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Ethereum just activated its ‘London’ hard fork

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Re: Ethereum just activated its ‘London’ hard fork

#21

Post by bgroat »

DaftDank wrote: post #6

Can someone explain to me how PoS is not centralized? The whole point of crypto and the blockchain is decentralization, no? I feel like crypto/blockchain will end up looking nothing like how it was intended, and be regulated to the point that it's just the next iteration of the traditional banking system, where the current power holders continue holding the power. Maybe I was naive to ever think it would be any diffe…

The answer is that it isn't, and none of these systems ever were.

They're distributed, not decentralized. And this distinction, and the refusal to acknowledge it is what put me off crypto entirely.

Re: Ethereum just activated its ‘London’ hard fork

#22

Post by ithinkinstereo »

DennisP wrote: post #12
DaftDank wrote: post #6

Can someone explain to me how PoS is not centralized? The whole point of crypto and the blockchain is decentralization, no? I feel like crypto/blockchain will end up looking nothing like how it was intended, and be regulated to the point that it's just the next iteration of the traditional banking system, where the current power holders continue holding the power. Maybe I was naive to ever think it would be any diffe…

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

Centralization issues come along with liquid staking solutions like Lido.

Re: Ethereum just activated its ‘London’ hard fork

#23

Post by pa7x1 »

sigmar wrote: post #15
DennisP wrote: post #12

Earlier quoted context omitted.

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

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

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.

Re: Ethereum just activated its ‘London’ hard fork

#24

Post by dogman144 »

DennisP wrote: post #12
DaftDank wrote: post #6

Can someone explain to me how PoS is not centralized? The whole point of crypto and the blockchain is decentralization, no? I feel like crypto/blockchain will end up looking nothing like how it was intended, and be regulated to the point that it's just the next iteration of the traditional banking system, where the current power holders continue holding the power. Maybe I was naive to ever think it would be any diffe…

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

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).

Re: Ethereum just activated its ‘London’ hard fork

#25

Post by exo762 »

dyndos wrote: post #16
DaftDank wrote: post #6

Can someone explain to me how PoS is not centralized? The whole point of crypto and the blockchain is decentralization, no? I feel like crypto/blockchain will end up looking nothing like how it was intended, and be regulated to the point that it's just the next iteration of the traditional banking system, where the current power holders continue holding the power. Maybe I was naive to ever think it would be any diffe…

The key distinction is that PoW is permissionless, whereas PoS is permissioned. Bitcoin is secured by hashpower, which is produced by physical capital outside the network. Nobody needs to ask for permission to start hashing and trade kilowatts for sats. PoS networks are secured by on-chain assets. This means you can't "mine" it without first buying tokens from someone who already owns them. You need permission from a…

> Another aspect of this is 51% attacks are recoverable for PoW

You can switch the protocol once. Making ASICs useless. But you can't do it twice.

> but are a permanent takeover condition for PoS networks.

This is false in both theory and practice. It is true that PoS does not offer in-protocol solution for the problem. But there is a historical precedent of people forking away money of Justin Sun in Steem project, creating Hive. Community has followed the fork, basically destroying Justin's Sun funds.

Re: Ethereum just activated its ‘London’ hard fork

#26

Post by cody8295 »

AlexandrB wrote: post #9
DaftDank wrote: post #6

Can someone explain to me how PoS is not centralized? The whole point of crypto and the blockchain is decentralization, no? I feel like crypto/blockchain will end up looking nothing like how it was intended, and be regulated to the point that it's just the next iteration of the traditional banking system, where the current power holders continue holding the power. Maybe I was naive to ever think it would be any diffe…

In practice PoW is pretty centralized also. Most of the mining is done by those who have the capital to set up massive ASIC/GPU farms.

There are coins like Monero that are ASIC-resistant and can only be mined with CPU, not GPU.

Re: Ethereum just activated its ‘London’ hard fork

#27

Post by neatze »

bgroat wrote: post #21
DaftDank wrote: post #6

Can someone explain to me how PoS is not centralized? The whole point of crypto and the blockchain is decentralization, no? I feel like crypto/blockchain will end up looking nothing like how it was intended, and be regulated to the point that it's just the next iteration of the traditional banking system, where the current power holders continue holding the power. Maybe I was naive to ever think it would be any diffe…

The answer is that it isn't, and none of these systems ever were. They're distributed, not decentralized. And this distinction, and the refusal to acknowledge it is what put me off crypto entirely.

Same here, market(s) over time will be cornered without control policies that counter monopoly.

Re: Ethereum just activated its ‘London’ hard fork

#28

Post by krobbn »

dogman144 wrote: post #19
dyndos wrote: post #16

Earlier quoted context omitted.

The key distinction is that PoW is permissionless, whereas PoS is permissioned. Bitcoin is secured by hashpower, which is produced by physical capital outside the network. Nobody needs to ask for permission to start hashing and trade kilowatts for sats. PoS networks are secured by on-chain assets. This means you can't "mine" it without first buying tokens from someone who already owns them. You need permission from a…

Ya I wonder if we’ll start seeing attempts to corner the market in PoS.

Computing power is just a proxy for capital/resources. Why not be more efficient and use the capital directly and save power in the meanwhile.

Current market cap of ETH is ~$324B, thus getting 50.1% of ETH would require $162.3B in capital. However, as soon as you start acquiring ETH the price will increase, especially at those large volumes.

It would be insanely hard to come up with enough resources to buy enough ETH in a POS world to take over the network. Never mind the fact that as soon as it's become evident you've taken over the network the value of the network is essentially worthless and you've just destroyed billions of dollars worth of capital in the process.

Re: Ethereum just activated its ‘London’ hard fork

#30

Post by WJW »

dogman144 wrote: post #19
dyndos wrote: post #16

Earlier quoted context omitted.

The key distinction is that PoW is permissionless, whereas PoS is permissioned. Bitcoin is secured by hashpower, which is produced by physical capital outside the network. Nobody needs to ask for permission to start hashing and trade kilowatts for sats. PoS networks are secured by on-chain assets. This means you can't "mine" it without first buying tokens from someone who already owns them. You need permission from a…

Ya I wonder if we’ll start seeing attempts to corner the market in PoS.

There's an interesting academic paper that I can't find anymore where the authors analyze the game theoretic edges of PoS systems. Basically: since the thing you need to mine is the same thing that gets mined the optimal strategy for anyone holding a majority of a PoS coin is to never spend more than half of your mining reward so that even someone who manages to buy all the coins that become available on the market can never catch up to you.

Of course, this does omit some real-life considerations like people needing money for other reasons (to pay taxes, when they die, to buy a house, etc) but the basic principle stands: any initial whale in a PoS coin will basically never be dislodged if they play the optimal strategy.

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