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There are a number of well known undesirable effects of mining pool centralization, primarily:

  • increased risk of collusion
  • a small set of pools effectively gain veto power on the evolution of the main net
  • a big proportion of hash power may fall victim of targeted attacks, and possibly hijacking (of the mining pool, and ultimately, if the pool is large enough, the entire network)

This issue was acknowledged for example in this blog post. It is therefore rather surprising to see that the Ethereum blockchain is no less centralised (approx 50% hashrate controlled by the top 2 mining pools over the past 24hrs, for example) than the Bitcoin counterpart.

Other than the eventual transition to proof of stake, what actions is the Ethereum community taking to counter the mining pool centralization trend?

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6

Miners are free to use any pool they want to the protocol cannot prevent centralization during PoW.

The fact that you asked this question and others have written about it is a means of encouraging decentralization by asking miners to choose smaller pools.

Below the writer made the same observation and encouraged miners to find alternatives to dwarfpool:

http://themerkle.com/is-ethereums-mining-getting-too-centralized/

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1
  • Now if the above behavior is desirable and is considered above protection against centralization, why is it not embedded behavior within the Ethereum core protocol? I might guess that this is due to the fact that apparently separate mining pools could in reality be controlled by the same entity, and in such case preventing any individual mining pool from exceeding some defined percentage of overall hash power is a rather artificial metric as it is tied to pool names rather than actual pool "owners".
    – zanzu
    Jun 9 '16 at 6:22

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