On the 11th of December, 2022, Polynya issued a caution to users regarding Arbitrum. The chain recently made it to the top 3 and is now only behind Ethereum and BSC. Polynya claims that Arbitrum’s weakest link, which is its instant upgradability by an opaque 4-of-6 multi-signature, makes it high risk.
As Arbitrum One makes it to #3 across a few key economic activity metrics, now behind only Ethereum and BSC, I'd caution you from using it – it's weakest link (instant upgradability by an opaque 4-of-6 multi-sig) makes it incredibly high riskhttps://t.co/pBrQJune1F
— polynya (@apolynya) December 11, 2022
Arbitrum and optimism are not decentralized and permissionless enough to provide maximum security. Users can be locked out of their funds, and they can choose to upgrade their contracts at their disposal. If this happens, a user might have to let go of the funds and start from scratch.
According to Justin Bons, Matic’s & Arbitrum’s admin keys can steal all user funds, a total value of over $2 billion. Chainlink’s admin keys can manipulate its price oracles, which are used across all DeFi. This puts over 40 billion dollars at risk.
OL has been making attempts towards making the chain more decentralized. From the look of things, they, at some point, introduced permissionless block proposals if the whitelisted validators are inactive after a week. Converting multi-signature wallets to a transparent security council coupled with a transparent whitelist will contribute immensely to the growth of the chain. It will also make it less centralized and high-risk.
Some application-specific rollups like Polygon, Hermez, and Fuel V1 already have fully implemented validity with time-locked upgrades, force exits, block proposals, and many more.
Blockchains like Ripple and Hedera claim to be decentralized, but in reality, they are permissioned. Solana also told a lie about the initial circulating supply and still thwarted usage numbers to gain support for a blockchain struggling to stay up. So many scams like these are prevalent in the crypto sector.
Although crypto has its downsides, it is undoubtedly the most important intervention since the internet. It has played a huge role in economics, governance, and solving key problems in human civilization. The Ethereum merge is also another significant event in the crypto space. It implemented a new economic and security model that helps solve the bitcoin security problem. At the same time, it makes cryptocurrencies more scarce and secure. It is recommended that all cryptocurrencies adopt this model.
Ethereum is developing PBS which permits increased censorship resistance. It will fix a problem that applies to all blockchains in the process.
The importance of decentralization and transparency in the world of decentralized finance cannot be overemphasized. Hence, platforms need to continue working towards these goals to reduce security risks and provide users with a safer and more reliable experience.