Worries about decentralization: WBS ban and Ethereum infura

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2021-01-31 23:21 (UTC+8)

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The WSB incident, the revelation to Infura, the Ethereum node server caused by shutting down the server, is not shocking.

introduction:

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introduction:Bitcoin and Ethereum are the two largest decentralized projects in the world. The development of these two projects has provided the world with a new idea to expand the boundaries of mankind. From the beginning of its birth, it has been cultivating and exploring along the road of releasing third-party guarantees.Recently, the server of the WSB forum, where retail investors gather in the US stock market, has been blocked, and people have begun to turn their attention to decentralization. Ethereum is undoubtedly highly decentralized, but there is still a great risk of centralization.

The uproar of the WSB ban

Recently, an incident about WSB retail investors forming an army and harvesting short-selling institutions on a US stock GME, forcing institutional predators to disarm and surrender, has attracted widespread attention.

The full name of WSB is WallStreetBet, and the Chinese translation is "Wall Street Casino". It belongs to the Reddit sub-forum and is called "the base camp of retail investors".。

The ins and outs of the whole incident are that a large number of retail investors on this forum fought against Wall Street's short-selling predators. They bought the stock of GME frantically, and abruptly pulled a stock that was about to be delisted from $3 to more than $300.In the end, Wall Street's short-selling institutions suffered huge losses of billions of dollars, surrendered, and closed their positions.

Before the retail investors had time to relish the joy of victory, the institutions began to form a group, and since they couldn't beat it, they turned the table. Delete the stock code, unplug the network cable, and shut down the server.

Stock trading software commonly used by retail investorsRobinhood, announced the prohibition of opening positionsGME、AMC、NOK When at least 6 institutions short-sell stocks, only users are allowed to sell, not to buy. Other brokerages in the United States have similar operations, restricting transactions, increasing margins, and server downtime.The hedge funds on Wall Street can still trade normally, and in the end they directly banned the WSB server, causing the base camp of retail investors to collapse directly.

Behind this farce,What really deserves our reflection is not the superficial ups and downs of the plot, but a re-examination of the unreliability of the "third party" and the philosophy of "decentralization".We do not comment too much on corporate projects and centralized institutions. Here we mainly analyze decentralized agreements.

Ethereum and Infura

Ethereum is the second largest decentralized protocol in the world by market value. It is a decentralized programmable financial underlying network.From ICO to DAO, DeFi, and NFT, it provides more possibilities for the entire open financial market.Throughout its evolution, no matter how much demand for financial innovation emerges, its root lies in the large-scale infrastructure of Ethereum.

Compared with Bitcoin, Ethereum is a more complex operating system, which also leads to Ethereum's storage requirements much higher than Bitcoin, which undoubtedly increases the difficulty of using full nodes to verify ledgers.The Chase of Decentralization: Full Nodes for Bitcoin and EthereumIn this article, I briefly explained it.

Since most developers do not have the conditions to use the Ethereum full node, the third-party server Infura is heavily relied upon.

Infura processes approximately13 billionThis code request provides a way for developers to connect to the Ethereum network without running a full node. It is developed by the only provider "Ethereum Development StudioConsensys "Operation, which relies on cloud servers hosted by Amazon, the centralization risk of these two layers makes Infura likely to become a single point of failure for the entire Ethereum network.

As the Ethereum ecology becomes more and more prosperous, it has broken throughTrillion Market Cap, coupled with the strong rise of DeFi, we have to face up to this problem again.

All current DApps that use MetaMask also essentially depend on Infura, and almost all DApps may depend on Infura.

The effect of this is that developers and users are less likely to run full nodes, meaning the number of full nodes powering the network will drop.This also has other implications due to the lack of full nodes due to the risk that Infura could become a single point of failure.

For example, running a full node will allow users and developers to keep most sensitive activities locally, while Infura can accumulate data combinations from users, such as wallet addresses and IP locations, which adds another layer of privacy risk.

As the co-founder of Infura Michael Wuehlersaid:If every DApp in the world points to Infura, and we decide to shut down Infura, and we have the ability to do so, then those DApps will stop working.

Infura is hosted on Amazon, so if Amazon said "You know what? Infura's gone, go away." Most of the DApps wouldn't work.

Although Infura itself is working hard to reduce its dependence on Amazon, Ethereum developers are also developing light clients to reduce their dependence on Infura, but the results we see today are,enlightenment

enlightenment

The WSB incident, the revelation to Infura, the Ethereum node server caused by shutting down the server, is not shocking.When the market interests are large enough, greedy enough, and the impact of secondary market games and regulatory regulation is too great, we must be fully prepared for the worst results. This is a problem that all decentralized protocols should consider and study in depth. Especially applications developed on Ethereum.