The Censorship Resistant Ethereum Protocol - Censors Headache

A CREP is important for decentralized cryptoeconomic systems. A CREP prevents the censors from altering any transaction made on the blockchain. This means that any party can transact on the network without worrying about government interference. Censorship-resistant protocols also make it impossible for censors to prevent any transaction from taking place on the network. It is also crucial for functioning financial protocols such as contracts for difference.

Turing Complete

Turing-complete is an additional feature to the Ethereum virtual machine (EVM), meaning that it can encapsulate any type of computation. This means it can loop through two methods: using the JUMP instruction to conditionally jump to a different location within a data structure or through “recursion.”  Additionally, Ethereum contracts can call other contracts, potentially looping through recursion. Moreover, malicious users can shut down full nodes and miners, using their ether balances and wallets to constrain other users' money.

One defense against censorship in Ethereum is the active fork choice rule. If three-fourths of validators refuse to process blocks during a fork, the blockchain will continue despite censored transactions. However, if the censor successfully blocks some or all transactions, the whole chain will be censored. This attack is a relatively easy way for cartels to steal money.

Security vulnerabilities

Researchers have been looking into the security vulnerabilities of the Ethereum blockchain since its inception; they have published papers that point to possible security vulnerabilities in Ethereum. While this research is limited to Ethereum, blockchain technologies seem to be people’s focus. In a survey published in Feb. 2020, Durieux et al. evaluated the current vulnerability detection tools and analyzed the Ethereum blockchain's main network. They conclude that while automated tools do not necessarily solve the problem, they allow for some security level.

There are several security vulnerabilities in the Ethereum blockchain, ranging from design to coding to operational. For example, a recent wargame, Ethernaut, shows how you can exploit Ethereum smart contracts. This attack relies on the defect in the TLS protocol, which allows a malicious actor to send commands without authenticating themselves. In addition, proof-of-work-based blockchains are vulnerable to the 51% attack. A third party can exploit several of these flaws.

The network is slow to update, which makes it vulnerable to exploits. The Ethereum project has made it a priority to address these vulnerabilities and make the network more secure. They also urge developers to apply the hotfix to the vulnerable code. A recent Ethereum network outage may have been due to the chain-split vulnerability, which could cause corruption of blockchain services and massive outages. The vulnerability, tracked as CVE-2021-39137, affected the official Golang implementation of the Ethereum protocol. The vulnerabilities would cause Geth instances to reject canonical chains, leading to an Ethereum network outage.

Reentrancy Attacks 

Reentrancy attacks are another common vulnerability in the Ethereum blockchain. The Solidity programming language incorporates these vulnerabilities and occurs when an adversary leverages an external call to a smart contract, forcing it to execute additional code or respond to itself. They have created countermeasures to address this vulnerability. One is called a single-function attack, and the other is a cross-function. Cross-function attacks occur when the target function shares its state with another function.

Transaction fees

To be effective, decentralized platforms must provide a level of trust. You can build an Ethereum platform on the blockchain. To ensure this, two key fields are essential for its anti-denial of service model: the STARTGAS field and the GASPRICE field. Gas is the basic computation unit, and each step requires 1 gas. Some operations cost more gas than others, such as adding data to state. As such, Ethereum charges 5 gas per byte of data.

As a result, Ethereum's credibility as a cryptocurrency has declined. Instead, it has become a captive of dealer banks. As a result, it is now difficult to maintain a high level of trust in transactions and fees. The Enterprise Ethereum Alliance has been formed to address these concerns. Its members include Accenture, BNP Paribas, BP, Cisco, Thomson Reuters, J.P. Morgan Chase, Banco Santander, and other big companies.

Censorship-resistant and transparent transactions are possible with Blockchain technology. Transaction fees incentivize miners to verify transactions, but disintermediation can eliminate them. In addition, transparency and two-factor authentication enable citizens and stakeholders to monitor government actions and participate in decision-making. And it's all protected by cryptography. Blockchain networks also reduce the risk of single-point failure and prevent unauthorized additions.

Ethereum's proof-of-stake merger

The move to proof-of-stake consensus, or PoS, adds a second layer of the regulatory moat to the digital asset. With a wider moat from regulatory effects and a commodity classification, The Merge is the preferred consensus mechanism among ESG advocates. In addition, this change will increase Ethereum's demand as it reaches an all-time high. Other improvements would resolve some of these issues while they linger and are likely to persist for a while.

The next big update to Ethereum's software will merge the Proof-of-Work execution layer with the Proof-of-Stake consensus layer. The change will ship sometime in 2022. Kiln, the final Merge testnet, included the move to Proof-of-Stake. Upgrades to public testnets will follow soon. Until then, we should expect more changes.

Ethereum's staking yield is likely to stay at the high single-digits with the merger. However, as the market cap of Ethereum approaches $400 billion, it's possible that the amount staked could double or triple. This could translate to an increase in market cap of 20-25%, which would be a staggering amount if compared to other popular mid-cap staking coins. For example, the Cardano (ADA-USD) token has consistently been around 70% of its market cap.

Ethereum's nonprofit setup

The for-profit and nonprofit Ethereum setup conflict have overshadowed the project's history. While Vitalik Buterin was the most influential figure in the development process, the founder of Ethereum reportedly alienated Di Iorio by insisting on a nonprofit structure. Buterin has made clear that he has no intentions of selling Ethereum or its assets. Buterin's position on the nonprofit setup is an underlying principle of Ethereum's success.

While most nonprofit organizations aim to help, the less fortunate, many false operators scam donors out of their money. Through the blockchain ecosystem, donors can trust that the nonprofit organization they're supporting is genuine. A smart contract can ensure that the nonprofit organization transfers funds to the intended beneficiaries. If the nonprofit organization doesn't meet its deadline, donors can even request a refund. The smart contract can also help establish trust between donors and charities, ensuring that their donations go to the right place.

The process of accepting cryptocurrency for nonprofits is relatively simple. Nonprofits should have a policy for accepting and storing cryptocurrency. The nonprofit should also have a process for approving gifts. The process is not difficult, but it requires the personal information of the nonprofit's leadership. The easiest way to get started is to use a third party. It is a much easier process than setting up an institutional wallet on your own.