So to me, the 2% doesn't seem like an incentive. But I don't think it was designed that way? I thought it was to make the rewards more equitable, and also continue to keep validator skin in the game (why would you corrupt Ethereum, you get paid in ETH). I don't know if it really succeeds at these things; I think rich people can stake multiple times and the initial big miner investment are probably sufficient skin (plus like, are people committed to ETH because of their mining rigs or because of the gains?), but that's just conjecture, hard (impossible?) to know for sure.
> people committed to ETH because of their mining rigs or because of the gains?
ETH is not to be priced like a stock. ETH is to be priced like a non-renewable commodity like oil. If the network is not efficient, people will move away from it, demand for ETH goes down and so does its price. People staking ETH are betting that the network utility will grow and the demand for ETH will grow as well.
> I think rich people can stake multiple times
If you think it is a bad allocation of the capital, why would you think that people with lots of it would put so much into stake?
OK I mean, my point is in whatever fiat you want to pick, 32 ETH is a lot.
> ETH is not to be priced like a stock. ETH is to be priced like a non-renewable commodity like oil.
I don't know if ETH is like oil; when we run out of oil we legit run out, like it's gone. We can run out of blocks on Ethereum, but ETH sticks around "forever".
As a result, I think the stock comparison is actually more accurate. Shares are divisible, their value relative to fiat fluctuates, they're transferable, etc. Or I mean, we could also view it as a currency. I just don't think it's a commodity at all, especially because it doesn't have physical utility. Every other commodity (like oil as you point out, or orange juice or cotton or copper) has physical utility. ETH doesn't.
> If the network is not efficient, people will move away from it, demand for ETH goes down and so does its price.
Well idk, the network is pretty inefficient right now. Buterin just posted "Endgame" where the main theme is basically "we'll get the transaction rate up". Relative to centralized transaction rates, Ethereum is very slow.
And there are networks with faster transactions rates! And yet Ethereum remains popular. I think a lot of crypto advocates get caught up in the actual attributes of a network but then can't explain why clearly inferior networks like Bitcoin and Ethereum are super popular. Well, it's because they're worth a lot of fiat--very few people care about the nitty gritty of blockchains, they just want to get rich. So I don't think "people will move away from it" as long as the fiat price is high.
And this just kind of torpedoes crypto optimism right? We have these networks that clearly solve a lot of problems that Bitcoin and Ethereum have, but it turns out the path to success and popularity is to make your coin as casino-like as possible. I think that's a compelling reason to be pessimistic, not optimistic.
> People staking ETH are betting that the network utility will grow and the demand for ETH will grow as well.
Yeah I mean, "bet" is the apt word here.
>> I think rich people can stake multiple times
> If you think it is a bad allocation of the capital, why would you think that people with lots of it would put so much into stake?
I think the reasons other people would are legion:
- I'm rich and I'm bored/interested
- I understand the technology and I think we'll overcome the risks and downsides
- As a libertarian I super hate liberal democracy and any kind of gatekeeping, and I'm willing to take some pretty drastic, risky actions to subvert its financial system
- I believe a lot of people are disillusioned by capitalist economies and that will drive adoption of alternative economies and currencies
FWIW I am in the 4th camp. I just think subverting financial systems set up by democracies is deeply immoral so I can't bring myself to profit off of it. Also I don't have 32 ETH to throw around haha.
The point is that the staking contracts were set at 32 ETH since the time when ETH was about $100. There is a good amount of people that staked then when it was a lot easier, and today there is always the possibility of staking pools (just like there are mining pools)
> ETH sticks around "forever".
Not since July, when the EIP-1159 introduced gas fee burn. There has been since then a lot of blocks were more ETH was burned with the gas then generated as miner rewards, so ETH can be
> network is pretty inefficient right now. (...) And there are networks with faster transactions rates!
The mistake you are making is that - like the $130k comment above - you are thinking in terms of a static system. Ethereum is constant development precisely as a way to address the bottlenecks that are being hit.
There are already people using Layer-2 systems for making transfers and for decentralized exchanges. This year we also are starting to see more complete scaling solutions. The more Layer-2 solutions come up, the less important the base-layer performance becomes for users.
Talking about the base-layer when it has been widely established that Ethereum is heading to the direction of scaling through roll-ups and other layer-2 systems is either ignorance or intellectual dishonesty.
> "bet" is the apt word here.
Pretty much in the same way that people "invest" in Uber or other Unicorns even if they go years without turning a profit, people "invest" in Ethereum (or Bitcoin, or Cardano, or Solana, or whatever) because they expect that in the future that network will be useful. It is a bet that it will be more profitable and create wealth in the future.
> I think the reasons other people would are legion:
You misunderstood my question. You were criticizing PoS because you claimed that it wasn´t capital efficient (2"% is not much..."), at the same time you pointing out the "issue" that "rich people" could put more at stake than others. These criticisms are at odds with one another.
> I just think subverting financial systems set up by democracies is deeply immoral
Not only you are clearly mistaking opinions for facts; this single statement seems to be based on a worldview that:
- assumes that "financial systems" were "set up" by democracies.
- assumes that being a "liberal democracy" is a binary property.
- assumes that leaders and elites from the "liberal democracies" are actually working with the interests of people at heart.
- assumes that "liberal democracies" are the inevitable endgame for government.
- assumes that people working with decentralization are only concerned about "finance".
- is based on a false dichotomy of "full-anarchy" vs "globalized world subject to a set of universal values as defined by liberal democracies"
> so I can't bring myself to profit off of it.
Do you own any stock? Pension funds? a 401-k? Worked for any VC-funded company? Bought anything made in China even though you knew there was an alternative product made in $wherever_you_live?
Then yes, you are profiting off of it. So please just get off the high horse.
> The point is that the staking contracts were set at 32 ETH since the time when ETH was about $100.
That's not relevant because they're still in the category of "people who have $130k to stake". Kind of doesn't matter how you came about it.
>> ETH sticks around "forever".
> Not since July, when the EIP-1159 introduced gas fee burn.
Oh cool I didn't know that. I guess this is to avoid the money laundering via gas fees thing--your ETH gets black holed instead?
Again I don't know that it's that relevant though. With oil--again your example--you only get utility out of it by destroying it. It's not like I have to burn ETH to light a lamp, destroying that ETH forever. So I still think it's less like an expendable, finite resource and more like a currency or a security.
But all that said, Ethereum users don't want Ether to all get burned, right? I assume what everything thinks will happen is that the increasing scarcity increases the value of unburned ETH, so that even if there's 1 ETH left it's still worth $50 gazillion or whatever and we just trade fractions of it. So also not like oil, because it would be pretty weird if every time I burned a teaspoon of it every other barrel of oil became more... flammable?
>> network is pretty inefficient right now. (...) And there are networks with faster transactions rates!
> The mistake you are making is that - like the $130k comment above - you are thinking in terms of a static system. Ethereum is constant development precisely as a way to address the bottlenecks that are being hit.
> There are already people using Layer-2 systems for making transfers and for decentralized exchanges. This year we also are starting to see more complete scaling solutions. The more Layer-2 solutions come up, the less important the base-layer performance becomes for users.
Layer-2 is an MEV-generating machine, and there's no way around it. It's fundamental because L2 is a desync from the chain. It doesn't really matter for dApps, and maybe it's tolerable for payments and such too, but we're stacking a lot of caveats on "send money to anyone anywhere at any time (also pay gas fees also they have to get a wallet also you'll get MEV'd). Plus, how is this not just middlemen (miners, banks) running yet more rent-seeking operations on yet another payment system?
And we're not even talking about all the different incompatibilities between different L2 solutions.
> Talking about the base-layer when it has been widely established that Ethereum is heading to the direction of scaling through roll-ups and other layer-2 systems is either ignorance or intellectual dishonesty.
There's a third option you should consider carefully: that you're wrong and someone's trying to politely point it out to you. You're super closed-minded about this stuff, and I think you'd benefit from a little introspection as to why. You and I are just a couple of naive humans stumbling ignorantly through an infinite darkness. We know almost nothing and are almost always wrong about everything. The only reason I know anything about crypto is I assumed I was wrong about it and read a bunch. I'm just representing what I think; I'm not astroturfing; I'm not talking my own book. I'm not saying I'm not ignorant; I am! But it's possible I'm not as ignorant as you think I am.
> <democracy stuff>
Look I'm no strong defender of the current state of democracy, and I'm pretty anti-capitalist. I just don't think blockchains are good solutions to governmental problems (or, good solutions to any problem tbh). If you want to argue that blockchains return power to people and are decentralized, you have to answer for multiple successful 51% attacks and Ethereum in particular hard forking the chain for political/financial reasons.
> Do you own any stock? Pension funds? a 401-k? Worked for any VC-funded company? Bought anything made in China even though you knew there was an alternative product made in $wherever_you_live?
> Then yes, you are profiting off of it. So please just get off the high horse.
There is no ethical consumption under capitalism. That said, there's a difference between incidental consumption and direct exploitation and subversion. Maybe it seems like I'm high-roading you, but I don't think capitalist consumption gives us ethical carte blanche. "Hey I know I scammed millions of people but, I had a 401k and you know what they say, in for a penny in for a pound". Yeah, that rings false.
The whole thing about "L2 is a MEV-generating machine". Fucking hell, dude. If someone tells you (like I did in another thread) that you can not make an international transaction without losing at least 7% of the value, and that I already have made and received payments on layer-2 systems for fractions of a cent, what is so hard to acknowledge that the people doing it are not idiots?
Setup costs are one-off and independent of the value you are transferring off-chain. They are amortized through all the lifetime of your "account" and the transactions you made.
Paypal does not work like that. Credit cards do not work like that. Loopring does. Zksync does. Even if all these systems did was to make transfers of stabletokens from A to B, they would be already miles ahead of the status quo.
Yes, there are still "middlemen", but they are both (a) cheaper compared with existing methods and (b) part of a global market with no monopoly. Almost all of the tech that is being adopted is open-source, so there is no large competitive advantage that one can establish over the other. If a roll-up starts trying to jack up fees, others can basically make a clone and take all of the userbase overnight.
You know what is so grating about this conversation?
Every comment you wrote shows your knowledge is incomplete and based on only what you heard/read, and yet you talk like you know all the theory and therefore you can prove how it doesn't work in practice. When presented with new information that shows how you are wrong, you double down on your theoretical background instead of looking at what people empirically achieved.
You end up sounding like someone who studied a bit of aerodynamics and then goes to believe they can teach birds how to fly. Or worse, you see a beetle flying in your face and start claiming "this is physically impossible, it's not real!"
Please, don't be those people who can not do anything useful with their life and end up just shitting or doubting on the works of others.