> Validators don’t need energy-intensive computers in order to participate in a proof-of-stake system – just a laptop or smart phone. This will make Ethereum better for the environment.
To me, this is the biggest win of proof-of-stake over proof-of-work.
I wonder if we’ll actually see flight from PoW cryptocurrencies to PoS at rates sufficient to reduce the current environmental impact. Anecdotally, a lot of the people I know who were early in Bitcoin are talking more about PoS coins as the natural progression and PoW as doomed tech. But until I actually see the transition happen, I remain (optimistically) skeptical.
Agreed. However it still is dominated by the "haves" vs the "have nots". Proof of stake is awarded to those with the largest stakes, which favors state-sponsored miners and works against decentralization.
I like how Monero's RandomX is designed to level the playing field: ASIC miners don't significantly improve over CPU mining so more people can participate in mining. Of course, this doesn't address pools, but it is a start.
I am a solo staker and its been a blast learning about PoS and participating in the community. Right now you can earn ~7.8% rewards if you lock up your eth on your own validator. Once EIP1559 goes live (July) and the full transition to PoS merge around the end of the year there are some folks on the ETH research team who see rewards conservatievly going to ~25% [1]
What does the process for staking actually look like? I remember setting up lightning a bunch of years ago and ended up losing some fractions of BTC by messing things up along the way.
Is there something foolproof for staking right now, or is it a lot of "git clone this repo, copy this address to a config file" etc.
Reading through the FAQ on staking it says you will get penalties for being offline and the network eats through 800mb/hour which comes out to around 576gb/month.
Is this practical to do at home? Or are pools the way to go for people on consumer home internet?
The penalties for being offline are equal to the rewards you would have earned. It is okay to be offline if you have minor outage for few hours or if you're moving and will be offline for a few days. You simply would need to go back online for the same amount of time to make your rewards back.
I am a solo staker. My machine churns through about 800 gb/month. I am a huge advocate for solo staking if you have the hardware and have technical ability. I work in finance not software engineering, and i was able to set a machine up with no issue.
Check out the link below if you would like more resources or if you have any questions!
If you have a gaming desktop and do a complete system wipe, you will be downloading several terabytes of data in backups and games.
Most AAA games these days are in 100GB range, and a steam library of my friends occupies a couple of TB. Also Dropbox / Onedrive give you 1TB of space, and is easy to fill it up with videos and photos.
A continous stream of 1.7 megabits, seems reasonable on both FTTC and FTTH, and maybe even on a xDSL. Definately more systainable than GPU mining
It's pretty much guaranteed at this point. The staking network has been running since Dec. 1, with over 3% of all ETH staked so far. The initial migration is simple to implement and a high priority for the devs. Community support is very high, and once everybody switches to the new fork the miners have no influence.
The miners could keep running the old PoW chain but it's unlikely to have significant value. Exchanges will support the PoS chain and some are already offering staking services. Tokens collateralized by off-chain assets will use the PoS chain. Etc.
With the PoW chain having little value, miners will be deeply unprofitable and most of them will have to quit. Moving to other chains isn't much of an option because other GPU chains have little aggregate value.
There is a high likelihood of a fork, but forks aren't necessarily harmful to Eth. The "rebelling" miners can't actually do anything to the proof of stake system.
The real people who decide what fork wins are the exchanges and users, and those people have no real reason to stick with PoW.
Miners will rebel and continue mining, some will mine on an ETH fork and others switch to other coins. GPUs will not be returned to gamers anytime soon.
Staking can be pooled just like regular POW mining pools. However unlike POW mining pools you have to give the majority of your funds to a trusted party whereas with POW mining the maximum you can loose is the unpaid balance between payouts which is usually some days worth of mining.
You can stake with Avalanche (AVAX) today for a smaller price which will be decreased in near future. ETH like all other classical nakamoto algorithms have a limit on number of participants in consensus. Avalanche has no such limit on decentralization without sacrificing security or throughput.
> Rewards are given for actions that help the network reach consensus. You'll get rewards for batching transactions into a new block or checking the work of other validators because that's what keeps the chain running securely.
The unstated gotcha here is that the chain operates through a variation of BFT agreement where staked coins vote for new blocks. All the usual BFT constraints apply -- namely, if fewer than 66% of the staked coins can reach a quorum, the chain stalls. This would mean that the network is only as resilient as the nodes that contribute the least-resilient 33% of the coin votes.
I bring this up because it has some pretty terrible resiliency implications below.
> Although you can earn rewards for doing work that benefits the network, you can lose ETH for malicious actions, going offline, and failing to validate.
If the coin is successful, then this really serves to incentivize DDoS attacks.
PoS is fundamentally a "rich-get-richer" system -- the means of making new coins tomorrow are intrinsically tied to owning coins today by the protocol itself. There's no way around this.
This intrinsic coupling has two significant economic implications, which in turn impact the chain's resiliency:
* The price of coins is a function of their expected future revenue from staking. If you want to become a staker, the expected value you'll pay for your coins will include not only the spot price of the token, but also all the future (but time-discounted) revenue that coin will earn you from staking it. This is the lower-bound case, too -- if there's something even more profitable than staking you could be using the coins for, then the expected price of the coin will reflect that activity instead of staking.
* Coins minted from staking would need to be continuously re-staked in order to maintain current profitability relative to your competitors. Stakers can't afford not to do this, unless there's a buyer (or use-case) that can give an even higher ROI than all future ROI from staking block rewards.
This impacts chain resiliency as follows:
* There will never be any spare capacity for fail-over, since staking your coins will always be more profitable than keeping them on stand-by in order to recover from failed block producers. If the chain encounters a liveness failure (e.g. more than 33% of the staked coins go offline), new block producers can't just step in and take over without buying the coin first (and the more successful / long-term-valuable the coin is, the higher that price will be). The price of the token would either need to first come down to whatever level the highest-bidding poor but honest block producer can afford, or the protocol would need to slash a portion of the 33% of offline coins until quorum can be met. Neither of these things is instantaneous, so you'd be looking at a dead chain for some non-negligible amount of time. (Note that this is not true for PoW -- mining rigs can lie dormant until the difficulty falls to the point where it's profitable to turn them on, thereby ensuring that a liveness failure in the profitable block-producers does not lead to an overall liveness failure for the chain).
* It's very costly for new honest block-producers to join the network, which will make the network brittle. As the token becomes more successful and its long-term value realized, honest block producers will have to pay more and more up-front capital costs to start participating. The only people who can sell them coins to stake are their competition, so there's little seller information asymmetry to exploit here -- the seller knows exactly how much these coins are worth to the buyer for staking, so they will always price that in. This is a direct consequence of the means of coin production being tied to coin ownership.
* If the coin is successful, then there will reach a point where the cheapest way for a block producer to grow their revenue from staking is to knock other staking nodes offline (or hack them and cause their coins to be slashed from bad behavior). There's no fail-over capacity to take over block production if the staking coin quantity decreases, so the attacker only needs to succeed once in getting their competition slashed. Then, their fraction of all coins staked will increase due to other coins getting slashed. (Contrast this to PoW, where the attacker not only needs to knock the competing block-producer offline, but keep it offline indefinitely).
It would be a mistake to say that Ethereum 2.0 is in any way similar to Ethereum today. The economics of its PoS system make it more brittle, less resilient, and less egalitarian than Ethereum 1.0. Moreover, it would be misleading to say that Ethereum 2.0 is an open-membership system -- the economics make it so newcomers can't compete with the initial block-producers unless the price of the token always goes up faster than the initial block-producers believe it will.
> the means of making new coins tomorrow are intrinsically tied to owning coins today by the protocol itself.
It's not a shocking economic situation that you can use capital to acquire more capital. I don't know exactly what equilibrium the long term staking rewards will tend to, but it's not very different from interest - where for nearly no risk your capital lodged with a bank increases. The other side is that in a healthy financial system, locking money up has a cost too, so it's appropriate to recompense those who do.
> Coins minted from staking would need to be continuously re-staked in order to maintain current profitability relative to your competitors
Everybody gets the exact same rate of return regardless of how much they have staked. Each validator has 32 ETH and gets the same amount of reward. You can take your profits and make a new validator or use them for something else, either way your existing validators will have the same profitability as everyone else.
asaph|4 years ago
> Validators don’t need energy-intensive computers in order to participate in a proof-of-stake system – just a laptop or smart phone. This will make Ethereum better for the environment.
To me, this is the biggest win of proof-of-stake over proof-of-work.
paulgb|4 years ago
SavantIdiot|4 years ago
I like how Monero's RandomX is designed to level the playing field: ASIC miners don't significantly improve over CPU mining so more people can participate in mining. Of course, this doesn't address pools, but it is a start.
Yay proof of stake!
TacoToni|4 years ago
[1] https://twitter.com/drakefjustin/status/1384124998084792324?...
blhack|4 years ago
Is there something foolproof for staking right now, or is it a lot of "git clone this repo, copy this address to a config file" etc.
gher-shyu3i|4 years ago
ArcFeind|4 years ago
Is this practical to do at home? Or are pools the way to go for people on consumer home internet?
TacoToni|4 years ago
The penalties for being offline are equal to the rewards you would have earned. It is okay to be offline if you have minor outage for few hours or if you're moving and will be offline for a few days. You simply would need to go back online for the same amount of time to make your rewards back.
I am a solo staker. My machine churns through about 800 gb/month. I am a huge advocate for solo staking if you have the hardware and have technical ability. I work in finance not software engineering, and i was able to set a machine up with no issue.
Check out the link below if you would like more resources or if you have any questions!
https://www.reddit.com/r/ethstaker/
ClumsyPilot|4 years ago
Most AAA games these days are in 100GB range, and a steam library of my friends occupies a couple of TB. Also Dropbox / Onedrive give you 1TB of space, and is easy to fill it up with videos and photos.
A continous stream of 1.7 megabits, seems reasonable on both FTTC and FTTH, and maybe even on a xDSL. Definately more systainable than GPU mining
blackearl|4 years ago
ArcFeind|4 years ago
If I have 32ETH but don't want to run this on my home internet, how do you compare pools because the fees are all over the place?
rhema|4 years ago
DennisP|4 years ago
The miners could keep running the old PoW chain but it's unlikely to have significant value. Exchanges will support the PoS chain and some are already offering staking services. Tokens collateralized by off-chain assets will use the PoS chain. Etc.
With the PoW chain having little value, miners will be deeply unprofitable and most of them will have to quit. Moving to other chains isn't much of an option because other GPU chains have little aggregate value.
lalaland1125|4 years ago
The real people who decide what fork wins are the exchanges and users, and those people have no real reason to stick with PoW.
antocv|4 years ago
rhn_mk1|4 years ago
sprash|4 years ago
picardo|4 years ago
antocv|4 years ago
tobltobs|4 years ago
unknown|4 years ago
[deleted]
sauwan|4 years ago
paulpauper|4 years ago
godelski|4 years ago
capableweb|4 years ago
paulpauper|4 years ago
capableweb|4 years ago
j_walter|4 years ago
kaliali|4 years ago
Still will have high gas fees.
SwagtimusPrime|4 years ago
jude-|4 years ago
The unstated gotcha here is that the chain operates through a variation of BFT agreement where staked coins vote for new blocks. All the usual BFT constraints apply -- namely, if fewer than 66% of the staked coins can reach a quorum, the chain stalls. This would mean that the network is only as resilient as the nodes that contribute the least-resilient 33% of the coin votes.
I bring this up because it has some pretty terrible resiliency implications below.
> Although you can earn rewards for doing work that benefits the network, you can lose ETH for malicious actions, going offline, and failing to validate.
If the coin is successful, then this really serves to incentivize DDoS attacks.
PoS is fundamentally a "rich-get-richer" system -- the means of making new coins tomorrow are intrinsically tied to owning coins today by the protocol itself. There's no way around this. This intrinsic coupling has two significant economic implications, which in turn impact the chain's resiliency:
* The price of coins is a function of their expected future revenue from staking. If you want to become a staker, the expected value you'll pay for your coins will include not only the spot price of the token, but also all the future (but time-discounted) revenue that coin will earn you from staking it. This is the lower-bound case, too -- if there's something even more profitable than staking you could be using the coins for, then the expected price of the coin will reflect that activity instead of staking.
* Coins minted from staking would need to be continuously re-staked in order to maintain current profitability relative to your competitors. Stakers can't afford not to do this, unless there's a buyer (or use-case) that can give an even higher ROI than all future ROI from staking block rewards.
This impacts chain resiliency as follows:
* There will never be any spare capacity for fail-over, since staking your coins will always be more profitable than keeping them on stand-by in order to recover from failed block producers. If the chain encounters a liveness failure (e.g. more than 33% of the staked coins go offline), new block producers can't just step in and take over without buying the coin first (and the more successful / long-term-valuable the coin is, the higher that price will be). The price of the token would either need to first come down to whatever level the highest-bidding poor but honest block producer can afford, or the protocol would need to slash a portion of the 33% of offline coins until quorum can be met. Neither of these things is instantaneous, so you'd be looking at a dead chain for some non-negligible amount of time. (Note that this is not true for PoW -- mining rigs can lie dormant until the difficulty falls to the point where it's profitable to turn them on, thereby ensuring that a liveness failure in the profitable block-producers does not lead to an overall liveness failure for the chain).
* It's very costly for new honest block-producers to join the network, which will make the network brittle. As the token becomes more successful and its long-term value realized, honest block producers will have to pay more and more up-front capital costs to start participating. The only people who can sell them coins to stake are their competition, so there's little seller information asymmetry to exploit here -- the seller knows exactly how much these coins are worth to the buyer for staking, so they will always price that in. This is a direct consequence of the means of coin production being tied to coin ownership.
* If the coin is successful, then there will reach a point where the cheapest way for a block producer to grow their revenue from staking is to knock other staking nodes offline (or hack them and cause their coins to be slashed from bad behavior). There's no fail-over capacity to take over block production if the staking coin quantity decreases, so the attacker only needs to succeed once in getting their competition slashed. Then, their fraction of all coins staked will increase due to other coins getting slashed. (Contrast this to PoW, where the attacker not only needs to knock the competing block-producer offline, but keep it offline indefinitely).
It would be a mistake to say that Ethereum 2.0 is in any way similar to Ethereum today. The economics of its PoS system make it more brittle, less resilient, and less egalitarian than Ethereum 1.0. Moreover, it would be misleading to say that Ethereum 2.0 is an open-membership system -- the economics make it so newcomers can't compete with the initial block-producers unless the price of the token always goes up faster than the initial block-producers believe it will.
kybernetikos|4 years ago
It's not a shocking economic situation that you can use capital to acquire more capital. I don't know exactly what equilibrium the long term staking rewards will tend to, but it's not very different from interest - where for nearly no risk your capital lodged with a bank increases. The other side is that in a healthy financial system, locking money up has a cost too, so it's appropriate to recompense those who do.
DennisP|4 years ago
Everybody gets the exact same rate of return regardless of how much they have staked. Each validator has 32 ETH and gets the same amount of reward. You can take your profits and make a new validator or use them for something else, either way your existing validators will have the same profitability as everyone else.
tobltobs|4 years ago
CynicusRex|4 years ago
johnny_b_g|4 years ago
antocv|4 years ago
devmunchies|4 years ago