A recent survey conducted by Christine Kim, a researcher at Galaxy Digital, revealed significant misconceptions within the Ethereum community regarding the economic security of blockchain. The survey, which asked the crypto community to rate the ETH security threshold involved in securing the blockchain, indicated a lack of awareness of the real risks of an attack.
The respondents to the survey has displayed the following beliefs regarding the security of Ethereum:
- 44.9% believe that securing Ethereum requires 100% of all ETH staked, or $110 billion, or 31.4 million ETH.
- 20.4% thought 66.6% of the ETH staked was enough, which equates to $73.4 billion, 20.9 million ETH.
- 34.7% believe that only 33.3% of the ETH staked, or $36.7 billion or 10.4 million ETH, was necessary for security.
How vulnerable is Ethereum?
Responding to these misconceptions, Christine Kim highlighted the real vulnerabilities of Ethereum’s proof-of-stake (PoS) mechanism in a detailed follow-up to in play to attack Ethereum. 33% is enough to disrupt the finality, 50% to prolong a chain split and 66% to double spending..”
She added: “Security depends primarily on the network’s ability to penalize investors by burning a large portion of the value they have locked up. The more serious the attack, the more value players stand to lose. It’s important to understand what’s really at stake here (pun well intended).
Further elaboration from the Ethereum Foundation explains the technical underpinnings of these vulnerabilities. A foundation article, cited by Kim, states: “Attackers using >= 33% of total participation making all of the previously mentioned attacks more likely to succeed… 33% of the ether staked is a benchmark for an attacker because with anything above that amount they have the ability to prevent the chain from finalizing without having to finely control the actions of other validators.
For attacks involving 34% of total participation, the article details a possible “dual purpose” scenario in which an attacker can simultaneously manipulate the validation of two conflicting blockchain forks. This form of attack is characterized by significant coordination and control over the timing of messages within the network, which poses a high risk due to a potential reduction in the entire amount staked by the attacker.
Higher levels of controlled staking, such as 50% and 66%, increase the risk of more serious disruptions, including prolonged chain splits and censorship or rollback of transactions. The foundation’s article states: “With more than 50% of the total stake, the attacker could dominate the fork choice algorithm… allowing the attacker to censor certain transactions, carry out short-range reorganizations and extract as many MEVs as possible by reorganizing the blocks in their favor. »
Defense against these threats includes “idle leakage,” a mechanism that gradually reduces the ether staked by non-participating or malicious validators, and the social layer of consensus within the Ethereum community on the chain to continue in the event of a split.
These revelations highlight the importance of community awareness and technical safeguards to maintain the security and integrity of the Ethereum network. They point out that while Ethereum’s PoS system offers several security benefits, it also requires vigilant monitoring and preparation to act against potential attacks.
3 Trends in ETH Staking
As the Ethereum staking landscape evolves, several key trends have emerged, reshaping how stakeholders interact with and benefit from the staking process.
Tom Wan, researcher at 21.co, Underlines these in a recent article on X:
- Rise in popularity of re-staking: Since 2024, there has been a significant shift towards re-staking in the Ethereum ecosystem. Re-staking contributions increased from 10% to 60% of the total ETH staked. Clean diaperin particular, has become the second largest DeFi protocol on Ethereum, holding a total value locked (TVL) of $15 billion, representing 13% of all ETH staked.
- Decline in Lido’s market share: The rise of liquid restaking protocols has significantly impacted Lido’s dominance in the Ethereum staking market. The part of the Lido fell below 30%, influenced by the growth of new platforms like Etherfi, which became the second largest withdrawal of stETH since 2024, totaling withdrawals of 108,000 stETH.
- Centralized Exchange (CEX) Staking Decline: Centralized exchanges’ dominance in ETH staking has seen a slowdown, dropping from 29.7% to 25.8% since 2024. Kiln Finance recently overtook Binance to become the third largest ETH staking entity. Ether.fi is also gaining ground and is poised to further challenge Binance’s former dominance in the near future.
At press time, ETH was trading at $3,526.
Featured image created with DALL·E, chart from TradingView.com
