or attesting twice.
cesarb 4y ago
There's a third option you didn't mention in your comment: instead of signing the block with these banned transactions (option 1), or signing an alternate block with other transactions (option 2), the node could pretend to be offline for that block (option 3). Instead of being slashed, the node would then be subject only to the much smaller inactivity leak for these blocks. The only question then is how indirect these sanctions can be. The node might not be allowed to validate a block with banned transactions, but what about the next block, which does not include these blocked transactions, only a pointer to a block with these banned transactions? What about the second next block, which has only a pointer to a block with a pointer to a block with these banned transactions? How many blocks until the link is tenuous enough that the validators under USA jurisdiction could validate again without fear?
- dcolkitt 4y ago
  One thing to keep in mind is that Ethereum is nothing but a network of computers passing messages to each other. Those messages are considered speech from a Constitutional perspective. Same as you sending a text message to your friend. Therefore normal free speech protections almost certainly apply, and most relevantly the Brandenburg test for imminent lawless action. Suppose Tony texts Paulie and tells him to wack a guy. That's illegal, unprotected speech, because it directly leads to imminent lawless action. Similarly the wallet owner who signs and broadcasts an Ethereum transaction to send money to North Korea would bass the Brandenburg test because it obviously leads to imminent lawless action. The validator who builds the block that includes an illegal transaction is an interesting question. On the one hand by building the block, one could argue that they're instrumental in putting carrying out the illegal transaction. OTOH one might argue that if the transaction is in the network (and priced appropriately) it almost certainly will get included on-chain eventually. Therefore the validator might argue that it's activity doesn't create any imminent lawless activity, because the transaction being in the mempool is already fait accompli. The validator is more like the reporter writing about a crime in the newspaper. But what I'm nearly certain of is that building on top of a chain with a previously finalized illegal transaction is okay. It's certainly not illegal to talk about a crime that's already happened. The further a block gets away from the initial block, then the less imminent the illegal action becomes. SCOTUS has historically held a very high standard for Brandenburg, which is why it's not even illegal to advocate for genocide or the violent overthrow of the American government.

spywaregorilla 4y ago

Who gets to decide if something should be slashed

jsheard 4y ago
It's determined by the majority of validators. There's two ways this can go - either the majority of validators enforce OFAC sanctions, effectively giving OFAC authority over the entire Ethereum network since validators who go against it will be slashed, or the majority of validators don't enforce sanctions, in which case validators with any presence in the US must put themselves in legal jeopardy to avoid getting slashed.
- spywaregorilla 4y ago
  So if I acquire 51% of validation power, and you catch me cheating, the person who gets to decide if I get punished is me?
  - jsheard 4y ago
    Technically yes, but I think the idea is that it would be incredibly expensive and unproductive to pull off such an attack. You'd first have to acquire billions of dollars worth of Ethereum, and then launching that attack would torpedo any trust in the network and send the value of Ethereum to zero, lighting your billions of dollars on fire. The theory is that it's too expensive to realistically do for the lulz or out of spite, and it wouldn't make economic sense to do it for profit. As for how that theory will interact with reality, who knows.
    - TakeBlaster16 4y ago
      Or you could be a government with billions staked in your jurisdiction, and bureaucratic indifference to the outcome of your regulatory actions.
      - dane-pgp 4y ago
        A government spending billions of taxpayer dollars on an attack which can be reversed in an afternoon with a new software update is more likely to be an existential threat to that government than to Ethereum. The sort of software update I'm imagining is one which just zeroes the holdings of the government wallet(s), and continues the chain from just before they launched their attack.
        TakeBlaster16 4y ago
        I think you lost the context of the thread. I'm not suggesting they will spend billions on crypto. I'm suggesting they will use their regulatory teeth to compel USA companies that have already staked billions worth of their customers' ETH to comply with the sanctions on Tornado Cash addresses, consequences/slashing be damned. OFAC has lawyers on payroll, so this would literally be free for them.
        dane-pgp 4y ago
        > I'm suggesting they will use their regulatory teeth to compel USA companies... If there's one group that the government care more about the finances of than taxpayers, it's companies. Destroying the wealth of these companies in their jurisdiction is an attack that can only be performed once, and provides no long term benefit, except for people outside their jurisdiction.
    - spywaregorilla 4y ago
      So what happens if I instead submit a billion slasher reports that claim the eth foundation nodes have all lied, none of which contain valid evidence, and continue to do so every second. If there's no gatekeeper for these reports, then they're all valid. And they still need to be voted on, right?
- cypress66 4y ago
  Sorry that's not correct. See https://news.ycombinator.com/item?id=32582316 https://news.ycombinator.com/item?id=32582316
  - deleted 4y ago
    [deleted]
cypress66 4y ago
It's baked into the protocol. A single validator can cryptographically prove that some other validator did something not allowed, and generate a special transaction that slashes that validator and gives you some ETH as a reward. A common misconception here is that slashing happens based on what transactions you include or not. False. Slashing happens because of things such as proposing or attesting twice.

cesarb 4y ago

There's a third option you didn't mention in your comment: instead of signing the block with these banned transactions (option 1), or signing an alternate block with other transactions (option 2), the node could pretend to be offline for that block (option 3). Instead of being slashed, the node would then be subject only to the much smaller inactivity leak for these blocks. The only question then is how indirect these sanctions can be. The node might not be allowed to validate a block with banned transactions, but what about the next block, which does not include these blocked transactions, only a pointer to a block with these banned transactions? What about the second next block, which has only a pointer to a block with a pointer to a block with these banned transactions? How many blocks until the link is tenuous enough that the validators under USA jurisdiction could validate again without fear?

dcolkitt 4y ago
One thing to keep in mind is that Ethereum is nothing but a network of computers passing messages to each other. Those messages are considered speech from a Constitutional perspective. Same as you sending a text message to your friend. Therefore normal free speech protections almost certainly apply, and most relevantly the Brandenburg test for imminent lawless action. Suppose Tony texts Paulie and tells him to wack a guy. That's illegal, unprotected speech, because it directly leads to imminent lawless action. Similarly the wallet owner who signs and broadcasts an Ethereum transaction to send money to North Korea would bass the Brandenburg test because it obviously leads to imminent lawless action. The validator who builds the block that includes an illegal transaction is an interesting question. On the one hand by building the block, one could argue that they're instrumental in putting carrying out the illegal transaction. OTOH one might argue that if the transaction is in the network (and priced appropriately) it almost certainly will get included on-chain eventually. Therefore the validator might argue that it's activity doesn't create any imminent lawless activity, because the transaction being in the mempool is already fait accompli. The validator is more like the reporter writing about a crime in the newspaper. But what I'm nearly certain of is that building on top of a chain with a previously finalized illegal transaction is okay. It's certainly not illegal to talk about a crime that's already happened. The further a block gets away from the initial block, then the less imminent the illegal action becomes. SCOTUS has historically held a very high standard for Brandenburg, which is why it's not even illegal to advocate for genocide or the violent overthrow of the American government.