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Look up Proof of Stake which is what Ethereum is moving to later this year. In Proof of Stake validators put up an ETH bond in order to randomly get picked to h

by Sargos 6y ago

Look up Proof of Stake which is what Ethereum is moving to later this year. In Proof of Stake validators put up an ETH bond in order to randomly get picked to help create blocks in the network. The higher the price of ETH the more expensive it becomes to attack the network.

AaronFriel 6y ago
They could just require a higher stake, the price of eth is irrelevant. Let's say hypothetically one eth was worth about a Satoshi, 0.05 cents or so. So they could just require 1,000,000 eth as a stake. Or ten times that. Or a hundred times that. It's irrelevant what the price is, the choice of the stake amount is. If eth was inflationary, they could inflate the stake proportionally.
- jtsiskin 6y ago
  That’s not true, those are two different things. Requiring 100x the total number of possible stakers is 100x lower. Versus if the price increases 100x, that means the same number of possible stakers is possible, but it’s now 100x more expensive to do a 51% (or whatever the PoS % needed is) attack.
  - deleted 6y ago
    [deleted]
  - AaronFriel 6y ago
    The ethereum protocol can choose whatever stake amount (in equivalent USD when they decide the bond to stake) they want. The currency being deflationary or not is irrelevant - the stake could be adjusted. The currency going up in down in value relative to ETH could be adjusted. They could choose to require one gwei, one ETH, or one million ETH. That's your protection. The exchange rate from USD to ETH is irrelevant.
    - dlubarov 6y ago
      Would you agree that attacking Eth2's consensus requires a certain percentage [1] of total voting power? If so, then by extension, it requires a certain (somewhat different) percentage of the total Eth supply. > The exchange rate from USD to ETH is irrelevant. Unless the attacker already has a large enough portion of the Eth supply to execute an attack, they'll have to pay to acquire it. [1] 1/3 voting power would theoretically let an attacker double spend by getting two conflicting forks committed; 2/3 would let them commit invalid and/or unavailable state.
    - jtsiskin 6y ago
      No, the exchange rate is extremely relevant. Let’s say we need 2/3 of all ETH in order to launch an attack. If ETH is 1 penny, this is much easier for us to acquire than if ETH is $100. I think you may be misunderstanding staking. Your vote is proportional to how much ETH you stake, it seems like you are picturing everyone gets 1 vote. The only reason for the minimum stake amount is for performance reasons
542458 6y ago
But isn’t that “the higher the market cap of ETH, the harder it is to attack”? Does the price of a single unit actually matter here, market cap being held equal?
- Sargos 6y ago
  The thing that matters is how valuable the 32ETH stake the validators put up is as that is the amount of penalty for trying any attack. The theoretical attacks on Proof of Stake are well known and discussed but generally require 33% - 51% of all staked ETH for various annoying attacks on the blockchain but not actually killing it. 3,491,906 ETH is currently staked right now which is actually way lower than will eventually be staked when PoS goes live later this year. 33% of this is 1,152,329 ETH which at current prices of $1,776 puts a minor attack at over $2billion. This is without considering that after the attack the network could easily fork and remove the attacker's ETH from existence so it's hard to see economics working in the attackers favor. A high price of ETH means it costs an increasingly astronomical amount to attack the network and pretty much no way to do it profitably.
  - dlubarov 6y ago
    > The thing that matters is how valuable the 32ETH stake the validators put up is as that is the amount of penalty for trying any attack. Well, there wouldn't be much point in attempting an attack if the attacker didn't have the ~1/3 voting power to successfully execute it, right?
    - terhechte 6y ago
      But acquiring ~1/3 voting power is much easier when 32 ETH are worth ~$3.2 vs when they're $60k Also: People stake ETH under the expectation that the ETH they generate are worth just as much or more as the ETH they staked. If the price would continuously go down, less and less people would stake. The less people stake, the easier it is to buy 1/3 of voting power.

by Sargos 6y ago

AaronFriel 6y ago

They could just require a higher stake, the price of eth is irrelevant. Let's say hypothetically one eth was worth about a Satoshi, 0.05 cents or so. So they could just require 1,000,000 eth as a stake. Or ten times that. Or a hundred times that. It's irrelevant what the price is, the choice of the stake amount is. If eth was inflationary, they could inflate the stake proportionally.

jtsiskin 6y ago
That’s not true, those are two different things. Requiring 100x the total number of possible stakers is 100x lower. Versus if the price increases 100x, that means the same number of possible stakers is possible, but it’s now 100x more expensive to do a 51% (or whatever the PoS % needed is) attack.
- deleted 6y ago
  [deleted]
- AaronFriel 6y ago
  The ethereum protocol can choose whatever stake amount (in equivalent USD when they decide the bond to stake) they want. The currency being deflationary or not is irrelevant - the stake could be adjusted. The currency going up in down in value relative to ETH could be adjusted. They could choose to require one gwei, one ETH, or one million ETH. That's your protection. The exchange rate from USD to ETH is irrelevant.
  - dlubarov 6y ago
    Would you agree that attacking Eth2's consensus requires a certain percentage [1] of total voting power? If so, then by extension, it requires a certain (somewhat different) percentage of the total Eth supply. > The exchange rate from USD to ETH is irrelevant. Unless the attacker already has a large enough portion of the Eth supply to execute an attack, they'll have to pay to acquire it. [1] 1/3 voting power would theoretically let an attacker double spend by getting two conflicting forks committed; 2/3 would let them commit invalid and/or unavailable state.
  - jtsiskin 6y ago
    No, the exchange rate is extremely relevant. Let’s say we need 2/3 of all ETH in order to launch an attack. If ETH is 1 penny, this is much easier for us to acquire than if ETH is $100. I think you may be misunderstanding staking. Your vote is proportional to how much ETH you stake, it seems like you are picturing everyone gets 1 vote. The only reason for the minimum stake amount is for performance reasons

542458 6y ago

But isn’t that “the higher the market cap of ETH, the harder it is to attack”? Does the price of a single unit actually matter here, market cap being held equal?

Sargos 6y ago
The thing that matters is how valuable the 32ETH stake the validators put up is as that is the amount of penalty for trying any attack. The theoretical attacks on Proof of Stake are well known and discussed but generally require 33% - 51% of all staked ETH for various annoying attacks on the blockchain but not actually killing it. 3,491,906 ETH is currently staked right now which is actually way lower than will eventually be staked when PoS goes live later this year. 33% of this is 1,152,329 ETH which at current prices of $1,776 puts a minor attack at over $2billion. This is without considering that after the attack the network could easily fork and remove the attacker's ETH from existence so it's hard to see economics working in the attackers favor. A high price of ETH means it costs an increasingly astronomical amount to attack the network and pretty much no way to do it profitably.
- dlubarov 6y ago
  > The thing that matters is how valuable the 32ETH stake the validators put up is as that is the amount of penalty for trying any attack. Well, there wouldn't be much point in attempting an attack if the attacker didn't have the ~1/3 voting power to successfully execute it, right?
  - terhechte 6y ago
    But acquiring ~1/3 voting power is much easier when 32 ETH are worth ~$3.2 vs when they're $60k Also: People stake ETH under the expectation that the ETH they generate are worth just as much or more as the ETH they staked. If the price would continuously go down, less and less people would stake. The less people stake, the easier it is to buy 1/3 of voting power.