Ethereum client Geth share declined due to risks of centralization and loss of funds

What’s new? Within 24 hours, the Ethereum execution client Geth share on the blockchain dropped from 84% to 78,8% amid community concerns about over-centralization. Geth plays a crucial role in processing transactions and executing smart contracts in Ethereum, but its popularity among validators has led to other similar tools taking only a small share of the network. One of the founders of the ETHStaker community under the nickname Superphiz noted that a bug in Geth could lead to the removal of most of the staked ETH coins.

Source: Twitter.com

What else is known? According to ClientDiversity, the next most popular execution client is Nethermind with a 14,07% share. It is followed by Besu (4,35%) and Erigon (1,34%), while the Reth tool is not used at all. The website also has a placard urging validators to switch from Geth to less popular clients.

Thus, if one client is used by 2/3 (66%) of validators, there is a high risk of circuit disruption and monetary losses for node operators. As a result of a bug in such a client, the network could split as a result of a fork, and validators would have to undergo slashing to return to the original blockchain. If 66% of validators are slashing at the same time, the penalty would be 32 ETH. However, this can be avoided if the share of each client does not exceed 33%

Superphiz noted that alternative Geth clients may be less mature and reliable, but a portion of validators are still better off switching to them to avoid unforeseen events with serious consequences (aka black swan).

Source: Twitter.com

Nethermind in particular has increased its share by more than 6% since January 23, despite the recent discovery of a critical bug that prevented blocks from being processed. This bug was later fixed.

In addition, US crypto exchange Coinbase, which is one of the largest Ethereum validators and runs on Geth, has announced a multi-client transition in the coming months.

Source: Twitter.com

Lachlan Feeney, founder and CEO of Ethereum infrastructure provider Labrys, commenting on the implications of Geth’s popularity, noted that ETH staking is not a risk-free tool:

“Would you invest a minimum of $75 000 USD into an instrument where the maximum potential gain is 3,5% p.a. but the potential for loss is 100%? Probably not, but this is what 84% of the Ethereum stakers are doing today.”

Since Geth’s current share is over 2/3, a critical bug would “instantly stop the chain from finalizing.” In this scenario, Geth validators would be subject to inactivity penalties when going offline. Then their ETH in staking would be burned until the client share drops to 1/3. According to Feeney, 90% of a validator’s staked ETH can be wiped out in about 40 days.