Ethereum rallies 5% as Vitalik Buterin addresses concerns raised by ETH community
- Ethereum developers have seen harsh criticism from several crypto community members following its slow price growth.
- Vitalik Buterin has responded to these criticisms, stating how developers have been addressing some of the concerns of community members.
- Ethereum could see a further rise as it outperforms Bitcoin for the first time in May.
Ethereum (ETH) saw a quick rally on Friday, posting a 5% gain as its co-founder, Vitalik Buterin, responded to recent criticisms from the crypto community.
Read more: Ethereum drops below $3,000 again, spot ETH ETF sparks debate in crypto community
Daily digest market movers: Processing speed, Buterin's response
Ethereum scaling solutions and layer 2s are yet to register higher processing speed compared to many other layer 1 blockchain networks despite the recent Dencun upgrade, according to data from CoinGecko. Ethereum and its scaling solutions achieved a total of 500 transactions per second (TPS), 50% lower than Solana and 70% lower than Sui.
Meanwhile, following Ethereum's slow price growth compared to Bitcoin and Solana, many crypto community members on X have targeted core Ethereum developers through a series of criticisms.
Many criticized Ethereum's "acceptance of MEV" after the Department of Justice arrested two brothers for an MEV-related exploit on the number one smart contract blockchain. Others complained that Ethereum folks need to post more about the protocol and its updates.
Read more: US Department of Justice charges brothers for alleged 12-second MEV fraud
One X user, @chainyoda, shared his plight:
Ethereum has a very bad case of cosmos infection. Last cycle the ethereum discourse was human usable apps like uniswap and aave. This cycle all the ethereum devs and investors speak only PhD eg based sequencer, shared sequencer, intercontinental rollup... and one else gives a fk
— chainyoda (@chainyoda) May 17, 2024
More importantly, Geth core developer Peter Szilagyi expressed dissatisfaction with the several upgrades the Ethereum network has undergone in a short while. "My criticism is that you (Ethereum developers have) [...] have abandoned due process and rushed to hotfix things."
Private transactions. Check.
— Péter Szilágyi (karalabe.eth) (@peter_szilagyi) May 16, 2024
Proprietary settlements (MEV). Check.
Staked Ether issued by central auth. Check.
0 local miner tips will nuke local stakers.
Gigagas hardware reqs will nuke local nodes.
Voila, the banking system recreated. All privately held and operated.
The increased concerns sparked a series of posts from several Ethereum core contributors, including Josh Stark, Tim Beiko, Dankrad Feist and Ethereum co-founder Vitalik Buterin.
Buterin gave a detailed response to these criticisms in a blog post, stating that the concerns raised by community members are valid and "are already being addressed by protocol features that are already in-progress."
He also stated that several other concerns from the community can be "addressed by very realistic tweaks to the current roadmap." Buterin addressed three major areas that he believes form the majority of the concerns raised:
- MEV and builder dependence
- Liquid staking
- Hardware requirement of nodes
He discussed how Verkle trees, EIP-4444, robust solo staking, and a peer-pressuring development process for MEV reduction can solve these issues.
"There is a near-unlimited number of blockchain projects aiming for the niche of ‘we can be super-fast, we'll think about decentralization later.’ I don't think Ethereum should be one of those projects," said Buterin.
"We should have deep respect for the properties that make Ethereum unique, and continue to work to maintain and improve on those properties as Ethereum scales," he added.
ETH technical analysis: Ethereum could attempt to break $3,251 resistance
Ethereum posted a 5% gain on Friday after it broke the $3,103 resistance. The rise follows a general appreciation of assets in the crypto market. However, Ethereum notably outperformed Bitcoin in the past 24 hours after several community members highlighted the ETH/BTC ratio was nearing a bottom.
Also read: Ethereum shows slight bullish signs, SEC faces several hurdles in attempts to deny spot Ethereum ETFs
As a result, ETH short liquidations are outpacing longs for the first time. With a total liquidation of $24.5 million in the past 24 hours, short liquidations sit at $17.54 million compared to $6.76 million long liquidations, according to data from Coinglass.
The recent ETH rise has also caused a spike in ETH open interest, which increased by 6.6% in the past 24 hours. This signifies renewed investor interest in ETH, meaning it may see less sideways movement in the coming days.
ETH/USDT 4-hour chart
If renewed confidence prevails, ETH could attempt to break the $3,161 resistance and, if successful, move past the $3,251 mark. However, it's important to watch out for volatility in the days leading up to the Securities & Exchange Commission (SEC) decision on spot ETH ETFs on May 23.
Ethereum FAQs
Ethereum is a decentralized open-source blockchain with smart contracts functionality. Serving as the basal network for the Ether (ETH) cryptocurrency, it is the second largest crypto and largest altcoin by market capitalization. The Ethereum network is tailored for scalability, programmability, security, and decentralization, attributes that make it popular among developers.
Ethereum uses decentralized blockchain technology, where developers can build and deploy applications that are independent of the central authority. To make this easier, the network has a programming language in place, which helps users create self-executing smart contracts. A smart contract is basically a code that can be verified and allows inter-user transactions.
Staking is a process where investors grow their portfolios by locking their assets for a specified duration instead of selling them. It is used by most blockchains, especially the ones that employ Proof-of-Stake (PoS) mechanism, with users earning rewards as an incentive for committing their tokens. For most long-term cryptocurrency holders, staking is a strategy to make passive income from your assets, putting them to work in exchange for reward generation.
Ethereum transitioned from a Proof-of-Work (PoW) to a Proof-of-Stake (PoS) mechanism in an event christened “The Merge.” The transformation came as the network wanted to achieve more security, cut down on energy consumption by 99.95%, and execute new scaling solutions with a possible threshold of 100,000 transactions per second. With PoS, there are less entry barriers for miners considering the reduced energy demands.
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