Brian Armstrong – CEO of Coinbase – stated on Thursday that he would refuse to censor the Ethereum blockchain using his platform’s concentrated stake in the protocol.

If compelled to do so by the government, he would prefer to shut down the service.

  • Armstrong made his intentions clear in response to an Ethereum developer’s question concerning the centralization of staked ETH. According to Dune Analytics, 66% of ETH staked on the beacon chain is held by entities that are regulated by the Office of Foreign Assets Control (OFAC).
  • As such, the developer asked the leaders of some of the larger staking entities – including Coinbase – whether they’d collude to censor transactions if compelled to do so by the OFAC.
  • Armstrong answered that if Coinbase were put in that position, he thinks they’d opt to shut down their staking service, rather than outright comply.
  • “Got to focus on the bigger picture,” he said. “There may be some better option (C) or a legal challenge as well that could help reach a better outcome.”
  • “It’s a hypothetical we hopefully won’t actually face,” he added.
  • The OFAC sanctioned the Ethereum-based privacy protocol Tornado Cash last week. There are concerns that they might be willing to censor Ethereum at protocol level if necessary.
  • The proof of stake system gives those with a larger stake in the network a greater voting vote in determining the ledger’s state. Entities with a net stake above a threshold can conspire to censor transactions.
  • Ethereum currently uses proof of work, but plans to transition to proof of stake in mid-September.
  • Ethereum co-founder Vitalik Buterin has confirmed that he would support hard-forking the Ethereum. blockchain and to slash the holdings of staking provider if they implement a censorship attack.
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