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Ethereum proof of work made it so the owners of the coins could be independent from the owners of the mining operations, even if in practice many miners end up

Ethereum proof of work made it so the owners of the coins could be independent from the owners of the mining operations, even if in practice many miners end up keeping most of the block rewards themselves and only reinvesting what they need in new infrastructure and to maintain what they already have. Proof of stake makes it so the miners and holders are now the same (you stake the coins that you have, or you pool them up with others), however the cost to wreck the chain is much greater than it would have been 3-4 years ago. The whole idea is that Ether is so spread out now, it'd be unfeasible for someone to snatch up enough of it for an attack, in a similar way to how an ever-increasing difficulty makes it harder for a hostile actor to coordinate enough of it to make such attack.

jyu 5y ago
Maybe it is spread out now, but won't there be centralized aggregators of eth so some point in the future a handful of POS nodes control a disproportionate amount of power? Is it so hard to imagine that coinbase or some other exchange accumulates enough eth to sway transaction validation? Seriously, please answer if this is wrong!
- swensel 5y ago
  I do think there will be some centralization at the exchange level. As of April 2021, Kraken had 600,000 ETH staked for ETH2 [1]. It's not in the interest of Kraken or Coinbase to disrupt one of these PoS networks, but there is some barrier to entry for staking ETH2 or other PoS coins on your own, vs staking them on an exchange. In the case of ETH2, if your staking node goes down, you get slashed and lose some ETH. If there isn't slashing (not all PoS coins have that), I don't see what guarantee of network security or uptime there is. I'd be curious what PoS coin experts think about this part. It seems like PoS / staking can lead to centralization. PoW has energy concerns for sure, but it has so far demonstrated decentralization pretty well. I'm legitimately curious about this. I'd love for PoS to be feasible and am trying to understand it more. [1] https://en.cryptonomist.ch/2021/04/20/ethereum-2-0-600-thousand-eth-staked-on-kraken/ https://en.cryptonomist.ch/2021/04/20/ethereum-2-0-600-thous...
  - 0134340 5y ago
    Centralization meaning those who have more gain more? I'd love to hear about any currency that doesn't have this feature/bug. Those who gain power tend to be able to acquire more by bootstrapping from prior power; it's pretty much universal. Even PoW has its own form of centralization in that those who have more can become richer and more easily gain therefore leading to maturation (centralization) of the currency.
    - swensel 5y ago
      My understanding is those who have more coins on a PoS network have more stake / power. This can matter if there are things like on-chain governance / voting rights, depending on their stake. Those with more stake would also get more staking rewards (it's like an APR % return based on the total staked), and if they stake their rewards as well, then they'd have even more total stake on the network. There also are concerns with those having a majority of the stake in a network being able to disrupt or attack the network (things like slashing based on poor behavior can prevent bad actors from wanting to do that, as they would lose some or all of what they had staked in that case). There are also different kinds of PoS though, and I'm not an expert on it.
      - 0134340 5y ago
        Yes, that's a feature or bug, however you see it, that's universal in capitalism, even communism or socialism what implementations I've read about. I guess if one isn't happy with those that have power in one system, a person should switch to another system. It's just so universal that I don't think there's any other way around it other than switch systems as none are perfect, all insofar as I can see are susceptible to the power of consensus. We've tried to mitigate it with constitutions in the political world and it helps to some extent but many would agree that there is still an exploitable hole in that those with power can use their own to gain more or mitigate risk. And any time you mitigate that feature/bug too much you run the risk of decreasing reward for work and stake, thereby delegitimizing the system itself or in the case we speak of, your currency. So pick your poison.
  - 5y ago
- 0134340 5y ago
  Yes, that's the problem with validation through concensus which is universal in currency. With enough power (nodes) you can delegitimize other stake holders.

jyu 5y ago

Maybe it is spread out now, but won't there be centralized aggregators of eth so some point in the future a handful of POS nodes control a disproportionate amount of power? Is it so hard to imagine that coinbase or some other exchange accumulates enough eth to sway transaction validation? Seriously, please answer if this is wrong!

swensel 5y ago
I do think there will be some centralization at the exchange level. As of April 2021, Kraken had 600,000 ETH staked for ETH2 [1]. It's not in the interest of Kraken or Coinbase to disrupt one of these PoS networks, but there is some barrier to entry for staking ETH2 or other PoS coins on your own, vs staking them on an exchange. In the case of ETH2, if your staking node goes down, you get slashed and lose some ETH. If there isn't slashing (not all PoS coins have that), I don't see what guarantee of network security or uptime there is. I'd be curious what PoS coin experts think about this part. It seems like PoS / staking can lead to centralization. PoW has energy concerns for sure, but it has so far demonstrated decentralization pretty well. I'm legitimately curious about this. I'd love for PoS to be feasible and am trying to understand it more. [1] https://en.cryptonomist.ch/2021/04/20/ethereum-2-0-600-thousand-eth-staked-on-kraken/ https://en.cryptonomist.ch/2021/04/20/ethereum-2-0-600-thous...
- 0134340 5y ago
  Centralization meaning those who have more gain more? I'd love to hear about any currency that doesn't have this feature/bug. Those who gain power tend to be able to acquire more by bootstrapping from prior power; it's pretty much universal. Even PoW has its own form of centralization in that those who have more can become richer and more easily gain therefore leading to maturation (centralization) of the currency.
  - swensel 5y ago
    My understanding is those who have more coins on a PoS network have more stake / power. This can matter if there are things like on-chain governance / voting rights, depending on their stake. Those with more stake would also get more staking rewards (it's like an APR % return based on the total staked), and if they stake their rewards as well, then they'd have even more total stake on the network. There also are concerns with those having a majority of the stake in a network being able to disrupt or attack the network (things like slashing based on poor behavior can prevent bad actors from wanting to do that, as they would lose some or all of what they had staked in that case). There are also different kinds of PoS though, and I'm not an expert on it.
    - 0134340 5y ago
      Yes, that's a feature or bug, however you see it, that's universal in capitalism, even communism or socialism what implementations I've read about. I guess if one isn't happy with those that have power in one system, a person should switch to another system. It's just so universal that I don't think there's any other way around it other than switch systems as none are perfect, all insofar as I can see are susceptible to the power of consensus. We've tried to mitigate it with constitutions in the political world and it helps to some extent but many would agree that there is still an exploitable hole in that those with power can use their own to gain more or mitigate risk. And any time you mitigate that feature/bug too much you run the risk of decreasing reward for work and stake, thereby delegitimizing the system itself or in the case we speak of, your currency. So pick your poison.
- 5y ago
0134340 5y ago
Yes, that's the problem with validation through concensus which is universal in currency. With enough power (nodes) you can delegitimize other stake holders.