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- Ethereum Foundation (EF) researcher revealed that staking reveals IP addresses to the network.
- After Ethereum Shapella Upgrade, this revelation is shocking.
Ethereum Shapella Upgrade is recently out, and an Ethereum Foundation (EF) researcher reveals that staking leaks IP addresses. The upgrade allows the un-staking of around $33.7 billion worth of staked ETH, but research shows that the stakers have been monitored as a small part of a broader set of metadata. This discovery unearthed privacy concerns.
The Shocking Revelation That Raised Privacy Concerns
On April 12, during an interview with Bankless, a crypto podcast, Justin Drake, an EF researcher, was speaking with the host Ryan Sean Adams. It was an exciting episode that revealed some shocking Ethereum ecosystem information.
Drake said about getting this information internally. The metadata referred to here was used to track various things, including
- Deposit addresses,
- Fee recipients,
- Withdrawal addresses,
- IP addresses, etc.
The list shocked the host, too, as he was pretty surprised to learn about the internal mechanism.
The shocking revelation means that Ethereum uses the Sybil-resistant dataset of its citizen. There have been many Sybil attacks in the industry where a single node is used to operate multiple fake identities simultaneously inside a peer-to-peer network.
Attackers can gain influence in the network and carry out 51% authority scams by using these fakely created identities. For instance, a single entity like a computer can develop and operate multiple identities, like user and IP address-based accounts. Moreover, these fake identities trick the system into believing they are real.
Hence, specific data sets were deemed Sybil-resistant to avoid being used by malicious actors.
What Made the EF Researcher Reveal the Information?
There were rumors that the solo stakers would receive special airdrops, but the more prominent names in the industry would not be given this facility. When asked how the Ethereum Network would differentiate between solo stakers and heavyweights, Drake revealed how metadata usage is used to identify the users’ credibility.
The crypto community did not receive this shocking news well; some people refer to Ethereum as a surveillance coin, while some argue about censorship. This raises many questions regarding the network’s privacy concerns, and if the data is available to them, it can also be used to launch a Sybil attack.
Some suggestions also came on how Ethereum can resolve this issue
- One way could be– they should take the on-chain privacy responsibilities themselves rather than delegating it to a third party and installing the Linux operating system
- Secondly, a robust Virtual Private Network (VPN) should store the crypto assets on a hardware wallet like Ledger.
The team behind Ethereum wallet Metamask, ConsenSys, started collecting users’ IP addresses in November to follow the guidelines that the company needed to follow regarding Know Your Customer (KYC) and Anti-Money Laundering (AML) when required.
Even after this shocking revelation from an Ethereum Foundation researcher, it was at the time of writing trading at $2,105 raised 7.91%, its value against Bitcoin hiked by 5.92% to 0.0686BTC, market cap jumped by 7.7% to $252 Billion, and trading volume saw a massive increase of 35.45% to $16.1 Billion.
Nancy J. Allen is a crypto enthusiast, with a major in macroeconomics and minor in business statistics. She believes that cryptocurrencies inspire people to be their own banks, and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning. She frequently researches, and posts content on the top altcoins, their theoretical working principles and technical price predictions.
