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A couple of questions: 1) Will this decrease gas fees, which make using Ether and its ecosystem completely unusable? 2) Does proof-of-stake mean that the rich

A couple of questions: 1) Will this decrease gas fees, which make using Ether and its ecosystem completely unusable? 2) Does proof-of-stake mean that the richer people in the ecosystem have more power?

arthurcolle 4y ago
1) ostensibly 2) yes
gweinberg 4y ago
It's not clear to me how this is supposed to help with gas. As I understand it, the reason gas costs so much is there are only so many transactions that can fit in a block, and the price is what you have to pay (competing against other customers) get your transaction through. It does seem that if the miners just have to prove they have stake and not do any work, it means the rich will get richer.
pcthrowaway 4y ago
1) Possibly a little bit since block time is supposed to decrease from ~13 seconds to 12 seconds. But it's not the primary goal. Side note, the network is generally more expensive during high-traffic times (due to the limited number of transactions which can be sent), but during low-traffic times (over the weekend for example) simple transactions could be made for ~$0.14 2) It means that if you want to participate in consensus directly, you need exactly 32 ETH to stake. People with smaller amounts of ETH can stake through staking pools though. Block-producing nodes do get to choose which of the transactions in the mempool get included, so in a sense, they have power (in the same way miners with higher hash-rate do currently). Not all the "richer people" will be running nodes though, as it does lock the ETH for a currently-indetermined amount of time. Unstaking isn't an option (yet), and if your node goes off-line, you'll be penalized by losing some of your stake
- e9 4y ago
  so what you are saying is that only very rich people will be able to participate because: - you need good hardware and access to good networks to meet the up-time guarantee s (can be solved with pooling the money I guess) - you need to have enough eth to spare locking up portion of it for years (this can only be solved if you find another person to join the pool and take your place by giving eth to you but there is no incentive for pools to offer this)
  - pcthrowaway 4y ago
    Actually, the second is definitely possible. There are many liquid staking pools, which tokenize your share of the stake, and allow you to trade it (usually at a modest discount to the current price of Ethereum) I believe the majority of staked ETH right now is actually pooled
    - e9 4y ago
      I see, so money is locked up but they'll deploy another smart contract that you have some stake in but you still have to find a buyer otherwise you are out of luck and your money is actually locked up
      - pcthrowaway 4y ago
        You don't "have to find a buyer", these are liquid tokens on Ethereum. So if you have 1 ETH, and you stake it with Lido (I think this is the largest staking pool), you get 1 stETH. Though if you want 1 stETH, you often would be better off buying it on a (decentralized) exchange (you could get a discount of 1% to 10%, though theoretically the discount could go higher in the future). when you hold your stETH on-chain, your balance rebases at the rate of the staking reward payout (minus, I think, some amount Lido takes out of this). For example, after a year, if the ETH staking reward was 10%, Lido might take 0.5% (which might go to their DAO, not sure). So you might end up with 1.095 stETH after one year. If you want to sell it, you can do it directly (again, likely at a discount to the price of ETH, though this might change depending on how easy it is to move in and out of staking once the details there are finalized) It's called liquid staking, because the tokenized share of the staking pool are tradable like any other token on Ethereum, meaning you just need a decentralized exchange, or a centralized exchange that supports it (of which I think stETH has a few) ---- edit: to clarify about not having to find a buyer, in case it's not obvious: there are various pools of funds referred to as "liquidity", which users wishing to transact on various markets can make trades from. These pools exist on both decentralized exchanges (through various types of automated market makers) as well as centralized exchanges (classically through an order book, same as the stock market). The only time you have to "find a buyer" (in crypto as well as in the stock market) is when you're looking to do what's called an OTC trade, which is typically just for institutional traders, as trading a large amount via an OTC arrangement will prevent a price movement which can otherwise occur (known as "slippage")
okwubodu 4y ago
1) Effectively no. I don’t think they even care anymore. 2) Rich people had more power under POW—miners aren’t cheap. What matters is the enforcement mechanism. Slashing remains a risk to every validator regardless of stake weight.
- rglullis 4y ago
  They "don't care" because the EF has been saying for at least 5 years that the way to scale transaction throughput will be through the myriad of roll-up systems. The idea is that people could use roll-ups as a "checkings account" and that they would only hold the funds that they don't want/need to move often at the base layer. With roll-ups, the funds are still secured by the base layer, so participants wouldn't need to trust the roll-up operators.
jlynn 4y ago
I'm not convinced proof-of-stake means less equity. PoW is very capex intensive between hardware and energy. Especially during a time when energy prices are soaring, the big players have access to extremely cheap electricity that keeps them profitable, while the small players shut down.

arthurcolle 4y ago

1) ostensibly 2) yes

gweinberg 4y ago

It's not clear to me how this is supposed to help with gas. As I understand it, the reason gas costs so much is there are only so many transactions that can fit in a block, and the price is what you have to pay (competing against other customers) get your transaction through. It does seem that if the miners just have to prove they have stake and not do any work, it means the rich will get richer.

pcthrowaway 4y ago

1) Possibly a little bit since block time is supposed to decrease from ~13 seconds to 12 seconds. But it's not the primary goal. Side note, the network is generally more expensive during high-traffic times (due to the limited number of transactions which can be sent), but during low-traffic times (over the weekend for example) simple transactions could be made for ~$0.14 2) It means that if you want to participate in consensus directly, you need exactly 32 ETH to stake. People with smaller amounts of ETH can stake through staking pools though. Block-producing nodes do get to choose which of the transactions in the mempool get included, so in a sense, they have power (in the same way miners with higher hash-rate do currently). Not all the "richer people" will be running nodes though, as it does lock the ETH for a currently-indetermined amount of time. Unstaking isn't an option (yet), and if your node goes off-line, you'll be penalized by losing some of your stake

e9 4y ago
so what you are saying is that only very rich people will be able to participate because: - you need good hardware and access to good networks to meet the up-time guarantee s (can be solved with pooling the money I guess) - you need to have enough eth to spare locking up portion of it for years (this can only be solved if you find another person to join the pool and take your place by giving eth to you but there is no incentive for pools to offer this)
- pcthrowaway 4y ago
  Actually, the second is definitely possible. There are many liquid staking pools, which tokenize your share of the stake, and allow you to trade it (usually at a modest discount to the current price of Ethereum) I believe the majority of staked ETH right now is actually pooled
  - e9 4y ago
    I see, so money is locked up but they'll deploy another smart contract that you have some stake in but you still have to find a buyer otherwise you are out of luck and your money is actually locked up
    - pcthrowaway 4y ago
      You don't "have to find a buyer", these are liquid tokens on Ethereum. So if you have 1 ETH, and you stake it with Lido (I think this is the largest staking pool), you get 1 stETH. Though if you want 1 stETH, you often would be better off buying it on a (decentralized) exchange (you could get a discount of 1% to 10%, though theoretically the discount could go higher in the future). when you hold your stETH on-chain, your balance rebases at the rate of the staking reward payout (minus, I think, some amount Lido takes out of this). For example, after a year, if the ETH staking reward was 10%, Lido might take 0.5% (which might go to their DAO, not sure). So you might end up with 1.095 stETH after one year. If you want to sell it, you can do it directly (again, likely at a discount to the price of ETH, though this might change depending on how easy it is to move in and out of staking once the details there are finalized) It's called liquid staking, because the tokenized share of the staking pool are tradable like any other token on Ethereum, meaning you just need a decentralized exchange, or a centralized exchange that supports it (of which I think stETH has a few) ---- edit: to clarify about not having to find a buyer, in case it's not obvious: there are various pools of funds referred to as "liquidity", which users wishing to transact on various markets can make trades from. These pools exist on both decentralized exchanges (through various types of automated market makers) as well as centralized exchanges (classically through an order book, same as the stock market). The only time you have to "find a buyer" (in crypto as well as in the stock market) is when you're looking to do what's called an OTC trade, which is typically just for institutional traders, as trading a large amount via an OTC arrangement will prevent a price movement which can otherwise occur (known as "slippage")

okwubodu 4y ago

1) Effectively no. I don’t think they even care anymore. 2) Rich people had more power under POW—miners aren’t cheap. What matters is the enforcement mechanism. Slashing remains a risk to every validator regardless of stake weight.

rglullis 4y ago
They "don't care" because the EF has been saying for at least 5 years that the way to scale transaction throughput will be through the myriad of roll-up systems. The idea is that people could use roll-ups as a "checkings account" and that they would only hold the funds that they don't want/need to move often at the base layer. With roll-ups, the funds are still secured by the base layer, so participants wouldn't need to trust the roll-up operators.

jlynn 4y ago

I'm not convinced proof-of-stake means less equity. PoW is very capex intensive between hardware and energy. Especially during a time when energy prices are soaring, the big players have access to extremely cheap electricity that keeps them profitable, while the small players shut down.