Vitalik wants to burn the staked Ethereum of sanction complying validators
Beacon Chain validators holding 66% of the total stake would comply with sanction requests, igniting discussion on Ethereum censorship resistance.
In a recent Twitter poll on Ethereum censorship, Vitalik Buterin revealed that he voted to punish validators complying with censorship requests by burning their staked tokens.
Ethereum co-founder champions censorship-resistant approach
The poll was held by software engineer Eric Wall, who asked the Ethereum community if they would burn the staked tokens of validators who comply with censorship requests or “tolerate the censorship” and do nothing.
The majority of voters — 62%, including Buterin — opted for the former. Meanwhile, 9% voted to tolerate censorship, and 29% clicked show results. As of press time, several hours remain until the poll closes.
Wall’s poll was a response to a tweet from Lefteris Karapetsas, the founder of Rotkiap, a privacy-focused portfolio tracker, who asked five significant Proof-of-Stake validators if they would comply with censorship requests or respond to the request by closing their staking service.
Question for @LidoFinance, @coinbase, @krakenfx, @stakedus, @BitcoinSuisseAG
If regulators ask you to censor at the #ethereum protocol level with your validators will you:
A) Comply and censor at protocol level
B) Shut down the staking service and preserve network integrity https://t.co/UYVR2L6tB1
— Lefteris Karapetsas | Hiring for @rotkiapp (@LefterisJP) August 14, 2022
Karapetsas’s post was inspired by @TheEylon, who revealed that the five validators called out by Karapetsas, which represent a combined stake of 66% of the Beacon Chain, would likely action censorship requests from authorities.
Start with the big, current one.
Currently it looks like over 66% of the beacon chain validators will adhere to OFAC regulations, @LidoFinance @coinbase @krakenfx @stakedus @BitcoinSuisseAG pic.twitter.com/qyq23tPnqV
— eylonverse X 🏴 (@TheEylon) August 14, 2022
Tornado Cash Coin Center
The tweet storm was a response to unfolding events at crypto mixer Tornado Cash, which the U.S. Treasury sanctioned on August 8.
Treasury officials said the protocol was responsible for laundering $7 billion of illicit crypto funds since 2019 and had failed to implement appropriate checks and measures to counter the problem.
The company announced its closure on August 13, saying it “can’t fight the U.S.” Moreover, software engineer Aleksey Pertsev was arrested in Amsterdam for his role in developing the Tornado Cash protocol.
Events at Tornado cash have reignited discussion over censorship, especially as several crypto service providers have complied with sanction mandates.
USDC issuer Circle has blacklisted all Ethereum addresses owned by the mixer protocol. And as a consequence of pranksters sending 0.1 ETH from blacklisted Tornado Cash addresses to prominent figures, Tron founder Justin Sun said Aave had blocked his wallet.
Non-profit organization Coin Center said they are preparing a legal challenge against the Office of Foreign Asset Control (OFAC) on the grounds it had “overstepped its legal authority.”
“we believe that OFAC has overstepped its legal authority by adding certain Tornado Cash smart contract addresses to the SDN List, that this action potentially violates constitutional rights to due process and free speech.”
Coin Center argues that Tornado Cash is autonomous code and does not fit the criteria of being a sanctionable “person.”