Ethereum Foundation

Ethereum researcher says staking reveals IP address, sparking privacy concerns

A researcher at the Ethereum Foundation says he had “internally” discovered that staking Ether reveals a user’s IP address information.

A researcher at the Ethereum Foundation has revealed that the IP addresses of Ether (ETH) stakers are monitored as part of a broader set of metadata, causing the cryptocurrency community to flag Ethereum for privacy concerns.

In an April 12 interview on the crypto podcast Bankless, EF researcher Justin Drake revealed that he learned this information “internally” — presumably, at the foundation.

The metadata Drake referred to is used to track a wide range of things, he explained:

“There’s a lot of metadata, you can look at deposit addresses, you can look at withdrawal addresses, you can look at fee recipients, you can look at IP addresses.”

Drake’s comments appeared to have taken Bankless host Ryan Sean Adams by surprise.

“So it’s a fairly Sybil resistant dataset of your most involved Ethereum citizens?” Adams asked.

“Exactly,” Drake responded.

The conversation was initiated when Drake predicted that “special airdrops” may become available for solo stakers — but not the industry heavyweights:

“Then you can identify, okay, we know who Kraken is, we know who Coinbase is, and we can just not give them an airdrop if the purpose of the airdrop is to airdrop to specific individuals that are running solo validators.”

The conversation caused a stir on Crypto Twitter.

Related: Crypto privacy is in greater jeopardy than ever before — here’s why

One Twitter user referred to Ether as the “real surveillance coin,” while another mocked Drake by sarcastically rehashing him: “We can stop censorship by censoring those we don’t like.”

Another described the situation as “central governance to a T.”

To resolve the privacy concerns, one Twitter user suggested that Ethereum users take on-chain privacy responsibilities into their own hands by installing a Linux operating system, using a Virtual Private Network (VPN) and storing crypto assets on a hardware wallet such as Ledger:

It isn’t the first privacy-related statement to have caused a stir in the crypto community either.

ConsenSys, the team behind Ethereum wallet MetaMask, began collecting IP addresses in November. The policy amendment was made to ensure that the firm could comply with Know Your Customer (KYC) and Anti-Money Laundering (AML) policies where necessary.

Cointelegraph contacted Drake and the Ethereum Foundation for comment but did not receive an immediate response.

Magazine: ‘Account abstraction’ supercharges Ethereum wallets: Dummies guide

Ethereum researcher says staking reveals IP address sparking privacy concerns

A researcher at the Ethereum Foundation said he had “internally” discovered that staking Ether reveals a user’s IP address information.

A researcher at the Ethereum Foundation (EF) revealed that the IP addresses of Ether (ETH) stakers are monitored as part of a broader set of metadata, causing the cryptocurrency community to flag Ethereum for privacy concerns.

In an April 12 interview on the crypto podcast Bankless, EF researcher Justin Drake revealed that he learned this information “internally” — presumably at EF.

The metadata Drake referred to is used to track a wide range of things, he explained:

“There’s a lot of metadata, you can look at deposit addresses, you can look at withdrawal addresses, you can look at fee recipients, you can look at IP addresses.”

Drake’s comments appeared to have taken Bankless host Ryan Sean Adams by surprise.

“So it’s a fairly Sybil resistant dataset of your most involved Ethereum citizens?” Adams asked.

“Exactly,” Drake responded.

The conversation was initiated when Drake predicted that “special airdrops” may become available for solo stakers — but not the industry heavyweights:

“Then you can identify, okay, we know who Kraken is, we know who Coinbase is, and we can just not give them an airdrop if the purpose of the airdrop is to airdrop to specific individuals that are running solo validators.”

The conversation caused a stir on Crypto Twitter.

Related: Crypto privacy is in greater jeopardy than ever before — here’s why

One Twitter user referred to Ether as the “real surveillance coin,” while another mocked Drake by sarcastically rehashing him: “We can stop censorship by censoring those we don’t like.”

Another described the situation as “central governance to a T.”

To resolve the privacy concerns, one Twitter user suggested Ethereum users take on-chain privacy responsibilities into their own hands by installing a Linux operating system, using a Virtual Private Network (VPN) and storing cryptoassets on a hardware wallet such as Ledger:

It isn’t the first privacy-related statement to have caused a stir in the crypto community either.

ConsenSys, the team behind Ethereum wallet Metamask began collecting IP addresses in November. The policy amendment was made to ensure that the firm could comply with Know Your Customer (KYC) and Anti-Money Laundering (AML) where necessary.

Cointelegraph contacted Drake and the Ethereum Foundation for comment but did not receive an immediate response.

Magazine: ‘Account abstraction’ supercharges Ethereum wallets: Dummies guide

‘Withdrawals are coming!’ — Ethereum devs confirm epoch for Shapella fork

Shapella will take effect at epoch 194,048, which is scheduled for 10:27:35pm UTC on April 12.

Ethereum validators will soon be able to withdraw their Ether (ETH) from the Beacon Chain, with the Shapella hard fork set to be activated on the Ethereum mainnet on April 12.

Shapella will take effect at epoch 194,048, which is scheduled for 10:27 pm UTC on April 12, Ethereum core developers confirmed.

The withdrawals will be enabled by Ethereum Improvement Proposal EIP-4895 by “pushing” staked Ether from the Beacon Chain to the Ethereum Virtual Machine (EVM), otherwise known as the execution layer.

The epoch, slot, and time were confirmed following a week-long deliberation between members of the Ethereum Foundation, which was led by Ethereum core developer Tim Beiko.

Tim Beiko suggested three epoch, slot and time combinations to members of EF two weeks ago. Source: Ethereum.org

While the hard fork will allow for partial and full withdrawals, several mechanisms are set in place to ensure a flood of Ether doesn’t disrupt the market.

There are now 17.81 million Ether staked on the Beacon Chain. At a current price of $1,776, this means $31.6 billion can be incrementally unlocked over time.

Staked Ether added to the Beacon Chain since it launched in December 2020. Source: Beaconcha.in.

While the Ethereum Foundation described the last testnet run on Goerli as “smooth,” there was a notable delay in activation time due to many validators not updating their client software.

However, Beiko is confident it won’t be an issue this time, as Ethereum validators will be economically incentivized to make the update for the mainnet.

Ethereum’s key hard forks

Because of EIP-4895, Shapella is considered the most significant hard fork on Ethereum since Paris — the Merge — changed the network consensus mechanism from proof-of-work to proof-of-stake on Sept 15.

Prior to that, London introduced EIP-1559 in August 2021, which introduced a base fee that users must pay instead of the old price auction method. While the validators still receive a block reward and tip, the base fee is burned, which is intended to make Ether deflationary over time.

Related: Ethereum’s Shapella transition is ‘on the horizon’

Berlin optimized gas costs for some EVM actions in April 2021, while Beacon Chain Genesis marked the first block that was produced on the proof-of-stake chain on Dec. 1, 2020.

Finally in December 2019, Istanbul served to improve denial-of-service attack resilience and make layer-2 scaling solutions based on SNARKs and STARKs more performant.

The Ethereum Foundation also announced last week that it doubled rewards for any bugs found in the Shapella code. Successful bounties may receive a reward anywhere between $2,000 and $250,000, depending on how “critical” the bug is.

Magazine: Crypto Twitter Hall of Flame: Lark Davis on fighting social media storms, and why he’s an ETH bull

Only 0.04% of Ethereum validators have been slashed since 2020, says core dev

Only 226 validators have been slashed since Ethereum staking began, with 75 of those coming from a single event in February 2021.

The Ethereum ecosystem has seen only 226 validators slashed since the launch of the Beacon Chain on Dec. 1, 2020 — amounting to just 0.04% of 524,060 validators, according to an Ethereum core developer.

Slashing is a process where a validator breaches the proof-of-stake consensus rules, which often results in the removal of that validator from the network and slashing a portion of the staked Ether (ETH) that the validator provided as collateral.

Such slim odds of being slashed were highlighted by Ethereum core developer “Superphiz” in a Feb. 23 Twitter post, which suggests that people shouldn’t be concerned about staking ETH for that particular reason.

The developer also explained “four emerging best practices” to reduce those odds even further.

One of these practices was to wipe any existing chain data on old staking machines and to reinstall and reformat the validator where necessary, said Superphiz, noting that many slashings occur due to “failed systems migrations.”

Superphiz then suggested using “doppelganger detection,” which checks whether the validator’s keys are active before starting the validation process.

While this can impact validator uptime, he explained that “perfect uptime” isn’t worth getting slashed in the grand scheme of things:

“It’s wise to throw away $0.06 to save $1700. (A slashing costs about 1 Ether).”

The developer said it is also worth watching buffers and logs on the Beacon Chain to become aware of any potential problems that may arise.

Log of the slashed validators on the Beacon Chain. Source: Beaconcha.in

If something feels wrong, Superphiz suggested “unplugging everything” and to “come back” when the problem has been identified and a proposed solution is set in place.

The developer also noted that over 150 of the 226 slashings have been caused by services rather than “home stakers.” 

Staked ETH and number of active validators on the Beacon Chain. Source: Beaconcha.in

Slashing can occur due to an “attestation” or a “proposal” violation, according to the Ethereum Foundation.

An attestation violation is one where a malicious validator attempts to change the history of a block or “double votes” by attesting two candidates for the same block.

A proposal violation occurs when a validator proposes and signs two different blocks for the same slot.

The majority of slashing events have come from attestation violations, according to data from beaconcha.in.

One of the largest slashing events occurred on Feb. 4, 2021, when staking infrastructure provider “Staked” had 75 of its validators slashed for producing competing blocks. Staked said the attestation violation came about due to a “technical issue.”

Related: What are the risks of the Ethereum Merge?

Since the Beacon Chain merged with the Ethereum proof-of-work chain on Sept. 15, only 35 of the total 226 slashings have taken place, according to beaconcha.in, which suggests that the Merge has not had a profound impact on slashing rates.

With about 16.7 million ETH staked (according to beaconcha.in) out of 120.4 million ETH currently in circulation  (according to CoinGecko), the percentage of ETH staked is about 13.9%.

ETH can be staked via a centralized exchange, by delegation to a third-party validator network, or by running on an independent node, which requires 32 ETH.

Breaking: Historic day for crypto as Ethereum Merge to proof-of-stake occurs

The Ethereum proof-of-stake consensus mechanism will cut energy consumption by a massive 99.95% compared to the proof-of-work system.

The Ethereum Merge has officially taken place, marking the full transition of the network to proof-of-stake (PoS). 

On Sept. 15 at 06:42:42 UTC at block 15,537,393, the long-awaited Merge saw the merging of the Ethereum mainnet execution layer and the Beacon Chain’s consensus layer at the Terminal Total Difficulty of 58,750,000,000,000,000,000,000, meaning the network will no longer rely on a proof-of-work (PoW) consensus mechanism.

Ether’s (ETH) price got a slight pump following the Merge in hourly metrics, currently trading at around $1,635, according to data from TradingView.

The Ethereum Foundation said the Merge will make the Ethereum network about 99.95% more energy efficient and will set the stage for future scaling solutions, including sharding.

Ethereum co-founder Vitalik Buterin celebrated the Merge with a tweet moments after the historical transition happened:

Speaking to Cointelegraph, StarkWare president and co-founder Eli Ben-Sasson said that “the immediate importance of the Merge is the dramatic effect on energy consumption.”

Ben-Sasson said it also marks “the first step in a process that will lead to exceedingly widespread adoption of Ethereum,” stating:

“It starts a chain reaction of changes. The end result will be the very broad use of Ethereum’s computing power and the general population using blockchain-based apps in many different areas of life.”

The Merge has come on the back of several years of hard work from the Ethereum Foundation.

Businesses that issue Ethereum-based exchange-traded products (ETPs) have been busy making their own adjustments about the Merge. Bradley Duke, CEO of the European crypto ETP issuer ETC Group, explained to Cointelegraph that the company has prepared a “forked version” of its ETH-based ETP in case there’s significant support for a PoW fork after the Merge.

“If enough people get behind a fork for whatever reason, we feel the free market will decide on what should live and what should not,” Duke added.

Related: It’s on! Where to catch the Ethereum Merge live

With the Merge complete, the “Surge,” “Verge,” “Purge” and “Splurge” are the final stages left on the Ethereum technical roadmap.

The Surge will increase scalability for rollups through sharding; the Verge will achieve statelessness through Verkle trees; the Purge will eliminate historical data and technical debt; and the Splurge will involve a number of small miscellaneous upgrades.

One of the biggest transitions in the history of blockchain didn’t go without opposition. ETHW Core, a group representing proof-of-work miners, announced that it will conduct a hard fork within 24 hours after the Merge.

Renowned designer Beeple celebrated the Merge with a sci-fi illustration:


The ‘launch of a rocket’ — Observers on the future of Ethereum post-Merge

With the Ethereum Merge only hours away, Cointelegraph spoke to industry experts about the transition to proof-of-stake today and what to look out for.

The Ethereum Merge is set to occur later today with the energy-efficiency focused transition expected to have a major impact on crypto investment and adoption, experts say. 

Speaking to Cointelegraph in the lead up to the Merge, StarkWare president and co-founder Eli Ben-Sasson noted that the Ethereum Merge will be the “first step in a process that will lead to exceedingly widespread adoption of Ethereum.”

The immediate importance of the Merge is the dramatic effect on energy consumption.

The Merge is expected to see Ethereum’s energy cut by 99.95% compared to its current Proof-of-Work (PoW) consensus mechanism, which requires large amounts of energy to be used in a competition to solve arbitrary mathematical puzzles.

“I think of the Merge like the development of the first solar fields,” added Ben-Sasson.

“We saw that we can slash the environmental impact of electricity production. We didn’t say ‘problem solved,’ but rather that if we’re generating electricity with less pollution, it’s time to double down on efforts to use the power more sparingly.”

Ben-Sasson believes the end result where the general population uses blockchain-based apps in many different areas of life, “and as naturally as people use smartphone apps today.”

CEO of crypto exchange Coinjar, Asher Tan says the Merge is set to change the narrative around crypto more broadly, pointing out that it’s incredibly rare for a tech sector to “execute such a drastic reduction in their energy intensity.”

“We believe that people are underselling the significance of the post-Merge 99.95% drop in energy usage,” noted Tan.

It makes the Ethereum network far more publicly palatable and opens the door for investors and companies that had remained crypto-agnostic due to its carbon footprint.

Despite optimism about Ethereum’s transition, there is still debate on whether the Merge has already been factored into Ether (ETH) price or not.

Charmyn Ho, head of crypto insights at crypto exchange Bybit, says their analysts have concluded there is “no consensus” amongst institutional investors or market makers regarding short-term trading around The Merge, but will instead be more likely to accumulate ETH and become hodlers.

Related: Only 10 hours to the Ethereum Merge: Here’s what you need to know

Meanwhile, most within the Ethereum “bubble” don’t appear to be concerned over whether the Merge will be a success or not.

Ethereum Co-Founder Joseph Lubin told Bloomberg yesterday he believes the transition will result in very little disruption to developers and users, and will be “as smooth as if your iPhone or laptop has upgraded its operating system overnight.”

StarkWare’s Ben-Sasson also sees the transition being a smooth one, suggesting the “Ethereum Foundation has prepared so meticulously for this moment, and inspires lots of confidence,” noting:

 “It will be a significant mark of success when the first block is produced by proof of stake. But this is like completing the launch of a rocket — we still have the rest of the journey ahead of us, which will pose its challenges.”

Lubin suggests that in his opinion, this is the third most important event in the crypto space, behind only the development of Bitcoin and Ethereum.

The ‘launch of a rocket’ — Observers on the future of Ethereum post-Merge

With the Ethereum Merge only hours away, Cointelegraph spoke to industry experts about the transition to proof-of-stake today and what to look out for.

The Ethereum Merge is set to occur on Sept. 15 at around 6am UTC, with the energy-efficiency-focused transition expected to have a major impact on crypto investment and adoption, experts say. 

Speaking to Cointelegraph in the lead-up to the Merge, StarkWare president and co-founder Eli Ben-Sasson noted that the Ethereum Merge will be the “first step in a process that will lead to exceedingly widespread adoption of Ethereum:”

“The immediate importance of the Merge is the dramatic effect on energy consumption.”

The Merge is expected to see Ethereum’s energy cut by 99.95% compared to its current proof-of-work (PoW) consensus mechanism, which requires large amounts of energy to be used in a competition to solve arbitrary mathematical puzzles.

“I think of the Merge like the development of the first solar fields,” added Ben-Sasson.

“We saw that we can slash the environmental impact of electricity production. We didn’t say ‘problem solved,’ but rather that if we’re generating electricity with less pollution, it’s time to double down on efforts to use the power more sparingly.”

Ben-Sasson believes the end result is when the general population uses blockchain-based apps in many different areas of life, “and as naturally as people use smartphone apps today.”

CEO of crypto exchange Coinjar, Asher Tan says the Merge is set to change the narrative around crypto more broadly, pointing out that it’s incredibly rare for a tech sector to “execute such a drastic reduction in their energy intensity.”

“We believe that people are underselling the significance of the post-Merge 99.95% drop in energy usage,” noted Tan:

“It makes the Ethereum network far more publicly palatable and opens the door for investors and companies that had remained crypto-agnostic due to its carbon footprint.”

Despite optimism about Ethereum’s transition, there is still debate on whether the Merge has already been factored into Ether’s (ETH) price or not.

Charmyn Ho, head of crypto insights at crypto exchange Bybit, says their analysts have concluded there is “no consensus” among institutional investors or market makers regarding short-term trading around the Merge, but will instead be more likely to accumulate ETH and become hodlers.

Related: Only 10 hours to the Ethereum Merge: Here’s what you need to know

Meanwhile, most within the Ethereum “bubble” don’t appear to be concerned over whether the Merge will be a success or not.

Ethereum co-founder Joseph Lubin told Bloomberg yesterday he believes the transition will result in very little disruption to developers and users and will be “as smooth as if your iPhone or laptop has upgraded its operating system overnight.”

StarkWare’s Ben-Sasson also sees the transition being a smooth one, suggesting that the “Ethereum Foundation has prepared so meticulously for this moment, and inspires lots of confidence,” noting:

“It will be a significant mark of success when the first block is produced by proof of stake. But this is like completing the launch of a rocket — we still have the rest of the journey ahead of us, which will pose its challenges.”

Lubin suggests that in his opinion, this is the third most important event in the crypto space, behind only the development of Bitcoin (BTC) and Ethereum.