9 ms·

Yes, it is correct. It was already much more centralized than for instance bitcoin, due to the difficulty in having a validator node, but now it is just managed

Yes, it is correct. It was already much more centralized than for instance bitcoin, due to the difficulty in having a validator node, but now it is just managed by the big holders and that's that. Furthermore, they will censor transactions according to US laws at least, and if you try to validate and not censor, you will get your staked coins taken from you by the protocol (as opposed to PoW, where you just fail to get your block in the chain), so this is another nail in the coffin of this project imo.

bowsamic 4y ago
No, it's the opposite. Proof of work is more centralised than proof of stake, because the former has an economy of scale: it's cheaper to add a single miner if you are a big mining operation vs a small mining operation. On the other hand, staking 1 eth is always staking 1 eth.
- deleted 4y ago
  [deleted]
- zyphr 4y ago
  You can't stake 1 eth yourself. You need to at least 32 eth. Plus you need to make an investment to run your own a validator.
  - Anon1096 4y ago
    32 eth is such a small investment that it isn't that meaningfully different than 1 eth.
    - pawelduda 4y ago
      Yeah, taking $4k (price it reached in the recent bull market). $4k vs $128k Literally the same numbers.
      - SilasX 4y ago
        Right, parent is overstating it, and that's fair to call out, but it's still a low barrier to entry (even without the staking pools). At the current price (where anyone can get in), it's ~$1660, so 32 ETH would be ~$53k. How many "paycheck-to-paycheck" households blew that much on a fancy new pickup truck? Or home remodel? Or extra interest charges on the lifetime of a home loan from stretching their budget?
        jagger27 4y ago
        You’re joking right?
        SilasX 4y ago
        Am I joking about the quantities of money that working families will spend on unnecessary stuff instead of investments while complaining about the inability to secure their financial futures? I am not.
        deleted 4y ago
        [deleted]
      - bowsamic 4y ago
        For the scales usually considered in the crypto scene these would be considered incidental
  - programmarchy 4y ago
    There are staking pools, just like there were mining pools.
    - joosters 4y ago
      If you join a staking pool, then by definition you are increasing the centralization of the network.
      - pa7x1 4y ago
        There are decentralized staking pools. https://rocketpool.net/ https://rocketpool.net/
    - usrusrusrusr 4y ago
      You can mine with one GPU, pool or no. Stake pooling also eliminates one of the supposed benefits of decentralised cryptocurrency - you have to trust someone else with your currency.
      - MaxikCZ 4y ago
        If I understand correctly, you are not trusting "someone", u are trusting the network itself. Imo no different than any other operation on the network. Any operation on the network requires trust that the network will do what it agreed it will do.
        usrusrusrusr 4y ago
        Staking pools are not part of the Ethereum network protocol - they are a third party that you need to trust with your Eth. You are lending your Eth to this third party, who will then participate in the Eth network on your behalf, and who is also under no particular requirement to do what they say they will. If I have to give my currency to a third party who will then invest it for me, then why bother with decentralised cryptos at all? >any operation on the network requires trust that the network will do what it agreed it will do. If I were an Eth apologist, I would explain how the code that defines the network operations is fully open and inspectable, so no trust needed.
- TakeBlaster16 4y ago
  Running a small validator is much riskier than being a small miner. If you're running a validator and have network downtime or any operational issues, you risk losing funds (the inactivity leak[1]). If you're mining and you have downtime, your only downside is the opportunity cost of not mining any blocks while you're offline. [1]: https://eth2book.info/altair/part2/incentives/inactivity https://eth2book.info/altair/part2/incentives/inactivity
  - exo762 4y ago
    Inactivity leak for a solo validator going offline is very cheap, and it is by design. People are expected to run validator nodes on home connections and be profitable.
  - thesz 4y ago
    One of the attacks on PBFT protocol is to split network in half, send block to one half, do not send anything to other half and the proposer wents offline and restore connectivity between the rest of the nodes. In that case, without any stakes, half of nodes will be locked to NIL, half - to a valid block. In case of stakes, byzantine proposer (it is only one node that is really byzantine, but it can control how network is split) can partition network according to a proportion of stakes, so that neither half gets prevalence. The algorithm in the link you provided does nothing in that case. The only node that will be punished is a byzantine validator which does not care. The system will be in no-progress-possible state indefinitely.
  - drog 4y ago
    No. Inactivity leak is an emergency measure to restore liveness when the network stops finalizing blocks. It happens when >33% of validators are offline(WW3 scenario), major bug in widespread implementation, etc. Your link explains that. ETH2 is friendly to home stackers - you may lose some profit by being offline sometimes, and in the worst case minor penalties are applied. EDIT: If you are interested in a much better description of what happens if you are offline, see this: https://eth2book.info/altair/part2/incentives/penalties https://eth2book.info/altair/part2/incentives/penalties Some points from the link: - penalties =/= slashing - If you are online > 42.5% of the sime - you are earning profits
- AlexandrB 4y ago
  Another article pointed out that the economics of staking are completely different than those of mining. With mining, some of the earned coins need to be sold to pay for electricity. With staking, the biggest holders just sit there and collect coins with few operational costs. To me it sounds like staking has a much more powerful snowball effect than mining and the gap between the wealthiest ETH participants and everyone else will increase faster under PoS.
  - landemva 4y ago
    There is some legitimate concern here. On the other hand, PoS looks to be more accessible to hobby miners/stakers because they don't have to convert their coin into ASICs or GPUs.
  - mcdee 4y ago
    > With staking, the biggest holders just sit there and collect coins with few operational costs. Every holder who is staking is rewarded for staking, in proportion to their stake. > To me it sounds like staking has a much more powerful snowball effect than mining No, because issuance under proof of stake is much lower than that under proof of work. The point of validating is to secure the chain, not to get rich. The more validators that are active, the lower the per-validator rewards, reducing compounding effects.
  - pa7x1 4y ago
    It is much cheaper to run a staking operation but not 0-cost. You still need an internet connection to pay and a bit of energy to run your validator. You may owe taxes on staking rewards, etc... So there is likely to be some selling by validators. Rewards are also much lower, issuance of ETH is cut by 90%, for example. Also you lock-up capital which has an opportunity cost and must competes with every other investable asset. As the barriers to entry staking are negligible (just acquiring a liquid staking derivative like rETH, for example) it means that everyone willing to stake will likely do so which drops the returns lower, which may push some stakers out as they see better investing opportunities. So staking is likely going to have thin margins in the future and will give a rate of return that is fairly priced given its risk adjusted returns.
  - 4y ago
steeleduncan 4y ago
This is quite far from true > but now it is just managed by the big holders To have any influence during the proof of work days you needed a server farm. This was also restricted to a small elite who could, if they wished, censor transactions.
- TakeBlaster16 4y ago
  It's incorrect to say PoW miners can censor transactions. With PoS, the big players control the small players. If the minority doesn't play along, their funds will be slashed by the procotol. If 66% of validators censor you, your transaction will never be finalized. With PoW, the big players cannot coerce the small players in any way. Everyone independently controls their own blocks. If 66% of miners censor you, your transaction will merely take 3x as long to be confirmed.
  - immibis 4y ago
    The part about PoW is falase. If 66% of miners really want to censor you, they will also censor the other 34% of miners if those miners choose to mine a block including your transactions. If <50% of miners want to censor you, they can make it take longer for your transactions to be processed. If it's >50% (or thereabouts) they can prevent your transactions from every getting confirmed. Sure, the 34% could collude until they happen to produce 6 blocks in a row, but each individual member of that group would make more money by going along with the censorship and not being censored themselves. I believe it's similar with PoS, but with somewhat different incentive magnitudes.
    - TakeBlaster16 4y ago
      I suppose that is possible, but we're thinking of two different incentive structures. If 66% of miners censor their own blocks to comply with OFAC, then eventually the transaction will get in. If 66% of miners not only censor their own blocks, but also collude to continually reorg the chain, then obviously all bets are off, the project has failed, and the exchange rate is headed to 0. I think the former is infinitely more likely than the latter.
redox99 4y ago
You are spreading false information. Besides the "centralization" thing that was already replied, the part of > and if you try to validate and not censor, you will get your staked coins taken from you by the protocol (as opposed to PoW, where you just fail to get your block in the chain) Is outright false. It is the same as PoW. You choose what transactions you include in your block. So some people may choose to not include some transactions (Ethermine is already doing this on PoW with Tornado Cash). But there is no mechanism that slashes your staked coins because the other validators didn't like what transactions you included. At most your block will not get attested. Slashing can only happen for other reasons (proposing twice, attesting twice, attesting something that surrounds something else). PoS is in fact even more resistant because in PoS you can kick out the malicious validators by doing a social fork that slashes their stake. In PoW if 51% of miners are malicious there's nothing you can do, you can't slash their hardware.
- deleted 4y ago
  [deleted]
- tboyd47 4y ago
  This 51% attack thing is such a canard. If 51% of Bitcoin miners are malicious, the most harm they can do is fail to include your valid transaction in their blocks. So, your transaction will be confirmed in the next block mined by one of the other 49% of miners. Big whoop.
  - proto-n 4y ago
    Not correct, they can choose to not accept any blocks containing banned transactions, and still have the longest chain (statistically speaking). That's why the 51% number is significant.
    - tboyd47 4y ago
      That assumes the other 49% won't accept the bad guys' blocks in their chain. Those blocks are valid, so the 49% will accept them and build off of them. At any point there is still a 49% chance the next block will be mined by a good guy. If the bad guys decide not to accept the good guys' blocks, then they are hard forking Bitcoin and will end up just like Bitcoin Cash: irrelevant. This is the exact problem PoW was designed to solve, and it works very well, which is why a 51% attack has never succeeded or even been attempted against Bitcoin, and never will.
spaceman_2020 4y ago
Already happening - the biggest miner refused to include Tornado Cash transactions in the mining pool. Stick a fork in it. Ethereum is done. With that degree of centralization, might as well just run a database and call it a day.
- exo762 4y ago
  Since blockchains are specifically built with idea of censorship resistance in mind, and Ethermine not including TC transactions can't actually prevent other miners from including them... I'm struggling to understand the point you are trying to make. Are you talking about lack of ideological purity of Ethermine?
  - spaceman_2020 4y ago
    > lack of ideological purity of Ethermine? Yes, and the fact that everyone in the Ethereum community has largely glossed this over in their enthusiasm for the "merge" and what it will do the price of their assets. Cryptocurrencies that embrace the centralization and censorship of fiat currencies are completely unnecessary and have no real utility. Tornado Cash and Ethermine should have been a line in the sand, a hard boundary for what's acceptable and what's not. But the fact that no one even cares tells me that the community will be happy to accept even more censorship as long as their bags keep going up. Pathetic, really.
    - exo762 4y ago
      Ethermine is out - because the merge is in. They are literally out of the business. Why would anyone care what they do? As for TC - who is rolling over? While some US based businesses are complying, protocol builders are saying that they will fight tooth and nail.
- rmujica 4y ago
  AFAIK in any network (including Bitcoin), any miner can select any transaction in the mempool. There will always be a miner (or validator in PoS) that will be willing to take Tornado Cash fees.
deleted 4y ago
[deleted]
rawoke083600 4y ago
No 'they dont take your coins/stake'. That is just plain false.
735409264082 4y ago
If they try that Ethereum will fork and I (and everyone I have any interest in interacting with) will be on the non-censored fork. With the old system, miners could try to sabotage our fork if most hashing power were to be on the censored fork. With this update, that would not be possible as the censors would lose their money on the non-censored fork and therefore be unable to stake. The relative power of the forks no longer matter as they cannot attack each other anymore. Ethereum is becoming more decentralized and permissionless as a result of this change.

bowsamic 4y ago

No, it's the opposite. Proof of work is more centralised than proof of stake, because the former has an economy of scale: it's cheaper to add a single miner if you are a big mining operation vs a small mining operation. On the other hand, staking 1 eth is always staking 1 eth.

deleted 4y ago
[deleted]
zyphr 4y ago
You can't stake 1 eth yourself. You need to at least 32 eth. Plus you need to make an investment to run your own a validator.
- Anon1096 4y ago
  32 eth is such a small investment that it isn't that meaningfully different than 1 eth.
  - pawelduda 4y ago
    Yeah, taking $4k (price it reached in the recent bull market). $4k vs $128k Literally the same numbers.
    - SilasX 4y ago
      Right, parent is overstating it, and that's fair to call out, but it's still a low barrier to entry (even without the staking pools). At the current price (where anyone can get in), it's ~$1660, so 32 ETH would be ~$53k. How many "paycheck-to-paycheck" households blew that much on a fancy new pickup truck? Or home remodel? Or extra interest charges on the lifetime of a home loan from stretching their budget?
      - jagger27 4y ago
        You’re joking right?
        SilasX 4y ago
        Am I joking about the quantities of money that working families will spend on unnecessary stuff instead of investments while complaining about the inability to secure their financial futures? I am not.
        deleted 4y ago
        [deleted]
    - bowsamic 4y ago
      For the scales usually considered in the crypto scene these would be considered incidental
- programmarchy 4y ago
  There are staking pools, just like there were mining pools.
  - joosters 4y ago
    If you join a staking pool, then by definition you are increasing the centralization of the network.
    - pa7x1 4y ago
      There are decentralized staking pools. https://rocketpool.net/ https://rocketpool.net/
  - usrusrusrusr 4y ago
    You can mine with one GPU, pool or no. Stake pooling also eliminates one of the supposed benefits of decentralised cryptocurrency - you have to trust someone else with your currency.
    - MaxikCZ 4y ago
      If I understand correctly, you are not trusting "someone", u are trusting the network itself. Imo no different than any other operation on the network. Any operation on the network requires trust that the network will do what it agreed it will do.
      - usrusrusrusr 4y ago
        Staking pools are not part of the Ethereum network protocol - they are a third party that you need to trust with your Eth. You are lending your Eth to this third party, who will then participate in the Eth network on your behalf, and who is also under no particular requirement to do what they say they will. If I have to give my currency to a third party who will then invest it for me, then why bother with decentralised cryptos at all? >any operation on the network requires trust that the network will do what it agreed it will do. If I were an Eth apologist, I would explain how the code that defines the network operations is fully open and inspectable, so no trust needed.
TakeBlaster16 4y ago
Running a small validator is much riskier than being a small miner. If you're running a validator and have network downtime or any operational issues, you risk losing funds (the inactivity leak[1]). If you're mining and you have downtime, your only downside is the opportunity cost of not mining any blocks while you're offline. [1]: https://eth2book.info/altair/part2/incentives/inactivity https://eth2book.info/altair/part2/incentives/inactivity
- exo762 4y ago
  Inactivity leak for a solo validator going offline is very cheap, and it is by design. People are expected to run validator nodes on home connections and be profitable.
- thesz 4y ago
  One of the attacks on PBFT protocol is to split network in half, send block to one half, do not send anything to other half and the proposer wents offline and restore connectivity between the rest of the nodes. In that case, without any stakes, half of nodes will be locked to NIL, half - to a valid block. In case of stakes, byzantine proposer (it is only one node that is really byzantine, but it can control how network is split) can partition network according to a proportion of stakes, so that neither half gets prevalence. The algorithm in the link you provided does nothing in that case. The only node that will be punished is a byzantine validator which does not care. The system will be in no-progress-possible state indefinitely.
- drog 4y ago
  No. Inactivity leak is an emergency measure to restore liveness when the network stops finalizing blocks. It happens when >33% of validators are offline(WW3 scenario), major bug in widespread implementation, etc. Your link explains that. ETH2 is friendly to home stackers - you may lose some profit by being offline sometimes, and in the worst case minor penalties are applied. EDIT: If you are interested in a much better description of what happens if you are offline, see this: https://eth2book.info/altair/part2/incentives/penalties https://eth2book.info/altair/part2/incentives/penalties Some points from the link: - penalties =/= slashing - If you are online > 42.5% of the sime - you are earning profits
AlexandrB 4y ago
Another article pointed out that the economics of staking are completely different than those of mining. With mining, some of the earned coins need to be sold to pay for electricity. With staking, the biggest holders just sit there and collect coins with few operational costs. To me it sounds like staking has a much more powerful snowball effect than mining and the gap between the wealthiest ETH participants and everyone else will increase faster under PoS.
- landemva 4y ago
  There is some legitimate concern here. On the other hand, PoS looks to be more accessible to hobby miners/stakers because they don't have to convert their coin into ASICs or GPUs.
- mcdee 4y ago
  > With staking, the biggest holders just sit there and collect coins with few operational costs. Every holder who is staking is rewarded for staking, in proportion to their stake. > To me it sounds like staking has a much more powerful snowball effect than mining No, because issuance under proof of stake is much lower than that under proof of work. The point of validating is to secure the chain, not to get rich. The more validators that are active, the lower the per-validator rewards, reducing compounding effects.
- pa7x1 4y ago
  It is much cheaper to run a staking operation but not 0-cost. You still need an internet connection to pay and a bit of energy to run your validator. You may owe taxes on staking rewards, etc... So there is likely to be some selling by validators. Rewards are also much lower, issuance of ETH is cut by 90%, for example. Also you lock-up capital which has an opportunity cost and must competes with every other investable asset. As the barriers to entry staking are negligible (just acquiring a liquid staking derivative like rETH, for example) it means that everyone willing to stake will likely do so which drops the returns lower, which may push some stakers out as they see better investing opportunities. So staking is likely going to have thin margins in the future and will give a rate of return that is fairly priced given its risk adjusted returns.
- 4y ago

steeleduncan 4y ago

This is quite far from true > but now it is just managed by the big holders To have any influence during the proof of work days you needed a server farm. This was also restricted to a small elite who could, if they wished, censor transactions.

TakeBlaster16 4y ago
It's incorrect to say PoW miners can censor transactions. With PoS, the big players control the small players. If the minority doesn't play along, their funds will be slashed by the procotol. If 66% of validators censor you, your transaction will never be finalized. With PoW, the big players cannot coerce the small players in any way. Everyone independently controls their own blocks. If 66% of miners censor you, your transaction will merely take 3x as long to be confirmed.
- immibis 4y ago
  The part about PoW is falase. If 66% of miners really want to censor you, they will also censor the other 34% of miners if those miners choose to mine a block including your transactions. If <50% of miners want to censor you, they can make it take longer for your transactions to be processed. If it's >50% (or thereabouts) they can prevent your transactions from every getting confirmed. Sure, the 34% could collude until they happen to produce 6 blocks in a row, but each individual member of that group would make more money by going along with the censorship and not being censored themselves. I believe it's similar with PoS, but with somewhat different incentive magnitudes.
  - TakeBlaster16 4y ago
    I suppose that is possible, but we're thinking of two different incentive structures. If 66% of miners censor their own blocks to comply with OFAC, then eventually the transaction will get in. If 66% of miners not only censor their own blocks, but also collude to continually reorg the chain, then obviously all bets are off, the project has failed, and the exchange rate is headed to 0. I think the former is infinitely more likely than the latter.

redox99 4y ago

You are spreading false information. Besides the "centralization" thing that was already replied, the part of > and if you try to validate and not censor, you will get your staked coins taken from you by the protocol (as opposed to PoW, where you just fail to get your block in the chain) Is outright false. It is the same as PoW. You choose what transactions you include in your block. So some people may choose to not include some transactions (Ethermine is already doing this on PoW with Tornado Cash). But there is no mechanism that slashes your staked coins because the other validators didn't like what transactions you included. At most your block will not get attested. Slashing can only happen for other reasons (proposing twice, attesting twice, attesting something that surrounds something else). PoS is in fact even more resistant because in PoS you can kick out the malicious validators by doing a social fork that slashes their stake. In PoW if 51% of miners are malicious there's nothing you can do, you can't slash their hardware.

deleted 4y ago
[deleted]
tboyd47 4y ago
This 51% attack thing is such a canard. If 51% of Bitcoin miners are malicious, the most harm they can do is fail to include your valid transaction in their blocks. So, your transaction will be confirmed in the next block mined by one of the other 49% of miners. Big whoop.
- proto-n 4y ago
  Not correct, they can choose to not accept any blocks containing banned transactions, and still have the longest chain (statistically speaking). That's why the 51% number is significant.
  - tboyd47 4y ago
    That assumes the other 49% won't accept the bad guys' blocks in their chain. Those blocks are valid, so the 49% will accept them and build off of them. At any point there is still a 49% chance the next block will be mined by a good guy. If the bad guys decide not to accept the good guys' blocks, then they are hard forking Bitcoin and will end up just like Bitcoin Cash: irrelevant. This is the exact problem PoW was designed to solve, and it works very well, which is why a 51% attack has never succeeded or even been attempted against Bitcoin, and never will.

spaceman_2020 4y ago

Already happening - the biggest miner refused to include Tornado Cash transactions in the mining pool. Stick a fork in it. Ethereum is done. With that degree of centralization, might as well just run a database and call it a day.

exo762 4y ago
Since blockchains are specifically built with idea of censorship resistance in mind, and Ethermine not including TC transactions can't actually prevent other miners from including them... I'm struggling to understand the point you are trying to make. Are you talking about lack of ideological purity of Ethermine?
- spaceman_2020 4y ago
  > lack of ideological purity of Ethermine? Yes, and the fact that everyone in the Ethereum community has largely glossed this over in their enthusiasm for the "merge" and what it will do the price of their assets. Cryptocurrencies that embrace the centralization and censorship of fiat currencies are completely unnecessary and have no real utility. Tornado Cash and Ethermine should have been a line in the sand, a hard boundary for what's acceptable and what's not. But the fact that no one even cares tells me that the community will be happy to accept even more censorship as long as their bags keep going up. Pathetic, really.
  - exo762 4y ago
    Ethermine is out - because the merge is in. They are literally out of the business. Why would anyone care what they do? As for TC - who is rolling over? While some US based businesses are complying, protocol builders are saying that they will fight tooth and nail.
rmujica 4y ago
AFAIK in any network (including Bitcoin), any miner can select any transaction in the mempool. There will always be a miner (or validator in PoS) that will be willing to take Tornado Cash fees.

deleted 4y ago

[deleted]

rawoke083600 4y ago

No 'they dont take your coins/stake'. That is just plain false.

735409264082 4y ago

If they try that Ethereum will fork and I (and everyone I have any interest in interacting with) will be on the non-censored fork. With the old system, miners could try to sabotage our fork if most hashing power were to be on the censored fork. With this update, that would not be possible as the censors would lose their money on the non-censored fork and therefore be unable to stake. The relative power of the forks no longer matter as they cannot attack each other anymore. Ethereum is becoming more decentralized and permissionless as a result of this change.