Chainlink co-founder Sergey Nazarov was concerned about the current situation in the field of protocol management. In his opinion, there are only three “significantly” decentralized blockchains – Bitcoin, Ethereum and, of course, Chainlink itself. He stated this in an interview with Decrypt.
For Nazarov, decentralization is a “security mechanism.” However, he clarified that the idea is also based on censorship resistance and transparency.
He cited the collapsed Celsius, FTX, Voyager and the recently hacked Mixin Network as unsuccessful examples of “decentralization theater.”
“Truly decentralized systems remain secure,” he added.
In contrast, he recalled Chainlink’s four-year period without hacks. During this time, the network processed $8.5 trillion in transactions.
Nazarov believes that at a certain point people began to perceive decentralization as a “buzzword.” At the same time, many companies began to use it “to raise capital.”
Not all is well with Ethereum
Although Nazarov singled out the network for the second largest cryptocurrency by capitalization, it still faces criticism due to Lido Finance’s significant share in staking.
Ethereum Foundation member Danny Ryan responded to the concerns, saying that the service undermines the economics of the blockchain.
🚨🚨🚨 Danny Ryan of the Ethereum Foundation calls @LidoFinance a “corporatization, a centralization and a system threat” of Ethereum.
“What happens when a regulator realizes that 3 people control the vote? I got 3 doors to knock on, easy.” 👀 pic.twitter.com/K3eDQl5SAm
— Pledditor (@Pledditor) September 26, 2023
“[Команда Lido] pushes a governance token owned by a group of venture capitalists into the center of the protocol,” he explained.
In his opinion, now most coins for distribution are distributed among investment organizations that “recreate their lousy companies on the blockchain.”
Nazarov sees two directions for resolving the current situation. The first step is to end the “buzzword cycle” and focus on creating systems that provide adequate security. The other part of the responsibility lies with the people themselves, says the head of Chainlink.
“We need to become more educated consumers,” he stressed.
Cross-chain problems
As Chainlink seeks to enter the cross-chain bridge space, co-founder Sergey Nazarov noted that most cross-chain protocols are “absolutely insecure.”
“The systems built in this industry promise a lot, but they fail to deliver sustainability one way or the other. Creating real security is not so easy,” he noted.
In addition, cross-chain infrastructure is quite difficult to decentralize, the programmer clarified. This is due to the fact that bridges themselves are not blockchain-based systems; they are only a connecting link between them.
Most such protocols involve a single server that transfers information and assets between two chains, Nazarov explained. In doing so, organizations can create a false appearance of security and decentralization.
As an alternative, the oracle network co-founder proposes to develop an interconnection platform managed by several separate networks that can also quickly respond to risks.
Using the example of his own internetworking protocol, Nazarov noted that the technology includes three different networks on each bridge.
“There are two networks that verify and execute every transaction, and there is a third one called the risk management network. It doesn’t perform operations, but approves or rejects them based on a pool of parameters,” he explained.
Let us recall that in August, the developers of the second-level platform Base, supported by Coinbase, presented a plan for transitioning the protocol to a decentralized model, involving several technical upgrades and the elimination of a single point of failure.
Previously, Polygon, dYdX, StarkWare and Gnosis announced similar plans.
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