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If there’s a reward for computing a VDF faster than everyone else, why won’t the amount of wasted resources, in the the form of e.g. human capital dedicated to

If there’s a reward for computing a VDF faster than everyone else, why won’t the amount of wasted resources, in the the form of e.g. human capital dedicated to computing faster VDFs, not be equivalent to the economic waste if the verification scheme used is proof of work? The article claims that proof of work is costing Ethereum hundreds of millions of dollars per year, but this VDF competition is also wasting millions of dollars in human capital to compute a fast VDF before there’s even a running blockchain using it (ie before there’s even a real non-synthetic incentive to break the system). Given that we need millions of dollars of waste just to launch the system safely, why wouldn’t we expect the wasted human capital dedicated to computing faster vdfs to increase to hundreds of millions once an actual attackable system is out in the wild, same as proof of work. Moreover, it seems very unclear that wasting human capital is less economically bad than wasting the same “valu” in raw energy, particularly if a lot of that energy is from renewable sources anyway.

H8crilA 7y ago
Well, it does not create CO2, for starters. Also several million is less than several hundred million. By 100x
- nnnnn11111 7y ago
  But it’s several million just to get it started. If the reward for pulling off an attack is the same as in proof of work systems, why wouldn’t the waste wind up equaling the reward (ie hundreds of millions in waste if it’s used to secure something like Ethereum or Bitcoin)?
  - H8crilA 7y ago
    Possibly. But the CO2 is the big deal. I don't have much issue with "stake"-based mining, i.e. if it's just burning abstract money, instead of burning physical commodities.
    - nnnnn11111 7y ago
      To me this is like arguing that something like high frequency trading is ok because it doesn’t generate c02. The reality is that hundreds of millions in wasted human capital, particularly the best mathematical minds on the planet, is extremely costly. That much human capital, if allocated correctly, could likely do a lot to offset climate change, for example, among many other positive things.
      - H8crilA 7y ago
        Sure, go ahead and start a new project. Money's cheap with zero interest rates, funding startups has been ridiculously easy for the past 10 years.
  - drcode 7y ago
    VDFs don't replace proof of work. In essence, POW is a lottery where everyone gets their own random lottery ticket and the lowest number wins. VDFs, instead, allow a large group of people to all share a SINGLE ticket, which simply spits out the ID of the winner. This is conceptually a completely different approach and VDFs therefore aren't susceptible to the same problems as POW (though they have other unrelated problems, which this contest is trying to mitigate)
justindrake 7y ago
> If there’s a reward for computing a VDF faster than everyone else There's no direct reward for being a bit faster than everyone else. If you are much faster (say, 100x faster than the general public) then you may be able to bias the randomness, and therefore manipulate things like lotteries built on Ethereum. > The article claims that proof of work is costing Ethereum hundreds of millions of dollars per year, but this VDF competition is also wasting millions of dollars in human capital It's about orders of magnitude. Ethereum burns about $0.5B per year. The VDF project is about $15m, and the ASIC should last about 10 years.
- nnnnn11111 7y ago
  From what you’re saying it seems like an “incentive cliff” at 100x the power of whatever the competition produces is being relied upon for the security of the currency, meaning there exists a strong incentive for someone to waste human capital computing a faster VDF if he thinks he can “hurdle” the incentive cliff of 100x the power of whatever the competition produces. Given the competition is only a ~$15m investment in a group of hobbyists, and given we’ve already seen order of magnitude improvements over and over again with proof of work in Bitcoin once the incentives are there, why is it assumed that someone won’t mount a long range attack to break the system by engineering a 100x faster VDF? Moreover, how does the system recover if that were to happen?
  - topmonk 7y ago
    There is quite a difference between a steady stream of income, and some far off reward which you may or may not be able to achieve. Nearly anyone can do the former, but only a few have the luxury to attempt the latter.
    - nnnnn11111 7y ago
      Modern asic farms require a lot of up-front investment in developing hardware. All it takes is for one person to think he can hurdle the cliff and he can raise a lot of money to do it if the reward is there, not unlike the first group of people to raise funds to develop ASICS for Bitcoin (which were orders of magnitude faster than the hardware available at the time). We know Bitcoin can cope with a 100x more powerful asic coming online— can these systems cope with a 100x more powerful VDF?

H8crilA 7y ago

Well, it does not create CO2, for starters. Also several million is less than several hundred million. By 100x

nnnnn11111 7y ago
But it’s several million just to get it started. If the reward for pulling off an attack is the same as in proof of work systems, why wouldn’t the waste wind up equaling the reward (ie hundreds of millions in waste if it’s used to secure something like Ethereum or Bitcoin)?
- H8crilA 7y ago
  Possibly. But the CO2 is the big deal. I don't have much issue with "stake"-based mining, i.e. if it's just burning abstract money, instead of burning physical commodities.
  - nnnnn11111 7y ago
    To me this is like arguing that something like high frequency trading is ok because it doesn’t generate c02. The reality is that hundreds of millions in wasted human capital, particularly the best mathematical minds on the planet, is extremely costly. That much human capital, if allocated correctly, could likely do a lot to offset climate change, for example, among many other positive things.
    - H8crilA 7y ago
      Sure, go ahead and start a new project. Money's cheap with zero interest rates, funding startups has been ridiculously easy for the past 10 years.
- drcode 7y ago
  VDFs don't replace proof of work. In essence, POW is a lottery where everyone gets their own random lottery ticket and the lowest number wins. VDFs, instead, allow a large group of people to all share a SINGLE ticket, which simply spits out the ID of the winner. This is conceptually a completely different approach and VDFs therefore aren't susceptible to the same problems as POW (though they have other unrelated problems, which this contest is trying to mitigate)

justindrake 7y ago

> If there’s a reward for computing a VDF faster than everyone else There's no direct reward for being a bit faster than everyone else. If you are much faster (say, 100x faster than the general public) then you may be able to bias the randomness, and therefore manipulate things like lotteries built on Ethereum. > The article claims that proof of work is costing Ethereum hundreds of millions of dollars per year, but this VDF competition is also wasting millions of dollars in human capital It's about orders of magnitude. Ethereum burns about $0.5B per year. The VDF project is about $15m, and the ASIC should last about 10 years.

nnnnn11111 7y ago
From what you’re saying it seems like an “incentive cliff” at 100x the power of whatever the competition produces is being relied upon for the security of the currency, meaning there exists a strong incentive for someone to waste human capital computing a faster VDF if he thinks he can “hurdle” the incentive cliff of 100x the power of whatever the competition produces. Given the competition is only a ~$15m investment in a group of hobbyists, and given we’ve already seen order of magnitude improvements over and over again with proof of work in Bitcoin once the incentives are there, why is it assumed that someone won’t mount a long range attack to break the system by engineering a 100x faster VDF? Moreover, how does the system recover if that were to happen?
- topmonk 7y ago
  There is quite a difference between a steady stream of income, and some far off reward which you may or may not be able to achieve. Nearly anyone can do the former, but only a few have the luxury to attempt the latter.
  - nnnnn11111 7y ago
    Modern asic farms require a lot of up-front investment in developing hardware. All it takes is for one person to think he can hurdle the cliff and he can raise a lot of money to do it if the reward is there, not unlike the first group of people to raise funds to develop ASICS for Bitcoin (which were orders of magnitude faster than the hardware available at the time). We know Bitcoin can cope with a 100x more powerful asic coming online— can these systems cope with a 100x more powerful VDF?