Vitalik Buterin (Ethereum Co-founder) – Ethereum Reorgs After the Merge (Nov 2021)


Chapters

00:00:25 Fork Choice Rules and Reorganizations in Blockchain Networks
00:05:40 Fork Choice Rules and Reorgs in Proof-of-Work and Proof-of
00:12:14 Understanding Reorganization Attacks in Nakamoto and Gasper Blockchains
00:15:07 Ethereum Proof-of-Work to Proof-of-Stake Transition Security Considerations
00:19:45 Ethereum Merge and Beyond: Improving Security and Finality
00:23:03 Ethereum Reorg Mitigation Strategies
00:27:12 Addressing Staking Centralization in Ethereum

Abstract



Evolving Blockchain Security: An In-Depth Analysis of Fork Choice Rules, Reorgs, and The Ethereum Merge

In the ever-evolving landscape of blockchain technology, the intricacies of fork choice rules and their impact on network security have become a focal point. This comprehensive article delves into the complexities of various fork choice rules like Gasper, Tendermint, and the Nakamoto rule, examining their role in chain reorganizations (reorgs) and the overall stability of blockchain networks. Particularly, we scrutinize the shift from proof-of-work to proof-of-stake in the Ethereum network, highlighting the implications of the Ethereum Merge, strategies to combat staking centralization, and the future of blockchain security and decentralization.

Main Ideas:

1. Overview of Fork Choice Rules:

Fork choice rules, essential in blockchain networks, determine the valid chain among multiple possibilities. Common rules include the highest total difficulty (longest chain) in Nakamoto consensus and more complex systems like Gasper in Ethereum’s proof-of-stake.

Supplemental Information:

Fork choice rules can be categorized into four primary groups: Nakamoto-style, parallelized proof-of-work, BFT, and Gasper-Fortress. Nakamoto-style and BFT are the most familiar, but other combinations exist. Early proof-of-stake algorithms relied on longest chain-based rules, similar to proof-of-work.

2. The Dynamics of Reorgs:

Reorgs, critical in assessing blockchain security, vary across consensus mechanisms. In Nakamoto consensus, reorgs are relatively frequent and easier for attackers, whereas in Gasper and Tendermint, they are rare and require significant effort.

Supplemental Information:

In Nakamoto consensus (proof-of-work), a single block can be reorged by two blocks or even a single block, requiring only two actors (or sometimes one), making it less secure. In Gasper (proof-of-stake), a large committee of attesters must be overcome to reorg a block, requiring a significant portion of the total stake to be controlled, although current weaknesses in the Gasper-Fortress rule allow reorgs with less than 50% stake. In Tendermint (proof-of-stake), reorgs never happen unless there is an extreme attack, and social mechanisms are used to recover from such scenarios.

3. Proof-of-Work vs. Proof-of-Stake:

These consensus mechanisms differ fundamentally in validation processes: miners solving puzzles in proof-of-work and validators staking tokens in proof-of-stake. Each has its trade-offs: proof-of-work is secure but energy-intensive, while proof-of-stake offers efficiency at potential security costs.

Supplemental Information:

Fork-choice rule and proof-of-work/proof-of-stake are separate concepts. Proof-of-stake is preferred, and recent amendments to the crypto bill exclude both proof-of-work miners and proof-of-stake validators. The merge’s reorg solution is due to the Nakamoto-style fork-choice rule, not proof-of-stake.

4. Finality and Blockchain Security:

Finality, the point at which transactions become irreversible, varies between proof-of-work and proof-of-stake. Stronger resistance to reorgs enhances security, with proof-of-stake systems generally offering better finality.

Supplemental Information:

Tendermint and many proof-of-stake designs provide instant finality. Proof-of-work can’t inherently provide finality due to potential hash power attacks. A hack like Puzzle Towers could enable finality in proof-of-work, but it’s impractical.

5. Vitalik Buterin’s Analysis of Reorgs:

Buterin highlights the differences in reorg strategies and implications in Nakamoto and Gasper consensus. Game theory implications suggest a smoother gradient for defection in Nakamoto, making reorgs more viable than in Gasper.

Supplemental Information:

In Nakamoto consensus, an attacker with less than half of the network’s stake can reorganize the chain by withholding their block and attestations, allowing other validators to attest to a different block, which the attacker can then reveal to overturn the accepted block.

In Gasper, the attacker needs a larger group of validators to successfully reorg, and all of them need to join the reorg strategy simultaneously, making it less attractive for validators to defect.

6. The Ethereum Merge:

A pivotal development, the Ethereum Merge marks the transition from proof-of-work to proof-of-stake, altering the fork choice rule to LMD-Ghost-Fortress. This shift aims to enhance security against reorgs and addresses concerns like staking centralization.

Supplemental Information:

The LMD Ghost Parallelized Proof-of-Work Rule is inspired by the original GHOST rule for proof-of-work and selects the child with the most descendants, not just the longest chain, allowing for frequent forking and parallel attestations.

7. Staking Centralization and Regulatory Challenges:

Centralization in staking poses risks, and Ethereum is exploring various strategies to mitigate this, including decentralized staking pools. Regulatory challenges are also a significant focus, with the Ethereum Foundation engaging with stakeholders to advocate for the crypto and DeFi industry.

Supplemental Information:

Decentralized Pool Technology:

– Vitalik emphasizes the ongoing development of decentralized pool technology to address staking centralization.

– Multi-party computation pools offer a potential solution to increase decentralization.

Higher Validator Count and Reduced Minimum Deposit:

– Increasing the validator count and reducing the minimum deposit size are considered as measures to enhance staking decentralization.

– A youth research post explores this topic in detail.

Easy-to-Execute Protocol Rules:

– Efforts are underway to modify Ethereum’s client and protocol rules to make them more accessible and reduce hardware requirements.

– The goal is to mitigate staking centralization by lowering barriers to entry.

EF’s Response to Regulatory Threats:

– The Ethereum Foundation (EF) engages with various stakeholders to address regulatory threats to crypto and DeFi in the United States.

– The EF supports organizations like Coin Center and is open to assisting government engagement efforts.

– Direct involvement in regulatory matters is limited due to the EF’s institutional structure.

Decentralized Staking Pools:

– Decentralized staking pools like Lido and RocketPool are seen as a positive step, but economic sustainability and MEV issues need to be addressed.

– True decentralization of validator functionality through MPC (multi-party computation) is yet to be achieved.

Delegation:

– Solo staking remains a priority, and maximizing support for it is essential.

– Delegation is an alternative approach that can be implemented without directly introducing a protocol feature called delegation.

– Improving the in-protocol functionality for changing staking keys is being explored.

On-Chain Reputation:

– Vitalik expresses skepticism about leveraging on-chain reputation at the base layer due to uncertain economics and lack of confidence in designs that can minimize centralization risks.



The transformation of blockchain networks, particularly Ethereum, highlights a significant evolution in consensus mechanisms, fork choice rules, and overall network security. The Ethereum Merge is not just a technical upgrade but a strategic move towards a more secure, efficient, and decentralized future. As the technology matures, addressing challenges like staking centralization and regulatory pressures remains crucial for the long-term viability and acceptance of blockchain technology.


Notes by: TransistorZero