No mathematical problem is getting "solved".
It is much more akin to playing the lottery: Entirely random numbers are being tried out, by sending them through an energy-intensive algorithm (being energy-intensive is the algorithm's only purpose in proof-of-work), until what comes out is less than another number. That other number is chosen according to the desired "difficulty", it has no significance beyond that.
The algorithm is literally meant to spend energy, i.e. the outcome of the computation has no meaning by itself. This also means that proof-of-work cryptocurrencies actively counteract any advances to make the computation more efficient: The "difficulty" will just be adjusted up until the efficiency gain is canceled out. Proof-of-work cryptocurrencies are inefficient by design.
That's a valid use of the word "solve". It is obviously mathematical. It is complex, as we do not have a simple way to solve it.
I get it, words can have multiple meanings. It's fine to give a clarification on the specific use here, but then move on.
You're either trying to confuse others intentionally, or if I'm interpreting charitably, you are merely confused yourself. In neither case is this attitude warranted. You just re-explained that the crux of the issue is useful work vs non-useful work. This is exactly the same point that Josde explained. This point was contested by lottin. I don't understand why they would contest it, as they very clearly agree with that point (based on reading other messages they wrote in this thread). According to you, lottin is not "pretending to disagree", they are "merely providing further context". This is very obviously not true. Either you are lying on purpose or you are confused, maybe you didn't read their message properly. Here it is again for you to read:
> It's worse than that, they're aren't solving anything at all. They're taking part in a lottery, in which participants have to guess a number, and the winner gets to update the ledger. Nobody is solving complex mathematical problems.
Does that sound to you like "yes, I agree, and here is some further context"? Obviously not. That message is expressing strong disagreement, not further agreement.
Please stop spreading misinformation.
Not obvious to me. But sure, I'm confused all right. Confused at how lottin's comment could be interpreted as contesting Josde's, when it reads as a reinforcing restatement to me. Confused at your hostility and accusations of misinformation.
Perhaps you're confused about how online conversations work? Sometimes people reply with a restatement when they feel the original doesn't go quite far enough. I mean, lottin's comment was arguably ineloquent, but he wasn't "muddying the waters". Do you perhaps have some expectation that the act of replying implies disagreement? Is it the strongly negative tone that gave you that impression? It certainly isn't the content, since you correctly interpreted my own restatement of lottin's comment as agreement.
I'm not trying to confuse others, I'm trying to enlighten you, specifically, about what happened here so that you might reconsider next time before jumping on someone for something they didn't say.
Yes, very much.
Guessing a number isn't a complex mathematical number, it's just guessing a number.
[1] https://cryptorials.io/beyond-hashcash-proof-work-theres-min...
Imagine a page of a book, for each letter a-z, assign a number to it (a=1, b=2, .. , z=26). Compute the sum of all of the letters on the page but reset back to zero when 100 is reached (i.e. 97 + 5 = 2). The resulting number is a kind of signature for the page. Changing a letter would result in a different sum.
At this point, people usually understand the utility and irreversible nature of it but quickly realize that many pages could have the resulting signature. It is a fairly easy leap of faith for most people to accept that there could be much more sophisticated algorithms that 1) use a bigger number for the signature and 2) take position into account and 3) result in very different signatures with tiny changes in input. This is usually sufficient for anyone to understand what is meant by a hash.
Finally explain that the hash must have a certain pattern to it (like end in a zero for example). If the hash of our "page" does not have this pattern, add another small gibberish word to the end and try it again. Keep trying until a hash with the expected pattern is found (and there is your Bitcoin).
The suggestion that a mathematical problem is being solved (while not completely inaccurate) sounds a bit more elegant in my opinion than what is really going on. It is really more like guessing (not that it really matters).
I've noticed that whenever I assert that a 'complex mathematical problem' is being solved people tend to think of an ever-growing algebraic equation.
> valuable, i.e. relays no additional useful information about the world (e.g. the boiling point of some new liquid or something)
Theoretical mathematicians don't provide anything useful according to your definition.
The theoretical mathematician definition isn't very good either because I think enough people get that the novelty has some kind of inherent value that doing something repetitive like the above does not?
I think the first thing people need to get over to understand de-centralized currencies like bitcoin is that money is just an illusion, a big fat shared delusion, or more accurately an inter-subjective fantasy, a way of keeping track of labor\value by agreeing on some scarce valuable thing and declaring that it represents every other scarce valuable thing if everybody agrees to trade any scarce valuable thing they have against it. I don't think most people truly relize this at the gut level (and this is not an insult to the intelligence of people, it was mind blowing and deeply enraging\upsetting to me when I worked through it to the end as well). Concept #1 : Money is any (possibly artificially) scarce thing that people with things you care about want to trade against.
Next, you observe that a currency doesn't actually has to be an actual thing you own, it just has to be an entry in a trusty and available record of all the favors you did\was done to you. Physical things are merely a convenient way to maintain a distributed record of favors in real life, but in principle all of our paper money could be replaced by a huge paper spreadsheet recorded by an infalliable angel who never lies or cheats, recording in each entry who did what favor to whom, and the amount of "favorism" that was done (so that it can be traded against other favors in the future). If everyone had an always-updated read-only access to that spreadsheet somehow, then this is a perfectly good and perfectly secure money system. You "pay" by invoking the earlier favors owed to you, "paid" to you by others, invoking favors "spends" them : turns them into the ownership of the entity you are paying. New favors are created by the infalliable angel whenever they deem necessary, they simply write in the spreadsheet "I now own 20 more favors than before, by the sheer force of my will". Concept #2 : Money doesn't actually have to be a scarce thing, it just needs to be a trusty record of transactions, scarce things approximate that fairly well in real life but are not the only way. Money is simply any promise backed by trust, scarce things are just one way of implementing that.
The final push is actually the hardest. You can't understand bitcoin without understanding even the tiniest bit of distributed systems. The fundamental difficulty of distributing a soft record and yet still preserving it's append-only nature while the machines the record is stored on can tick at 4 billion times a second must be appreciated and truly understood in all its impossiblity. Distributed blockchains' delightfully bizarre solution must be appreciated in all its counter-intuitevity. I was stuck at this stage for a long long time, knowing hashing and crypto (public API wise) but finding it difficult to understand why can't I just make-up money as I please, who's going to stop me ? who's going to know ? How can bitcoin stop me or even detect me without a central authority ? Distributed Systems are simply magic, and crypto-currencies get most of their magic and brilliance from that component. But eventually you get there if you're motivated enough and manage to dodge\discard all the trash pop-sci false explanations. Concept #3 : Bitcoin utilized super-smart magic from several apparently-unrelated fields of CS to make the fantastical spreadsheet from concept #2 come to reality.
Anyway, all of that long rant was just to say I don't think hyper-focusing on the intricacies of hashing and public-private cryptography is actually helpful for people to understand the 'why' of decentralized currencies. I don't mean they're not important building blocks, they are invaluable of course, I just mean the vast majority of work in decntralized currencies is done by the decentralized blockchain they are running on, and those work because PoW is a piece of magic and also distributed systems and also NP-hardness.
>The suggestion that a mathematical problem is being solved (while not completely inaccurate) sounds a bit more elegant in my opinion than what is really going on.
That's a very human centric way of putting it, but I agree. If a computer is searching through the library of babel to find a treatment for cancer, the computer is still 'solving' cancer, it just doesn't do it by studying medicine. "Elegance" is a human value, and my personal philsophical belief about intelligence is that its all really Search, Neural Networks and Reinforcement Learning Agents and Evolutionary Computing and Human Brain Heuristics and Knowledge are all really more efficient way of searching spaces and trees. Medicine is just there to tell what branches not to search. So the library of babel computer is just doing intelligence a bit more naively and expensively than its more efficient artifical or natural cousins, but its still "solving" a problem, like all intelligences do.
Not really. Bitcoin (i.e. the original satoshi version) is hashcash, data structure merging and some game theory. Its an ingenious system, no doubt, but its ingenious because it put together some really well known building blocks in a smart way. It definitely did not use super advanced stuff from any field of CS, let alone multiple.
And that's not a dig at it either. In many ways that makes it more impressive.
And public-private crypto & hash pointer data structures are both fairly advanced CS from multiple fields. Public Key Crypto was discovered in the late 1970s and only further explored in the 1980s, hash data structures only in the 1980s and 1990s. That's fairly young, most vanilla CS ideas date from the 1960s or before. Just because the public APIs of those things can be explained in an afternoon doesn't mean at all that they aren't advanced concepts: I can explain what a hydrogen bomb does to a 10 year old, but that wouldn't imply the Hbomb isn't advanced nuclear physics.
Yes, the new thing bitcoin invented was novel and quite interesting. I'm not sure that is the words i would use to name it, but the result still stands.
> Just because the public APIs of those things can be explained in an afternoon doesn't mean at all that they aren't advanced concepts
Of course not. They are advanced concepts because they are some of the most basic concepts in the field and used throughout the industry. Hash functions are so prevalent that we literally have special x86 instructions just to speed up calculating sha256.
Compare for example to things like ZK-SNARKs, or homomorphic encryption which are actually cutting edge cryptography.
Of course, the hashing/nonce part is only one part of the mechanism and probably not even the most important part. However, it is where the bulk of the energy is used - most people have heard that Bitcoin uses a lot of energy and would like to understand that a bit better. I have other "parables" for explaining public/private key encryption, etc., but I was primarily responding to the parent comment.
>> That's a very human centric way of putting it
Humans are the ones assigning the value to this and they may be more likely to assign a higher value if it appeals to their sense of aesthetic. Solving beautiful equations sounds better than trial and error to many. That being said, I do think there is beauty in crypto - just maybe not in the nonce guessing bit.
>>> Money doesn't actually have to be a scarce thing, it just needs to be a trusty record of transactions
Physical cash or coin, exchanged between parties, is trusted by both parties yet leaves no transaction record.
>>> Money is simply any promise backed by trust
Credit is backed by trust.
A finalized and appended bitcoin block needs no further trust. It is settled.
The cash/coins are the record in this case: that was the point the GP was trying to make. But, they are not required for the transaction to take place: a trusted ledger also works.
> A finalized and appended bitcoin block needs no further trust. It is settled.
Of course it needs trust: you have to trust that Bitcoin is doing what it promises. Every time you sell something in exchange for bitcoin, you have to trust that:
- the network is working as advertised
- your client is working as advertised, it's not infected with some Malware to report the wrong info to you
- there is possibility of a 51% attack
Also, the latest finalized and appended block often changes. You actually have to wait until there are several other blocks appended after the one that contains your transaction until you can be sure the transaction won't be reverted.
In high school math, problems are solved by choosing the right formula and plugging in the right variables. Throwing the dice trillions of times isn’t what people imagine when they hear “solving a complex mathematical problem.” That framing is designed to make PoW more acceptable to laypersons, as it sounds like the computation is useful or at least clever rather than intentionally designed to waste energy.
Heck, I understand well how POW works, and even I think of it as solving a "complex mathematical problem"... the inherently difficult problem of prime factorization.
Anyways, potayto potahto.
???
Factoring is not a common problem for proof of work. In fact im not sure how you could even make that work in a way that ensures participants arent cheating.
This is, actually, how I layperson-explain cryptography: there’s no fast or easy way to take any huge number and know what two numbers mutiplied to make it, and this mathematical property is what makes (good) passwords hard to crack.
Note that even being able to quickly reverse the hash function for Bitcoin wouldn't do anything to the PoW security.
The only thing that matters for PoW as implemented in Bitcoin is that there is no way to predict the value of the hash of a block + nonce faster than computing the hash. This doesn't rely on integer factorization difficulty in any way, it simply relies on a construction that uses many one-way functions.
Only RSA is built around factoring. I suppose if you consider discrete log to also be factoring related, some other public key & key agreement algs are also.
Hash functions and symmetric algorithms are not based around factoring.
Any explanation of PoW worth its salt no matter how basic should - and does in my experience - repeatedly drive home the idea that PoW is inefficient, it's literally right there in the name, Proof of Work, jumping through hoops as an algorithm. If somebody doesn't understand that PoW is extraordinarily inefficient, they don't understand blockchains and why they are cryptographically secure modulo implementations and social engineering.
Nothing new is added or said by emphasising how inefficient PoW is, that's the entire point, that's why it's secure. The comment that started this chain basically said that in very simple terms, and the comment I replied to expressed disapproval about a very minor issue with the terms then re-said what its parent already said in more words that don't add any clarity.
Will people see 'mathematical' and assume the computer is integrating dy/dx by parts to get the next nonce ? You can assume that the average HN reader knows that when we say a computer is 'solving math' it's meant that it's crunching an aweful lot of binary strings. That's why we call classic AI "classic" or "symbolic". Everything a computer do is crunching numbers brute-force style except when said otherwise.
Side question: what about your username? I live in Venezia and I'm curious now.
- how does the punishment work ? Do all nodes see that a malicious actor changed the chain and write the bad ideas in some ledger meaning "these nodes just lost X ETH" ?
- But if the malicious actor owns 2/3 of validators, what does he care what other nodes do ? They effectively control what block is accepted
- is there an advantage to run more than one validator, if you have the money (EDIT: and you don't want to attack the network)? Basically, does having more money gives you more (power, control, anything) ?
Slashers are entities that enforce the two above rules. If a slasher determines that you're node is down, or that you're committing an attestation violation (i.e. that you're signing more than one attestation in a given epoch mainly). The slasher actually does not get rewarded here. The block proposer who takes the broadcasted slashing and and adds a proof of it to their block proposition, and get what's called a whistleblower reward. Slashing is not meant to profitable, and the whistleblower reward is quite small. We don't need a million slashers, in fact, we could operate with just one... expect the Eth Foundation to run them, among other large players who can spare the resources.
2. Owning 2/3 of nodes economically is kind of silly. You essentially just 51% the network, and everyone else leaves. You're then stuck with a worthless personal currency. Have fun!
3. More than one validator means more validator rewards, and a bit more "power" in that you're a larger component of the general validation network.
Exchanges hold the most ETH. They are a central collusion point which could cause undue influence on the network.
At least it seems they do not own a lot of the existing Eth.
The main goal of crypto - the base token and protocol rewards from PoW or PoS - is to secure this network and keep it permissionless and decentralized.
A malicious actor can cause the network to slash a validator's funds by inhibiting the validator's connection. Slashing funds seems completely disproportionate for a validator being offline.
1. So if I get it correctly, there is an actor in charge of surveiling the network. There is no financial incentive to do that which means only a few actors will be running a slasher, and thus completely remove all decentralization. Once a fraud has been detected, the proof of fraud is to be spread by nodes with a financial incentive, meaning they might spread whatever the slasher says like gospel, giving even more power to slashers.
This is a very large step away from decentralization. The network depends not just on a few coders, but also on an institution checking whether nodes behave correctly or not. The whole point of blockchain was that everyone would assume everyone was out to cheat, and came up with a way to make it useful.
2. As I said in another reply, I don't expect the most rationality and long-term thinking from economic actors anymore, especially in the world of cryptocurrencies. I could very well see a single actor owning that many nodes but still being trusted because "they're the good guys" and people remain. You would also have to be sure they are in fact colliding.
3. So, as I feared, this is capitalism in its crudest form. At least PoW made it indirect by putting requirements on the hardware, but here it's just plain naked for all to see.
I know I sound very negative but I was really curious to see how PoS really changed the dynamics compared to PoW, and now I know. Thanks again for your explanations.
Exactly. This is usually the tradeoff glossed over by PoS marketing, that decentralization is essentially lost and it's no different than government controlled currencies. Instead of the "elected officials", it's the crypto messiah's that control this currency. You can pay into it, just as you can try to pay into your local city, county, state, (assuming in the USA) etc...
Further reading: https://eth2book.info/altair/part2/incentives/slashing#the-v...
There is no separate notion of a slasher, everyone gets to provide slashing evidence when they build a block. I don't understand why you build such a weak straw-man and the push it forward as if it was the truth without even checking how the system operates.
Having >2/3rds of validators (or >50% of power in PoW) let's you rewrite the chain back in history, censor txs, etc. You control what transactions go in blocks, and to a certain extent also recent history.
HOWEVER, this does not give you the power to steal or rewrite state as you please. You cannot convince the rest of the network that you now own someone else's ETH just because you have supermajority validator power. To take away ETH or change the cabin state in any other way, you need to include a valid and correctly signed transaction.
If you include an invalid state change (not caused by a successful and correct transaction) then all other nodes will reject that block, no matter how much validator power or hashing work went into it.
As I understand it, anyone who owns that amount of ETH would probably be interested in contributing to the trust of the Ethereum blockchain.
I never said that, I actually agree with you. I was just explaining GP's point to parent who in my opinion missed it.
you rug pull, divest into hard cash at peak, <any of the dozens of ways people with large amounts of cryptocurrencies get rid of those>
And, as always, sometimes folks just want to watch the world burn. It's a relatively low investment (~$50k) to become a validator, and the fine's only about $7k (.5 eth).
Imagine the damage someone with a few million (say, some baby-boomer who just sold their California duplex) could do if they wanted to.
If you own a security you are long, not short.
The point is that it can be profitable to crash the price even though you're holding the asset at the same time.
in that case, the less you hold the more profitable it is. I'm not sure I get your point...
> If you own a large amount of a currency, you want to ensure that the currency in question is trusted, or otherwise that currency would end up losing its value.
is fundamentally flawed. You can own a large amount of a currency and profit from it losing its value.
By the time the public has figured out the plot, it's too late: the attacker has already run to the exchanges with double-spent coins.
If you don't have that, the most that you can do is to attack the network by proposing bad blocks to slow down block production. Anytime that a (selected) validator proposes a bad block, the other validators that catch your mistake will snitch on you (through attestations) and the validator will get their stake funds slashed. The more your funds are slashed, the less of a chance you will have to be proposing new blocks in the future.
How is Ethereum going to comply with looming regulations in the cryptocurrency industry with proof-of-stake when regulators and enforcement agencies such as the OFAC could instruct validators to not mine or process transactions that have come from Ethereum mixers like Tornado.cash or sanctioned addresses and stay as a permissionless network at the same time?
If they do comply and enough validators start censoring these transactions, then it no longer is a permissionless network and just censors transactions like any other permissioned network does. If not enough validators censor or comply with these regulations, the funds in those validators will be slashed and may cause a cascade of lost funds and will also allow the processing of transactions from sanctioned addresses. i.e non-compliance and angering the regulators.
The energy problem is most definitely solved. But from a regulatory point of view, it appears that the Merge will introduce another can of worms and will make Ethereum eventually a more permissioned network with proof-of-stake.
- Some US based miners are already not including Tornado Cash transactions in their block
- These transactions are included in the blocks mined by the other miners
- Base layer censorship is not likely, because there have sanctioned Bitcoin and Ethereum addresses since 2018
- Getting the required 2/3 validators on the board might be difficult, becaused there is a huge backslash from the community against this and this could lead to another TheDAO hard fork like event and just having your validators slashed by the users / DoS etc.
The base layer neutrality make senses. Web browsers don’t censor the DNS addresses you can access either.
It's actually closer to 99.95% [1] which is significantly less than a 99% reduction.
99.95% reduction in power usage is more than 99% reduction.
A more in-depth explanation can be found here:
https://arstechnica.com/tech-policy/2022/08/the-merge-the-bi...
- PoS is not "decentralized" nor "democratic", because it means that only those with capital can participate in the network consensus building. This is "technically correct", but (a) it ignores that existing PoW also require massive amounts of capital to deploy mining facilities and (b) it is not democratic because only those with access to cheap electricity will profit from being a miner.
- PoS implies that those staking their crypto are "investing" with their tokens, which would make the token a "security" and not a "currency". This distinction could make it easy for the SEC and governments to intervene and create regulation that would require stakers to only participate if they implement changes at the protocol level. E.g, it could happen that a staker would reject to validate any block containing transactions to smart contracts that got sanctioned. This is a more real concern, if you think about all the big players (read, centralized exchanges) who are staking ETH on behalf of their customers and therefore will have non-negligible control over the network. In this case, the community expectation is that (a) users of staked ETH pull out of the exchanges and run their own validators and (b) the exchanges realize that they will be shooting themselves in the foot, and therefore go on to fight whatever legislation that pushes on that type of control/censorship at the protocol level.
In PoW, they can’t buy gpu as long as they have money, because there is another limit that money can’t always buy, energy, resources, needs (gpu for gamers, researchers, etc)
> In PoW, they can’t buy gpu as long as they have money, because there is another limit that money can’t always buy, energy, resources, needs (gpu for gamers, researchers, etc)
Just to elaborate, the implications of this are that PoW has an extra layer of centralization that threatens the network as ASICs/GPUs are only produced by less than a dozen companies and they can pick and choose who gets what kind of hardware and when (including keeping the best for themselves). This ensures that mining cannot be a level playing field and economies of scale will take over long term. This is even ignoring the massive corruption in the energy markets.
On the other hand PoS only requires one resource which nobody has a monopoly on so anyone can stake with nearly zero overhead. It's a level playing field regardless of size or political connections which allows for a much greater distribution of actors.
IMO it's preferable to 'the ones with lucrative energy contracts get richer' but obviously not desirable.
In the first case, you perpetuate the status quo. With the second, miner's greed indirectly helps humanity find cheaper and more available sources of energy, benefiting all. Because Bitcoin or not, as humanity gets more and more advanced, it will need more and more energy. So energy generation is the bottleneck that needs optimisation.
I don't see how creating the world's first trillionaire is positive in any way.
That said, the fact that PoW has been running the longest and Bitcoin uses it to secure the most value of any chain and it has had 100% uptime for the last 9.5 years, means people naturally trust it more.
PoS also in theory incentivizes centralization of staking over time. It's already started to play out this way way with the top two stakers controlling 46% of the staked ETH on the Beacon Chain. With Bitcoin, because you constantly have to buy new hardware and find cheap energy every single block, there's been a constant rise and fall of large miners.
A related issue is that it's more fragile to government censorship as the Tornado Cash OFAC sanctions show. Bitcoin has had mixers sanctioned and it didn't affect the core chain at all. With Tornado Cash, it's possible that Coinbase and other US-based stakers will have to not validate certain transactions, which doesn’t work in PoS, so they've said they will stop staking if the US gov't decides OFAC applies to stakers (which there's a legal argument it does). It's a bit in the weeds, but basically Bitcoin/PoW works in a fundamentally different way, so miners can filter out transactions they legally aren't allow to process and all that happens is those transactions get validated in a future block by other miners.
One other is that PoS has no deterministic way to recover from a complete outage. If a huge EMP brought down every computer network on Earth, when they come back online, PoW has a clear rule for determining which chain is the real one. PoS does not, so it's unclear what would happen. This may seem like a small edge case, and it is, but trust and security are so important when $500B and growing is at stake that tiny edge cases matter.
While correct, that conveniently omits the downtime in 2010 and 2013. Why be shady?
Edit: three nines is considerably different than infinite nines. Around 2018 there was an inflation bug which was kept quiet until it was patched. It's human to have an occasional bug. Setting the bar too high may be a dis-service if/when there is an exploit.
It had 99.98% uptime since launched and 100% since 2013. That’s one of the most reliable software projects ever created in history.
You could fairly easily argue that building on a chain that includes sanctioned transactions is also "processing" them. Therefore miners would need to fork the chain to remain in the clear legally or just stop mining altogether.
I personally think even going after stakers is a bridge too far, but in that case the staker is profiting off of the illegal transaction and they're also directly participating in processing it.
They have? Regulators have made an explicit statement on this? Can you link to it?
A direct way to do that is to vote NO for such blocks. Does PoS protocol of yours require the NO vote to have reasons for that decision? It can be analyzed and having wrong NO reasons may be a reason to punish validator.
An indirect way to do that attack is to timeout on unwanted blocks. E.g., if a malicious validator sees a block it does not want, it will stop sending any messages at all until it sees next block or has an opportunity to be a proposer. How PoS protocol of yours handle such attack?
Another possible weakness could occur if staking is mostly outsourced (i.e. staking as a service) and one provider overwhelmingly dominates the market. That provider would be in a position to hijack the network without having much of a stake in it. Proof of stake doesn't really live up to its name if the validation nodes aren't run by validation slot owners.
Staking-as-a-service will operate as a market of diverse options. The network could decide to fork from an outsized dishonest market participant. It would be controversial, but the validity of the network is generally a common incentive for most involved.
Is there a good place to read more about this hardware requirements as a function of validator slots? A concern in my mind with PoS is what is the incentive to expand the physical hardware footprint of the network. I understand this implies more energy usage, however it is a requirement for a decentralized, distributed, and resilient system, otherwise it can very easily be physically attacked if the footprint becomes overly concentrated with a few very powerful nodes.
Unless the hardware requirements are a convex function of total staked then if me and you both want to stake we will see the hardware and network/bandwidth costs as something we could share, which if everyone calculates the same, the network will physically shrink.
See this response on reddit: https://www.reddit.com/r/ethstaker/comments/nk9qzt/multiple_...
Weighed against that, the slashing penalties per node increase, the more nodes fail at once. That gives an economic incentive to decentralize.
Is it sufficient? I’m not sure.
Are you asking why it won't consolidate on AWS?
Penalties for offline validators are greater if many validators go offline for similar timeframe.
But can't the malicious actor estimate very well whether their attack will succeed beforehand?
Can someone clarify the point about expected price action changes for ETH/USD and other pairs?
Presumably the author believes a smaller proportion of Ether will be regularly traded than on the PoW system, but will the total staked (i.e. held) amount be sufficient to impact prices significantly? Also, why would we expect stakers to not take their profits on a regular basis? (Note: another commenter pointed out unstaking won’t be possible for the time being. That does answer the question for the short-term).
What’s the meaning (and reasoning behind) the following statement:
> Ethereum will move from a system that has roughly $20mm a day of structural outflows to a system that has roughly a half a million dollars a day of structural inflows.
Perhaps it’s referring to the ratio of Ether being supplied on a daily basis compared to its total supply?
So in summary:
With PoW, each day fresh $20M is created and sold, which increases the ratio of traded Ether compared to its total amount (“outflow” from held ratio).
With PoS, each day fresh $0.5M is created and held, which decreases the ratio of traded Ether compared to its total amount (“inflow”).
Do I have this right? That does still leave the question of whether this daily ratio change will be sufficient to impact prices significantly.
When the merge happens, the PoW software (the "execution client") will keep running transactions, but instead of choosing blocks by looking at miner hashes, it will look to the beacon chain to choose them. So stakers will run both the PoS client, and the execution client with the mining function turned off.
There's just too many escape valves. If you're a miner, you don't care about what network you're mining, you care about getting the most profit out of your hardware. There are several EVM PoW chains that are established, have been around and are listed and traded somewhere already, and have functioning contracts in them, and beyond that there are other non EVM PoW chains to direct your hardware at if you're running GPUs. It just doesn't make sense for a miner to take the risk of backing a new chain over moving their hash power over to an existing one.
At some point I'm sure they'll remove the legacy mining code, I just don't know whether they've done it yet.
Yes, definitely, and I'm sure all malicious actors made sure to disclose their exploits before it goes live, right? :)
Note that the current Ethereum consensus protocol does not support 100% decentralised staking pools yet.
What about storage requirements? How long before you need a dedicated NAS to operate a node?
The non-responsive stakers would gradually lose their stake. The penalty for going offline is normally small, but if most validators go offline at once it's considerably larger. Their stake will shrink, until they don't hold most of the stake anymore and the network can start finalizing again.
(This makes the network a bit subjective, so hopefully it’ll come up rarely)
All fields of engineering are complex to those that have an not studied them.
Alternatively, proof-of-stake (PoS) guarantees the security of the network in a different way. In PoS, anyone with 32 ETH can deposit that ETH to become a validator, a node that participates in the network's consensus algorithm. Finalizing a block requires 2/3 of all active validators to sign off on it. Should a malicious actor try to tamper with the underlying protocol by using a large number of validators to revert a finalized block (the equivalent of a "51% attack" in PoW) their funds are slashed — meaning they lose a portion of their staked ETH. This makes attacks extremely expensive; it would be like a PoW system where if you use your mining hardware to attack the network then your hardware catches fire and is destroyed.
PoS does not require the same energy-intensive hardware as PoW. Any relatively recent consumer hardware should be capable of running the software required to operate a 32 ETH staking node. If you deposit more than 32 ETH, you will be assigned multiple "validator slots" by the protocol, but you will still be able to run them from a single computer, though hardware requirements go up the more you stake. Most estimates put the expected energy savings from the switch to PoS to be around 99%.
If you have any additional questions please let me know!