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Ethereum 2.0 launches

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Re: Ethereum 2.0 launches

#591
post #446
post #416

Earlier quoted context omitted.

I think the big reason this happens is because smart contracts are immutable at the lowlevel. Once it's declared, it's done. I think this is very good for auditability and security. But yeah, that quote is dead on. It's not quite as hot at a higher level, because things go wrong (bugs, malfeasance, mistakes, etc). I think the current lowlevel framework is fine, because it's allowing different projects to explore how…

All things considered, is this truly less complicated than a hand written handshake contract? The real solution is risk mitigation through deposits and payment plans. Put another way: how good is a smart contract if it’s easy to create a deceptive one?

From a technical perspective, yeah, I'd say it's a bit more complicated.

But establishing agreement with another human means I have to establish a common language with them, then work out what we're agreeing to, then establish some set of mutual trust between us (usually involving some form of identity verification, even if it's a "who are you on twitter?" level of thing). And then we perpetually have to track that the other person's incentives haven't changed outside of the contract in such a way that violating it would be more profitable. The effort involved in all of that scales very poorly, especially from the service provider's perspective.

On the other hand, if someone wishes to operate in good faith, their incentive is to make the smart contract as simple as possible, and as amenable to independent verification from outside parties (as well as theorem provers).

And no one has to worry about establishing mutual trust with the other person, or that they'll just change their mind in the future. Even if a contract is upgradable, if you only choose to work with ones that are either immutable, or require a timelock / voting period before changes take effect, you (collectively all the consumers of the contract) know your margin of safety.

And that margin of safety is provided because you can trust the base layer is itself immutable and secured. Whereas with risk mitigation through bonds etc, who is the trusted third party we mutually agree to hold our deposits? how do each of us trust that third party isn't in league with one of us? (I trust the "Certified Bank of Nigeria In England", but do you?).

That's the core bit that a smart contract platform like Ethereum provides -- a base layer for establishing mutual trust in objective terms. You can build whatever manner of agreements on top of such a base layer, but if the base layer isn't there, each separate agreement (expensively) requires the two parties find some common ground.

Re: Ethereum 2.0 launches

#592
post #503

Earlier quoted context omitted.

> all involved parties voluntarily agree to be bound by these contracts despite the fact there's no way they can be enforced Maybe I'm misunderstanding, but I don't think ETH contracts count on humans doing anything.

If you "don't have humans doing anything", then Ethereum is just a very slow and inefficient API and protocol layer. However, if you want to use services or exchange goods, then people are involved. A simple example: person A requests goods or services from person B. According to Ethereum website, "Customers have a secure, built-in guarantee that funds will only change hands if you provide what was agreed." Person B…

As far as I understand it, that's not the sort of thing Ethereum contracts would cover. The contract is just an computer agreement between trustless systems to run code. Vitalik Buterin has said he regrets the term "smart contracts" because of the usual meaning of the word contracts:

https://twitter.com/VitalikButerin/status/105116093269977088...

> To be clear, at this point I quite regret adopting the term "smart contracts". I should have called them something more boring and technical, perhaps something like "persistent scripts".

> I do think that persistent scripts controlling assets compete with the legal system on some margins, but so do locks on doors. So IMO it's wrong to equate them with a specific philosophy of law privatization.

Re: Ethereum 2.0 launches

#593

Earlier quoted context omitted.

> Vitalik Buterin came up with a solution for the nothing-at-stake problem Is that a link to an article from a peer reviewed academic journal? > There are several PoS networks out there such as Cosmos, Tezos, etc, holding more than a billion dollars. If there was an issue, someone would have hacked them by now. I'll give you a hint: "slashing" is not a thing that sustains security of these networks.

Where did he claim it was a peer reviewed journal?

Don't you think this claim should be supported by some reputable secondary source?

Re: Ethereum 2.0 launches

#594

Earlier quoted context omitted.

>>It's also the most secure and has the largest community. Ethereum's mining fees exceed Bitcoin's: https://cryptofees.info/ That would mean it has better long-term security prospects than Bitcoin, as security is proportional the revenue earned by validators.

That's misleading. If you factor in mining rewards, Bitcoin has much higher fees per transaction. A total of $18,000,000 more per day spent on validating Bitcoin transactions than what that website claims.

In the case of Bitcoin, mining rewards decline geometrically, at a rate of 50% every 4 years. Mining fees are what any cryptocurrency with an inflation rate that rapidly declines to zero/close-to-zero depends on for security on any appreciable time scale.

That's why I said that Ethereum's long-term security prospects are better. Its mining fees have exceeded Bitcoin's and with the multi-pronged efforts to further scale Ethereum - that are vastly more promising than Bitcoin's - there is a high likelihood of these fees further increasing their gap with Bitcoin's.

Re: Ethereum 2.0 launches

#595
post #430

Earlier quoted context omitted.

There still isn't a lot of real-world use of crypto. Even all the DeFi stuff on Ethereum, while innovative, is derivatives on speculative crypto assets. As long as speculation is the main thing going on in crypto, BTC is king, since it is purely speculative, has the best name recognition, and doesn't try to hide that fact.

how about getting a higher interest on your savings account using defi on your usdc? Isn't this a real world use case?

That's as much of a use case as "get rich from dogecoin". Both of them are based on speculation. The "high interest" is just a derivative that shapes the speculation a certain way. Underlying it is still people speculating on cryptocurrency.

It's different from a conventional bank account, because there the returns are (theoretically) coming from the bank loaning it to entrepreneurs to buy factory and farming equipment and create value.

Re: Ethereum 2.0 launches

#596

Earlier quoted context omitted.

They are primarily used for arbitrage transactions. Token swaps on decentralized exchanges are instant - there is no order book. So you can compose a single transaction that involves many exchanges, swaps involving different tokens, flash loans, etc. If the transaction ends with a profit after the loan is paid back, at the market prices that exist at the time the transaction is executed, the flash loan occurs, and pr…

Wow this sent me down a rabbit hole. How are the transactions composed, with a smart contract/s, in combination with Dex API’s?

Flash loans are composed using a smart contract. So basically you create a smart contract that will call all the DEX/loan platform/other contract functions necessary to obtain the loan, carry out swaps and pay it back. You then deploy that contract.

Then you would have a separate program running on your client machine to scan for market opportunities, and when it spots one, have that program send a transaction to your deployed smart contract to initiate the loan and set into action whatever logic you programmed into the smart contract that will yield a profit.

Yes, it’s quite a rabbit hole indeed. It is hard to believe that something like this is even possible, let alone profitable, but it really can be. I have seen single flash loan transactions yield up to $46k in profits. That profit is irrevocably delivered back to you in a couple of seconds.

Re: Ethereum 2.0 launches

#597
post #591
post #446

Earlier quoted context omitted.

All things considered, is this truly less complicated than a hand written handshake contract? The real solution is risk mitigation through deposits and payment plans. Put another way: how good is a smart contract if it’s easy to create a deceptive one?

From a technical perspective, yeah, I'd say it's a bit more complicated. But establishing agreement with another human means I have to establish a common language with them, then work out what we're agreeing to, then establish some set of mutual trust between us (usually involving some form of identity verification, even if it's a "who are you on twitter?" level of thing). And then we perpetually have to track that t…

followup - shout out to https://defisafety.com/, which is attempting to curate lists of projects with publically performed audits, to make it easier to assess quality of their code (and how closely code adheres to human statements). it's nascent, but IMO a good step forward.

Re: Ethereum 2.0 launches

#598

Earlier quoted context omitted.

They are primarily used for arbitrage transactions. Token swaps on decentralized exchanges are instant - there is no order book. So you can compose a single transaction that involves many exchanges, swaps involving different tokens, flash loans, etc. If the transaction ends with a profit after the loan is paid back, at the market prices that exist at the time the transaction is executed, the flash loan occurs, and pr…

How would that work, though? It sounds like guaranteed arbitrage? But does arbitrage work as a trading strategy? I thought markets quickly become too efficient for that?

It is guaranteed arbitrage. There is no risk to the lender, and the only risk to the person that initiated the transaction is that slippage will occur that makes the trade unprofitable, which would cause the transaction to revert, which would cause them to lose the transaction fee for having attempted the transaction.

The markets are not currently too efficient for that, and never will be. In fact Uniswap’s entire design depends heavily on arbitrageurs balancing out the markets between itself and other exchanges.

Re: Ethereum 2.0 launches

#599

Earlier quoted context omitted.

Now compare financial loss from bugs/hackers in smart contracts to financial loss from deception on the part of bankers, brokers, company execs, etc - the exact kind of fraud that's much harder to perpetrate with smart contracts. I'd wager the second number is and always will be orders of magnitude larger. Enron alone was responsible for ~$74bn of loss.

There's plenty of fraud going on with smart contracts and blockchains in general, and everyone knows it. In fact, it offers newer and easier ways to commit fraud. How many ICOs walked away with their investors' money? How many exchange and smart contract 'hacks' were actually insider jobs? Just because crypto currency is a smaller market than traditional finance doesn't mean it's more honest. I'd imagine the % of fra…

It's important to differentiate here.. fraud by deception is only partly mitigated - if some slick sales droid convinces you to dump your life savings into a dodgy ICO, that's really not all that different to what Bernie Madoff did.

The critical difference is that the smart contract lets you peek under the covers. If the contract allows for its owners to do things to your tokens, that will be plainly visible in the code, regardless of what the owner says. The owners can lie about it, but the lie can be seen by all and sundry. The creators of the token mathematically cannot do anything the contract doesn't allow them to do.

Re: Ethereum 2.0 launches

#600

Earlier quoted context omitted.

Have you checked out rsk? It lives on top of bitcoin and apparently does smart contracts. https://www.rsk.co

Is anything built on top of rsk up and running at this time?

From what I can understand from their official dashboard, the answer is no: https://stats.rsk.co

RSK MainNet launched about 3 years ago. Currently, most blocks have no transactions, with 0 gas spent.

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