• Wed. Aug 23rd, 2023

Ethereum Foundation Researcher: ETH Stakeholders Take a Privacy Risk

May 2, 2023
Ethereum Foundation Researcher: ETH Stakeholders Take a Privacy Risk
Marcel Bich

An Ethereum Foundation researcher has raised concerns about data collection by ETH stakeholders. This statement has sparked questions about Ethereum’s centralization and privacy.

During a discussion on the Bankless podcast on April 12th, researcher Justin Drake revealed that validators collect a significant amount of information about ETH holders, including their IP addresses. Ryan Sean Adams, the host of Bankless, appeared surprised by Drake’s comments.

According to the study, collecting and monitoring this data allows for the identification of major players, such as centralized exchanges Coinbase and Kraken, and prevents their involvement in ventures targeted at retail investors.

“Consider the scenario where we conduct an airdrop for specific validators. By collecting data, we can remove Coinbase or Kraken from the list,” Drake said.

Members of the crypto community have understandably been curious about Ethereum’s centralization and privacy following the researcher’s statement. A user of DeFi Crypto Vaults recommended using Linux, constantly using VPNs, and adopting hardware wallets like Ledger as precautions against data collection.

Announcements about privacy have previously caused agitation in the crypto community. Developer ConsenSys faced criticism after announcing that MetaMask collected users’ IP addresses in November 2022. Combining offline data like IP addresses with online data like addresses and blockchain transactions could identify people and weaken security, as community members expressed concerns about privacy. ConsenSys stated that it would only retain IP addresses and wallet data for a week after changing its usage guidelines.