The Promise of 'Stateless Ethereum'

The introduction of stateless clients should make running an Ethereum node easier than ever, leading to true decentralization and resilience of the network.

AccessTimeIconMar 9, 2022 at 12:30 p.m. UTC
Updated May 11, 2023 at 5:32 p.m. UTC
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Last week, crypto users in Venezuela and certain other jurisdictions were blocked from accessing MetaMask and, ultimately, the Ethereum blockchain.

The core issue ended up being with Infura, a crypto software and API provider that plays one of the largest roles in providing infrastructure for on-chain wallets and decentralized applications. While Infura said the ban was in accordance with legal standards and global sanctions and not a blanket ban, many noted that even the ability to block access poses a threat to the decentralization of the ecosystem.

So what are the potential solutions?

  1. Industry-level change – use decentralized API providers, create hundreds of options that are geographically diversified
  2. Protocol-level change – allow anyone to run a node on a simple computer and access the blockchain locally

The former is essential in addressing some of the concerns laid out by Moxie Marlinspike a few months ago and ultimately in pushing the industry forward to reaching actual decentralization. Marlinspike noted that unless users or applications are running their own node, they are completely relying on third parties like Infura and Alchemy to interact with the blockchain for them.

The latter is something that Vitalik Buterin has been discussing since 2017. The concept of “Stateless Ethereum” would help remove the reliance on centralized service providers and would allow blockchain users to access the chain locally in dire situations, especially if they are being blacklisted. To understand Stateless Ethereum, it is vital to understand the problem, as broken down by Ethereum researcher Sandra Johnson of ConsenSys:

“The Ethereum world state contains all Ethereum accounts, their balances, deployed smart contracts and associated storage. New accounts are continually being added and new smart contracts are being deployed. Therefore, by design, the state size of Ethereum keeps growing ad infinitum. The implication of this unbounded state growth is that it takes longer and uses more space to spin up a new full node.”

The Ethereum Foundation sums up some of the reasons to run an Ethereum node as follows:

Running your own node enables you to use Ethereum in a truly private, self-sufficient and trustless manner. You don't need to trust the network because you can verify the data yourself with your client. "Don't trust, verify" is a popular blockchain mantra.

Your node verifies all the transactions and blocks against consensus rules by itself. This means you don’t have to rely on any other nodes in the network or fully trust them.
You won't have to leak your addresses and balances to random nodes. Everything can be checked with your own client.
Your dapp can be more secure and private if you use your own node. Metamask, MyEtherWallet and some other wallets can be easily pointed to your own local node.
You can program your own custom RPC endpoints.
You can connect to your node using Inter-process Communications (IPC) or rewrite the node to load your program as a plugin. This grants low latency, which is required to replace your transactions as fast as possible (i.e. frontrunning).

As seen above, running a full node allows users to bypass third parties while interacting with Ethereum, but how could ordinary users spin up their own full node, especially as it will continue to become more memory and software intensive as Ethereum’s state grows? According to Ethereum developer Ben Edgington, you can fix this at the protocol level by making state storage somebody else’s problem. By introducing state providers, tasked with the core job of maintaining the history of Ethereum, you can also introduce stateless clients that make running an Ethereum node easier than ever, leading to true decentralization and resilience of the network.

This is all a very high-level overview of a concept that continues to evolve in real time. Ethereum’s Core Developers have been discussing implementation details, which will take place under the proof-of-stake network, hopefully in the coming few months. Stateless Ethereum is just one of the exciting upgrades that will become possible after the Merge, and 2022 is lining up to be one of the most exciting years in the network’s 6-year history.

And a programming note: Finally, I have to announce that this will be my last week at CoinDesk and my final edition of the Valid Points newsletter. I want to thank all of the readers who have followed along over the past few months and everyone at CoinDesk who helped make my job easy. I truly appreciate everyone who has reached out with feedback and helped me on my journey to understand the Ethereum ecosystem and community.

However, all you readers are in luck because Andrew Thurman and Sage Young will be taking over the newsletter starting next week! Andrew is top of the class in his knowledge and reporting around the entire decentralized finance (DeFi) industry and will do an amazing job following the progression of Ethereum. Sage started at CoinDesk as an intern just weeks ago and has already been a tremendous help with the newsletter, taking over the Validated Takes section and covering all data surrounding the validator. Valid Points is in good hands!

Signing off,

Teddy

Pulse check

The following is an overview of network activity on the Ethereum Beacon Chain over the past week. For more information about the metrics featured in this section, check out our 101 explainer on Eth 2.0 metrics.

Network health - Participation Rate: 97.5%-99.8%. Number of Validators:  307,414 active (+2.1%). Total ETH Deposited: 9,931,986 ETH (+2.6%). Share of Total ETH Supply Deposited: 8.4%.
CoinDesk Validator Historical Activity: 86,496 attestations submitted, seven blocks proposed. Weekly Revenue: + 0.02676 ETH ($68.85). Estimated APR: 6.32%.

Disclaimer: All profits made from CoinDesk’s Eth 2.0 staking venture will be donated to a charity of the company’s choosing once transfers are enabled on the network.

Validated takes

  • Frances Coppola, an ex-banker and financial author, posed the idea that stablecoin interest rates are so high because of the lack of central bank liquidity. BACKGROUND: While stablecoin interest rates in DeFi have fluctuated by a factor of 10 over the past two years, they have been consistent in beating returns on the dollar. Coppola assumed that a lack of liquidity injections and a lower level of rehypothecation have sustained this yield, but she failed to recognize the risk inherent in smart contracts and the incentives paid by DeFi protocols in the form of token equity.
  • A bug in Convex Finance’s staking contract unlocked staked tokens weeks ahead of schedule. BACKGROUND: By staking Convex’s CVX token for 16 weeks, users are able to participate in revenue sharing with the protocol. The mechanism has become very popular, with up to 72% of tokens staked as of just last week. The vulnerability forced Convex to mass unstake the locked tokens and the price immediately crashed 20% as the vesting schedule was thrown off course and a majority of supply became free to trade.
  • An Ethereum Improvement Proposal (EIP) was introduced to create a new transaction type for Ethereum staking withdrawals. BACKGROUND: EIP-4863 is just one of many proposals to get Ethereum ready for a liquid staking contract, but the proposal highlights the progress in making withdrawals a reality. The specific EIP will allow users to send the transaction out of the Beacon Chain without needing to pay a transaction fee on the receiving wallet.
  • Evmos to merge the Ethereum Virtual Machine (EVM) with the Cosmos-based Inter-Blockchain Communication (IBC) protocol. BACKGROUND: Considered the port of entry from Ethereum to Cosmos, Evmos gives “Ethereum developers a frictionless way to build cross-chain applications,” said Federico Kunze Küller, co-founder of Evmos. Developers can port over implementations of protocols that are already running on Ethereum and make interchain transactions across the Ethereum and Cosmos ecosystem. Evmos’ announcement signals the importance of interoperability between blockchains in the future of Web 3.

Factoid of the week

Transaction fees made up as much as 70% of Ethereum miner revenue in 2021 before EIP 1559 introduced a fee burn mechanism. While revenue has not decreased drastically in dollars terms, transaction fees now only account for around 5% of miner income.

Open comms

Valid Points incorporates information and data about CoinDesk’s own Eth 2.0 validator in weekly analysis. All profits made from this staking venture will be donated to a charity of our choosing once transfers are enabled on the network. For a full overview of the project, check out our announcement post.

You can verify the activity of the CoinDesk Eth 2.0 validator in real time through our public validator key, which is:

0xad7fef3b2350d220de3ae360c70d7f488926b6117e5f785a8995487c46d323ddad0f574fdcc50eeefec34ed9d2039ecb.

Search for it on any Eth 2.0 block explorer site.

Disclosure

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is an award-winning media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. In November 2023, CoinDesk was acquired by Bullish group, owner of Bullish, a regulated, institutional digital assets exchange. Bullish group is majority owned by Block.one; both groups have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary, and an editorial committee, chaired by a former editor-in-chief of The Wall Street Journal, is being formed to support journalistic integrity.

Edward Oosterbaan

Edward was an analyst on the CoinDesk Research team focusing on Ethereum and DeFi. He holds ETH, AVAX, OHM and a small amount of other cryptocurrencies.

Sage D. Young

Sage D. Young was a tech protocol reporter at CoinDesk. He owns a few NFTs, gold and silver, as well as BTC, ETH, LINK, AAVE, ARB, PEOPLE, DOGE, OS, and HTR.


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