Honest question: How is that different from proof of work, where those with significant resources (1%, a nation, etc) can spend significantly on mining equipment?
Whatever equipment you buy will lose it's value quickly, in 5+ years, it's probably worthless. And that's ignoring all the money you have to spend on electricity, non-stop and increasingly. In PoW, if miners slow down, they'll become irrelevant.
Even if you manage to acquire a 51% hash rate for example (which is extremely difficult), it'll be very difficult to keep it over a long enough period of time.
PoS is fundamentally broken in my opinion, it literally says "rich gets richer" and wealthy stakers will get higher (absolute) rewards which they don't have any incentive to sell since they didn't spend any energy to get it. That's even ignoring all the custodians which have large quantities of the said crypto, so they can just keep the rewards to themselves or keep a sizeable % of it.
One of the motivations for the DAO hack hardfork btw was that the attacker would hold significant power under a PoS system.
You can participate in mining pools, but realistically speaking unless you have very powerful hardware, you're better off just buying Bitcoin outright.
Same with PoS, you can stake with a pool if you have less than 32eth, but your returns on that are not going to be comparable to what large holders get (same percentage, but very tiny in absolute numbers).
You're arguing that "small" (<$80K) amounts of money aren't worth investing even at a very high APR. This is pretty contrary to most investment advice.
I'm not, even small amounts should be invested of course, I'm just pointing out that rich benefit the most in either scenario.
Also worth pointing out, high APRs aren't guaranteed and the network fees are supposed to be significantly decreased post EIP-1559. Also, for those who don't meet 32 eth threshold, there's good chance they are not even remotely close to that threshold.
The difference is that PoW is permissionless and PoS is permissioned system. Another difference is that in PoS you pay once and get benefits forever, in PoW you must actively choose to spend energy mining. One more difference is that once you become a staker, your power in the system only grows, in PoW anybody can start mining and dilute your power.
PoS is simply worse from every angle and it’s also not cheaper because MR=MC.
PoS is permissioned system because if you want to become a validator you must convince another (potential) validator to give up part of his stake.
> MC in PoS is mainly interest costs
no, it's also costs of fighting (via politics, marketing and hacking) for that initial pre-mined stake.
it's not cheaper than PoW and has worse security properties due to all sorts of attacks - long range, grinding, etc. ultimately it's flawed because unlike in PoW there is no universally objective measure of geniuneness of a chain (the "work" in PoW).
PoS is effectively permissionless given the number of parties that have the stakeable asset and are willing to sell it.
>>no, it's also costs of fighting (via politics, marketing and hacking) for that initial pre-mined stake.
There is no fight if there was a transition from PoW to PoS, and thus no premine, or if the premine was distributed via an open crowdsale, with revenue allocated to a non-profit foundation.
Your analysis makes too many tenuous assumptions to push one side of the debate.
> PoS is effectively permissionless given the number of parties that have the stakeable asset and are willing to sell it.
the market doesn't have enough liquidity for you to gain a meaningful stake and those that organized the pre-mine scam will always remain in control. or they will sell you the stake for exorbitant price and perform a long-range attack against you because they still hold the original keys.
Eth is going through transition and yet it’s the largest pre-mine scam in existence.
Crowd sales are just pre-mines.
Non-profit is just pre-mine beneficiary that people will fight for control over.
And you conveniently ignored all the other problems with PoS: long range and grinding attacks, no ability to reduce power of malicious staker, no universal objective measure for which chain is genuine so you have to rely on third parties, etc.
>>the market doesn't have enough liquidity for you to gain a meaningful stake
This is unsupported. There are billions of dollars worth of ETH sold every day. If you intended to hold what you bought, the liquidity would gradually go down as you took what was bought off the market, but you could certainly acquire a significant share of the stake.
>>Non-profit is just pre-mine beneficiary that people will fight for control over.
That assumes zero altuistic oversight from ETH stakeholders at large deterring attempts to corrupt the grant issuing process, which is not a sensible assumption.
>>And you conveniently ignored all the other problems with PoS
Long-range attack is addressed with dependence on weak subjectivity:
> There are billions of dollars worth of ETH sold every day
not nearly enough to purchase a meaningful stake that could protect you from premine scammers that launched the project. not to mention - you'd be giving up your money for their benefit. double rekt.
> zero altuistic oversight from ETH stakeholders at large deterring attempts to corrupt the grant issuing process, which is not a sensible assumption
ah, nice, a system that simply relies on altruistic motives of premine scammers that will be in control and largest beneficiaries of those staking grants. what could possibly go wrong.
> Long-range attack is addressed with dependence on weak subjectivity: ... The rest of your criticisms have similarly been addressed in state of the art Proof of Stake protocols
it's not addressed, it's just partly waved away and partly obfuscated in a non-solutions like slashing or checkpointing.
pos still doesn't work, pow is the only known decentralized and trustless consensus reaching protocol.
>>not nearly enough to purchase a meaningful stake that could protect you from premine scammers that launched the project. not to mention - you'd be giving up your money for their benefit. double rekt.
There is no need for any protection. Proof of stake doesn't enable stakers to attack non-stakers. Nor would stakers have any incentive to.
Moreover, there was absolutely no scam in the premine. It was publicly announced, and the majority of it was distributed via a programmatic crowdsale.
This characterization of yours is simply an emotional attack.
>>you'd be giving up your money for their benefit. double rekt.
Same with any currency. You provide something of value to acquire some currency. This applies to dealing with early adopters of other currencies, early investors in companies, etc.
This is simply a bad-faith criticism of proof-of-stake that is equally applicable to anything else, unless you make the tortured argument that a publicly announced crowdsale and dev grant is somehow a "scam", and therefore there is some distinct quality about buying currency from those who acquired their stake through a premine over acquiring it through some other method.
>>ah, nice, a system that simply relies on altruistic motives of premine scammers
How can any one can take ETH's critics seriously when you make blatantly libelous accusations that participating in an open premine crowd makes someone a scammer.
> Proof of stake doesn't enable stakers to attack non-stakers
yes it does. it allows stakers to prevent non-stakers from becoming stakers. all rewards go to stakers. rich get richer even faster.
> there was absolutely no scam in the premine. It was publicly announced, and the majority of it was distributed via a programmatic crowdsale.
public announcement means nothing if participation is permissioned. there was 12% blatant premine and 60% so called "pre-sale", of which undisclosed amount went to scammers that organized it and didn't have to pay anything.
> applies to dealing with early adopters of other currencies
this doesn't apply to BTC which literally anybody could mine without asking approval and permission. ETH is just another scam.
> dev grant is somehow a "scam"
of course it is.
> open premine crowd
well, at least you used the right word to describe it - premine. any crypto premine is a scam by definition. some of those scams just manage to bamboozle enough people to stay afloat longer and get a chance to scam even more.
good job shifting conversation away from discussing PoS flaws into complaining about randoms on internet being rude to scammers.
>>yes it does. it allows stakers to prevent non-stakers from becoming stakers. all rewards go to stakers. rich get richer even faster.
No it doesn't. As I already explained, there is no practical way holders can collude to force all holders of the currency to not sell. There will always be significant liquidity for any currency that has as wide a distribution of holders that Ethereum does.
>>public announcement means nothing if participation is permissioned.
The crowdsale was not permissioned. It was completely programmatic.
>>there was 12% blatant premine
Which was publicly disclosed compensation for the developers who created Ethereum, as well as an allocation for grants to further develop Ethereum.
>>and 60% so called "pre-sale", of which undisclosed amount went to scammers that organized it and didn't have to pay anything.
This allegation of the pre-sale being a scam is totally unsubstantiated. It's irresponsible character assassination.
>>randoms on internet being rude to scammers.
The credibility of avowed critics of Ethereum, who make totally unsubstantiated allegations of the organizers of Ethereum's crowdsale of being scammers, is relevant to these discussions.
Moreover, your criticism is not relevant to PoS. It's specifically critical of Ethereum, since Ethereum had a premine and crowdsale. PoS doesn't have to have either. So once again, your analysis seems entirely biased and agenda-driven.
Basically in proof of work you have no idea who is participating at any moment. For example, the NSA could be running a blockchain in parallel and if they have more power create a fork. With proof of stake you are always aware of the participants in the system and a fork will only happen it the richest decide to fork. But why would they? In Bitcoin the most powerful miner might have no bitcoin and no incentive to keep the network safe.
At the same time, because of this, you don’t really get finality in Bitcoin. You get some assurance that your transaction is “confirmed” after a number of block but you’re never really sure. In proof of stake you can have consensus protocols with true finality, meaning that there’ll be no forks for sure if a threshold of participants remained honest.
My understanding is, proof of stake is not more secure than proof of work. Reason for PoS are efficiency, speed of transaction, lower gas fees, less environmental impact, etc. (Of course there can be secure PoS, insecure PoS, secure PoW, insecure PoW…)
Polygon basically checkpoints a spreadsheet onto the eth chain on an interval, but there is no way to guarantee that there weren't any shenanigans between the checkpoints. This is a big improvement over say BSC which does no such thing, but it isn't the security of a true eth L2. Real L2's can prove that their output to L1 is legitimate either through zero knowledge cryptographic proofs (loopring, zksync) or through a game theory fraud check (optimism, arbitrum).
PoS is more secure in general, also PoS and BFT-based cryptocurrencies in periods of network partitions will rather come to a stop instead of allowing safety to be violated (double spending).
Once they stop, they don't start again without external intervention (so you're back to The DAO when it comes to which validators are not Byzantine). PoS is a bet that 1/3 of the staked tokens never, ever fall into the hands of Byzantine actors -- not by purchase, not by theft, and not by DeFi smart contract hacks. That's not a bet I would take.
And how, exactly, will the "network conditions stabilize" if over 1/3 of the votes are malicious, and thus able to prevent the honest voters from ever agreeing on anything ever again? Are you betting that the attacker will just get bored and walk away?
Also, what a confusing choice of words. A distributed system is BFT (or not BFT) regardless of whether or not the underlying message broadcast medium is synchronous/asynchronous, or reliable/unreliable. The "network conditions" being "stable" have no bearing on the voters' ability to reach agreement -- that's solely a function of whether or not f or fewer votes are malicious out of 3f + 1 votes.
I was talking about network conditions, not a threshold of malicious participants (in which case yeah you will have liveness issues).
Your second paragraph is false also. Different BFT systems have different assumptions. Some work in asynchronous settings, some work in semi-synchronous settings, etc.
You should consider rereading Leslie Lamport's original paper. BFT is a property of corrupt votes, not the network. You keep trying to make it about the network. Like, if you want to have a conversation about how the network can influence the system's fault tolerance, you should instead consider the network topology -- as in, which routes between honest nodes include corrupt nodes. This is also considered by the paper, since corrupt nodes can censor or rewrite messages, and thus influence how many corrupt nodes the system can truly tolerate, given a network topology. But in no case does message delay give a BFT system's node an excuse to make forward progress without first verifying that at least 2f+1 replicas agree with its decision. Even voting on a view change to remove a presumed dead node requires a 2f+1 vote.
