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Yes, running a validator will cost some money. I will explain how I think. If the rich want to get richer he have to make good investment decisions and some wor

by GBiT 5y ago

Yes, running a validator will cost some money. I will explain how I think. If the rich want to get richer he have to make good investment decisions and some work. In POS you don't have to do anything at all, just buy and hold. So in POS, you don't need to innovate your business model. In POW, you always have to innovate to be a leader. Bitcoin ASIC innovation in last years shows how strong competition is. And competition makes innovation. In POS you just keep coins and stake them. Thats it

shawnz 5y ago
This is often claimed to be an advantage of PoS: you can't get an extra increase in rate of profits by being richer (beyond the linear increase you'd expect). With PoW on the other hand, the richest have the best access to the most innovative technology and so you get superlinear profits the richer you are.
- GBiT 5y ago
  Real world case: Intel had the most advanced chip and more money, until one day AMD got better. In POS this scenario is impossible. First will always be first.
- atweiden 5y ago
  > This is often claimed to be an advantage of PoS: you can't get an extra increase in rate of profits by being richer (beyond the linear increase you'd expect). With PoW on the other hand, the richest have the best access to the most innovative technology and so you get superlinear profits the richer you are. And yet, anyone who buys these proof-of-stake coins now, years after they were launched, suffers from having a cost basis orders of magnitude higher than that of the early investors. Yeah, they’re all superficially earning “the same staking ROI”. But in relative terms, the earliest investors are mopping the floor with the later investors, because the earliest investors can stake orders of magnitude more coins. The earliest stakers become by far the biggest miners. They’re given an outsized influence over the network, and it’s sadly telling — and a bit unsurprising — that early PoS investors astroturf their coin by focusing on irrelevant minutia, e.g. “open access to staking ROI”, or whataboutism, e.g. “but what about ASIC miner distribution”. That is a classic Red Herring. “Rate of profits” doesn’t matter more to fairness than, say, premining half or more of the outstanding supply of a given coin to give early investors absurd ROI advantages. “Fair access to yield” doesn’t matter more to fairness than exclusive pre-ICOs rounds which only prestigious investors have access to.
  - 22c 5y ago
    > But in relative terms, the earliest investors are mopping the floor with the later investors, because the earliest investors can stake orders of magnitude more coins. PoS networks are typically not going to be minting coins in perpetuity. Most PoS networks aim to reach a "zero issuance" state where the network can sustain itself on TX fees alone. It's also typically in a networks interest to decentralise TX verification as much as possible (in contrast to banking, which tends lean towards the opposite). Ideally a PoS network will reach a steady-state where TX verification is profitable enough that people will be willing do it for TX fees alone, but efficient enough that you can be market competitive regardless of how you choose to run your validator nodes (ie. costs should not be prohibitively high as to prevent geographical distribution). There will always be rich and poor people - PoS networks don't aim to solve that - but the question will be is a rich person able to participate in the network more efficiently than a poor person.
    - atweiden 5y ago
      > Most PoS networks aim to reach a "zero issuance" state where the network can sustain itself on TX fees alone. Whether ICO investors are stakemining coins issued through inflation or transaction fees doesn’t matter — they’re still mining orders of magnitude more coins, at the end of the day. Their artificially low cost basis translates into them reaping outsized profits which dwarf that of later investors. (And frankly, it’s absurd the PoS astroturfing has gotten so out of hand that this needs to be pointed out at all.)
      - wmf 5y ago
        It seems like that argument could equally apply to PoW or startups.
        atweiden 5y ago
        > It seems like that argument could equally apply to PoW or startups. It isn’t clear to me what you meant to say here. Early investors tend to be by far the biggest winners in general, crypto or not. However, we were discussing mining revenue, not profits in general. Importantly, early PoW miners had to source new ASIC mining rigs from China year after year, pay to install those ASICs in datacenters, and pay for the electricity to power them. For the better part of a decade. Only then would they have continued earning bitcoin mining revenue at all. Conversely, PoS staking yield requires little more than showing up with cash on day one. From then on out, PoS stakers earn mining revenue in proportion to their holdings. It costs them almost nothing to do this in perpetuity. In addition, PoS is sadly linked with ICOs, pre-ICOs and pre-mines. These financial shenanigans allow early investors to stake disproportionately more coins than later investors. IMO it’s highly misleading to present this situation as being somehow “more fair” than PoW mining.
0134340 5y ago
You're assuming that PoS is divorced from competition and innovation. Those who innovate tend to earn capital, be it fiat, or let's say Ethereum here. You're assuming those that have Ethereum didn't innovate in some way up the line to be able to buy their earned share. And if you want more shares for PoS, well, you innovate and earn to buy more shares. Your model only works if you assume a very closed and proprietary economic system.
- imtringued 5y ago
  >And if you want more shares for PoS, well, you innovate and earn to buy more shares. If the devs have a 51% share of staked ETH and they never sell any ETH then even if you buy all ETH on the market you will never get beyond 49%. The only way that can happen is if the devs to decide to hand over control to you voluntarily. >Your model only works if you assume a very closed and proprietary economic system. What you are assuming is that the economy exists for the sake of Ethereum, people work and exist so that they can buy ETH shares for POS but reverse doesn't apply because owning ETH only entitles you to earning more ETH, nothing more. This is a trap that a lot of cryptocurrency enthusiasts fall into. The decentralized nature of blockchains doesn't extend into reality. You cannot have a house deed on the blockchain because it would require a central authority outside of the blockchain to recognize the deed. Therefore information can enter the Blockchain and be stored there, but it cannot have impact outside the blockchain because the world isn't being simulated inside a decentralized blockchain. In that regard the blockchain is similar to a sandbox, the only thing that exists is the sandbox itself and all the data you have decided to store inside it and since a lot of the data is meaningless, the focus is put on the sandbox being a goal in itself. Another common trap is to build a programming language where the only significant project written in that language is the compiler.
  - 0134340 5y ago
    >If the devs have a 51% share of staked ETH and they never sell any ETH then even if you buy all ETH on the market you will never get beyond 49%. The only way that can happen is if the devs to decide to hand over control to you voluntarily. In that case the currency loses value to other currency competition because currency, Eth in this case, doesn't exist in its own ecosphere. The big holders still have an incentive to sell some portion of it. PoS signifies the power of currency just as PoW does. The whole basis of PoW is to expend work and in return exchange and project power. Stake is projected power earned, sometimes not because not everyone is said to earn what they get, from other expended power. The whole world works on powers, be it financial, physical, etc and we're all exchanging one for another. As long as those powers have power to project themselves and protect themselves enough to propagate well, either through military or math (through the network), they are valid. The network is its own authority (much as the military or government is a network) and through various governments, hard powers, cryptocurrencies have also recently earned some legitimacy that way. To me this all seems silly. You can trade sticks and if someone imbues them with symbolic powers and everyone agrees, it can just as well become a currency. We can disagree from here to the moon on what currencies or methods therein should or shouldn't have legitimacy but if no one cares, you have little to no power to change it. If you can get a big network behind it, there's legitimacy of authority whether you agree or not. > Therefore information can enter the Blockchain and be stored there, but it cannot have impact outside the blockchain because the world isn't being simulated inside a decentralized blockchain. And to reiterate, economic predictions are very hard due to us not living in a closed economic system, other powers influence economics, they don't exist just within their own sphere. You seem to imply this but seem to forget that your same argument could also be applied to traditional fiat. Blockchains may be decentralized but they have their own authorities and realities to which they're bound to. What happens in the crypto world very much affects the non-crypto world as we've seen. >Another common trap is to build a programming language where the only significant project written in that language is the compiler. The common theme here seems to be that you're railing against domain discretion, which itself, is a valid strategy within certain domains but I've reiterated that it has its own negatives in that nothing is totally discrete in reality, you can't have your own perfect domain without influence of other domains. Eth in this case, or PoS specifically, doesn't and can't exist within its own reality, it's no more a feedback currency than traditional fiat which is exemplified in that the rich tend to get richer, a theme which exists in many other domains, power attracts power, there's no escaping that. Yet there is a universal fairness in that more power for individual benefit means more power that can turn against you, which is a whole other topic. I think you're trying to argue against something more universal and it's pointless because it's so embedded in the universal machine. PoW, PoS, whatever, both require vigilance to acquire and maintain power that are ultimately derived from some form of work in the real world, regardless of method. PoS is old money, it can perpetuate decadence in the real world by relying on what's done while PoW, new money, may exemplify newness and chaos by relying on change or what's to become, both can work as methods of power transactions in crypto just as in the real world. Silly argument, I spent way too much time talking about this so guess that means I'm silly, no doubt about that.

by GBiT 5y ago

shawnz 5y ago

This is often claimed to be an advantage of PoS: you can't get an extra increase in rate of profits by being richer (beyond the linear increase you'd expect). With PoW on the other hand, the richest have the best access to the most innovative technology and so you get superlinear profits the richer you are.

GBiT 5y ago
Real world case: Intel had the most advanced chip and more money, until one day AMD got better. In POS this scenario is impossible. First will always be first.
atweiden 5y ago
> This is often claimed to be an advantage of PoS: you can't get an extra increase in rate of profits by being richer (beyond the linear increase you'd expect). With PoW on the other hand, the richest have the best access to the most innovative technology and so you get superlinear profits the richer you are. And yet, anyone who buys these proof-of-stake coins now, years after they were launched, suffers from having a cost basis orders of magnitude higher than that of the early investors. Yeah, they’re all superficially earning “the same staking ROI”. But in relative terms, the earliest investors are mopping the floor with the later investors, because the earliest investors can stake orders of magnitude more coins. The earliest stakers become by far the biggest miners. They’re given an outsized influence over the network, and it’s sadly telling — and a bit unsurprising — that early PoS investors astroturf their coin by focusing on irrelevant minutia, e.g. “open access to staking ROI”, or whataboutism, e.g. “but what about ASIC miner distribution”. That is a classic Red Herring. “Rate of profits” doesn’t matter more to fairness than, say, premining half or more of the outstanding supply of a given coin to give early investors absurd ROI advantages. “Fair access to yield” doesn’t matter more to fairness than exclusive pre-ICOs rounds which only prestigious investors have access to.
- 22c 5y ago
  > But in relative terms, the earliest investors are mopping the floor with the later investors, because the earliest investors can stake orders of magnitude more coins. PoS networks are typically not going to be minting coins in perpetuity. Most PoS networks aim to reach a "zero issuance" state where the network can sustain itself on TX fees alone. It's also typically in a networks interest to decentralise TX verification as much as possible (in contrast to banking, which tends lean towards the opposite). Ideally a PoS network will reach a steady-state where TX verification is profitable enough that people will be willing do it for TX fees alone, but efficient enough that you can be market competitive regardless of how you choose to run your validator nodes (ie. costs should not be prohibitively high as to prevent geographical distribution). There will always be rich and poor people - PoS networks don't aim to solve that - but the question will be is a rich person able to participate in the network more efficiently than a poor person.
  - atweiden 5y ago
    > Most PoS networks aim to reach a "zero issuance" state where the network can sustain itself on TX fees alone. Whether ICO investors are stakemining coins issued through inflation or transaction fees doesn’t matter — they’re still mining orders of magnitude more coins, at the end of the day. Their artificially low cost basis translates into them reaping outsized profits which dwarf that of later investors. (And frankly, it’s absurd the PoS astroturfing has gotten so out of hand that this needs to be pointed out at all.)
    - wmf 5y ago
      It seems like that argument could equally apply to PoW or startups.
      - atweiden 5y ago
        > It seems like that argument could equally apply to PoW or startups. It isn’t clear to me what you meant to say here. Early investors tend to be by far the biggest winners in general, crypto or not. However, we were discussing mining revenue, not profits in general. Importantly, early PoW miners had to source new ASIC mining rigs from China year after year, pay to install those ASICs in datacenters, and pay for the electricity to power them. For the better part of a decade. Only then would they have continued earning bitcoin mining revenue at all. Conversely, PoS staking yield requires little more than showing up with cash on day one. From then on out, PoS stakers earn mining revenue in proportion to their holdings. It costs them almost nothing to do this in perpetuity. In addition, PoS is sadly linked with ICOs, pre-ICOs and pre-mines. These financial shenanigans allow early investors to stake disproportionately more coins than later investors. IMO it’s highly misleading to present this situation as being somehow “more fair” than PoW mining.

0134340 5y ago

You're assuming that PoS is divorced from competition and innovation. Those who innovate tend to earn capital, be it fiat, or let's say Ethereum here. You're assuming those that have Ethereum didn't innovate in some way up the line to be able to buy their earned share. And if you want more shares for PoS, well, you innovate and earn to buy more shares. Your model only works if you assume a very closed and proprietary economic system.

imtringued 5y ago
>And if you want more shares for PoS, well, you innovate and earn to buy more shares. If the devs have a 51% share of staked ETH and they never sell any ETH then even if you buy all ETH on the market you will never get beyond 49%. The only way that can happen is if the devs to decide to hand over control to you voluntarily. >Your model only works if you assume a very closed and proprietary economic system. What you are assuming is that the economy exists for the sake of Ethereum, people work and exist so that they can buy ETH shares for POS but reverse doesn't apply because owning ETH only entitles you to earning more ETH, nothing more. This is a trap that a lot of cryptocurrency enthusiasts fall into. The decentralized nature of blockchains doesn't extend into reality. You cannot have a house deed on the blockchain because it would require a central authority outside of the blockchain to recognize the deed. Therefore information can enter the Blockchain and be stored there, but it cannot have impact outside the blockchain because the world isn't being simulated inside a decentralized blockchain. In that regard the blockchain is similar to a sandbox, the only thing that exists is the sandbox itself and all the data you have decided to store inside it and since a lot of the data is meaningless, the focus is put on the sandbox being a goal in itself. Another common trap is to build a programming language where the only significant project written in that language is the compiler.
- 0134340 5y ago
  >If the devs have a 51% share of staked ETH and they never sell any ETH then even if you buy all ETH on the market you will never get beyond 49%. The only way that can happen is if the devs to decide to hand over control to you voluntarily. In that case the currency loses value to other currency competition because currency, Eth in this case, doesn't exist in its own ecosphere. The big holders still have an incentive to sell some portion of it. PoS signifies the power of currency just as PoW does. The whole basis of PoW is to expend work and in return exchange and project power. Stake is projected power earned, sometimes not because not everyone is said to earn what they get, from other expended power. The whole world works on powers, be it financial, physical, etc and we're all exchanging one for another. As long as those powers have power to project themselves and protect themselves enough to propagate well, either through military or math (through the network), they are valid. The network is its own authority (much as the military or government is a network) and through various governments, hard powers, cryptocurrencies have also recently earned some legitimacy that way. To me this all seems silly. You can trade sticks and if someone imbues them with symbolic powers and everyone agrees, it can just as well become a currency. We can disagree from here to the moon on what currencies or methods therein should or shouldn't have legitimacy but if no one cares, you have little to no power to change it. If you can get a big network behind it, there's legitimacy of authority whether you agree or not. > Therefore information can enter the Blockchain and be stored there, but it cannot have impact outside the blockchain because the world isn't being simulated inside a decentralized blockchain. And to reiterate, economic predictions are very hard due to us not living in a closed economic system, other powers influence economics, they don't exist just within their own sphere. You seem to imply this but seem to forget that your same argument could also be applied to traditional fiat. Blockchains may be decentralized but they have their own authorities and realities to which they're bound to. What happens in the crypto world very much affects the non-crypto world as we've seen. >Another common trap is to build a programming language where the only significant project written in that language is the compiler. The common theme here seems to be that you're railing against domain discretion, which itself, is a valid strategy within certain domains but I've reiterated that it has its own negatives in that nothing is totally discrete in reality, you can't have your own perfect domain without influence of other domains. Eth in this case, or PoS specifically, doesn't and can't exist within its own reality, it's no more a feedback currency than traditional fiat which is exemplified in that the rich tend to get richer, a theme which exists in many other domains, power attracts power, there's no escaping that. Yet there is a universal fairness in that more power for individual benefit means more power that can turn against you, which is a whole other topic. I think you're trying to argue against something more universal and it's pointless because it's so embedded in the universal machine. PoW, PoS, whatever, both require vigilance to acquire and maintain power that are ultimately derived from some form of work in the real world, regardless of method. PoS is old money, it can perpetuate decadence in the real world by relying on what's done while PoW, new money, may exemplify newness and chaos by relying on change or what's to become, both can work as methods of power transactions in crypto just as in the real world. Silly argument, I spent way too much time talking about this so guess that means I'm silly, no doubt about that.