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Ethereum's PoS supports up to a million or so independent full-fledged stakers. That seems fairly decentralized to me.

sigmar 5y ago
What does it matter what the technology supports if it incentivizes the community to consolidate? Penalties for being offline and slashing (for misconfigured nodes) are a massive incentive for nodes to centralize
- pa7x1 5y ago
  On the contrary, penalties are higher the more nodes go out at the same time. If you centralize you expose yourself to higher penalties if something goes awry. The incentives of the system are designed to prevent centralization.
  - sigmar 5y ago
    So if a large state like Texas loses power for days/weeks all validators inside it suffers more? Why shouldn't I give my keys to a business that can operate multi-location operations? Would save me huge headaches in terms of keeping my node maintained...
    - pa7x1 5y ago
      The stakers of even an entire state like Texas represent a rather small percentage of all ETH stakers. So the extra punishment is rather small. It will likely be much bigger if you use Coinbase/Kraken/... or any other centralized staking service and it goes down (including any possible failovers that they have set in place). I don't have the specific numbers in front of me but you should think of the extra penalties for centralization to scale with the risk of the network not being able to function properly, so of the order of 30-40% validators going down for them to kick in hard. Also, staking redundancy/failover is hard to do. You never want to have two nodes validating with the same keys, the punishment in case there are two validators with the same keys at the same time are very harsh. While not being up, is barely above the cost of opportunity of the reward that you could have gotten. Roughly speaking: Your node goes down: roughly cost of opportunity (you don't get what you could have gotten if online) You and your neighbors, city, state going down: Roughly above of cost of opportunity Centralized service validating for a large percentage of the network going down: Above cost of opportunity penalties. Double-validation: Risk total loss of capital.
ithinkinstereo 5y ago
Centralization issues come along with liquid staking solutions like Lido.
dogman144 5y ago
How many stakers actually have enough to win blocks though. What is the impact of shorting on PoS - what happens when I borrow enough ETH to win blocks, deliberately mis-verify TXs, and screw up consensus. I know Ethereum has planned recovery for situations like this, but PoS introduces risks that will never be as present in PoW bc the latter has built-in latency to how easy it is to aggregate resources which increase market power and centralize around certain miners (ie buy asics and build a data center takes time, so you just have to watch mining pools for liquid malicious hash rates for equivalent risks in PoW).
- fogof 5y ago
  > How many stakers actually have enough to win blocks though. Just as in PoW miners make blocks in proportion to their hashpower, PoS stakers win blocks in proportion to their stake > What is the impact of shorting on PoS - what happens when I borrow enough ETH to win blocks, deliberately mis-verify TXs, and screw up consensus. Well, you can't "mis-verify TXs", everyone can check your work to see that all of the transactions you put in your block verify. If you reached 1/3 of the total stake on the network, you would be able to screw up consensus and make conflicting blocks both appear to be finalized, just as a 51% attack on a PoW currency can revert a block that it treated as final by client software. The ETH2 block explorer https://beaconscan.com/ https://beaconscan.com/ tells me that there is about 6.5 million ether staked, which would be worth about 16 Billion USD, so you would need to borrow around 5 billion USD in order to make this attack work.
  - hanniabu 5y ago
    > so you would need to borrow around 5 billion USD in order to make this attack work. If you were about to find someone to sell you $5B in ETH at spot price. In reality you would need much more than this.
    - fogof 5y ago
      Indeed, this is true. I was also assuming you would be buying the ETH from other stakers (if not, you would need $8B in ETH at spot price) and that you as an attacker have the ability to make the network desynchronous (if not, you would actually need 1/2 the total stake rather than 1/3). These are just generous assumptions that give us a lower bound on how much money it would actually take to attack the network.
Ceezy 5y ago
But that's not peer to peer. And people compare bitcoin/ ethereum to gold, but you can't really exchange ethereum without a centralised authority when you use POS. If these people refuse to process your payment, there is not much you can do about it.

What does it matter what the technology supports if it incentivizes the community to consolidate? Penalties for being offline and slashing (for misconfigured nodes) are a massive incentive for nodes to centralize

pa7x1 5y ago
On the contrary, penalties are higher the more nodes go out at the same time. If you centralize you expose yourself to higher penalties if something goes awry. The incentives of the system are designed to prevent centralization.
- sigmar 5y ago
  So if a large state like Texas loses power for days/weeks all validators inside it suffers more? Why shouldn't I give my keys to a business that can operate multi-location operations? Would save me huge headaches in terms of keeping my node maintained...
  - pa7x1 5y ago
    The stakers of even an entire state like Texas represent a rather small percentage of all ETH stakers. So the extra punishment is rather small. It will likely be much bigger if you use Coinbase/Kraken/... or any other centralized staking service and it goes down (including any possible failovers that they have set in place). I don't have the specific numbers in front of me but you should think of the extra penalties for centralization to scale with the risk of the network not being able to function properly, so of the order of 30-40% validators going down for them to kick in hard. Also, staking redundancy/failover is hard to do. You never want to have two nodes validating with the same keys, the punishment in case there are two validators with the same keys at the same time are very harsh. While not being up, is barely above the cost of opportunity of the reward that you could have gotten. Roughly speaking: Your node goes down: roughly cost of opportunity (you don't get what you could have gotten if online) You and your neighbors, city, state going down: Roughly above of cost of opportunity Centralized service validating for a large percentage of the network going down: Above cost of opportunity penalties. Double-validation: Risk total loss of capital.

ithinkinstereo 5y ago

Centralization issues come along with liquid staking solutions like Lido.

dogman144 5y ago

How many stakers actually have enough to win blocks though. What is the impact of shorting on PoS - what happens when I borrow enough ETH to win blocks, deliberately mis-verify TXs, and screw up consensus. I know Ethereum has planned recovery for situations like this, but PoS introduces risks that will never be as present in PoW bc the latter has built-in latency to how easy it is to aggregate resources which increase market power and centralize around certain miners (ie buy asics and build a data center takes time, so you just have to watch mining pools for liquid malicious hash rates for equivalent risks in PoW).

fogof 5y ago
> How many stakers actually have enough to win blocks though. Just as in PoW miners make blocks in proportion to their hashpower, PoS stakers win blocks in proportion to their stake > What is the impact of shorting on PoS - what happens when I borrow enough ETH to win blocks, deliberately mis-verify TXs, and screw up consensus. Well, you can't "mis-verify TXs", everyone can check your work to see that all of the transactions you put in your block verify. If you reached 1/3 of the total stake on the network, you would be able to screw up consensus and make conflicting blocks both appear to be finalized, just as a 51% attack on a PoW currency can revert a block that it treated as final by client software. The ETH2 block explorer https://beaconscan.com/ https://beaconscan.com/ tells me that there is about 6.5 million ether staked, which would be worth about 16 Billion USD, so you would need to borrow around 5 billion USD in order to make this attack work.
- hanniabu 5y ago
  > so you would need to borrow around 5 billion USD in order to make this attack work. If you were about to find someone to sell you $5B in ETH at spot price. In reality you would need much more than this.
  - fogof 5y ago
    Indeed, this is true. I was also assuming you would be buying the ETH from other stakers (if not, you would need $8B in ETH at spot price) and that you as an attacker have the ability to make the network desynchronous (if not, you would actually need 1/2 the total stake rather than 1/3). These are just generous assumptions that give us a lower bound on how much money it would actually take to attack the network.

Ceezy 5y ago

But that's not peer to peer. And people compare bitcoin/ ethereum to gold, but you can't really exchange ethereum without a centralised authority when you use POS. If these people refuse to process your payment, there is not much you can do about it.