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Ethereum just activated its ‘London’ hard fork

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Re: Ethereum just activated its ‘London’ hard fork

#61

Post by pa7x1 »

sigmar wrote: post #37
pa7x1 wrote: post #23

Earlier quoted context omitted.

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.

So if a large state like Texas loses power for days/weeks all validators inside it suffers more? Why shouldn't I give my keys to a business that can operate multi-location operations? Would save me huge headaches in terms of keeping my node maintained...

The stakers of even an entire state like Texas represent a rather small percentage of all ETH stakers. So the extra punishment is rather small. It will likely be much bigger if you use Coinbase/Kraken/... or any other centralized staking service and it goes down (including any possible failovers that they have set in place). I don't have the specific numbers in front of me but you should think of the extra penalties for centralization to scale with the risk of the network not being able to function properly, so of the order of 30-40% validators going down for them to kick in hard.

Also, staking redundancy/failover is hard to do. You never want to have two nodes validating with the same keys, the punishment in case there are two validators with the same keys at the same time are very harsh. While not being up, is barely above the cost of opportunity of the reward that you could have gotten.

Roughly speaking:

Your node goes down: roughly cost of opportunity (you don't get what you could have gotten if online)

You and your neighbors, city, state going down: Roughly above of cost of opportunity

Centralized service validating for a large percentage of the network going down: Above cost of opportunity penalties.

Double-validation: Risk total loss of capital.

Re: Ethereum just activated its ‘London’ hard fork

#63

Post by lasagnaphil »

exo762 wrote: post #38
bgroat wrote: post #21

Earlier quoted context omitted.

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.

May I ask you to elaborate a bit? What is they are centralized around? Capital? Misbehaving capital can easily be destroyed in PoS by a fork. Please see Steem/Hive case.

I really wish the current global monetary system based on the US dollar would be this simple to change as just creating a fork. Wait, it's actually the US military (which is still the largest in the world) that's backing the whole monetary system? Ah, shucks.

Re: Ethereum just activated its ‘London’ hard fork

#64

Post by dyndos »

krobbn wrote: post #28
dogman144 wrote: post #19

Earlier quoted context omitted.

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…

>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.

Anyone can create new capital independently.

Nobody can create new tokens outside of the chain rules.

This means any newcomer can build up power in a PoW network, but "old money" is privileged in a PoS network.

Re: Ethereum just activated its ‘London’ hard fork

#65

Post by lasagnaphil »

leesec wrote: post #47
jyu wrote: post #44

I asked this months ago and did not get any convincing answers. Ethereum is currently decentralized because of the initial POW distribution. Won't there be centralized aggregators of eth so some point in the future a handful of POS nodes control a disproportionate amount of power? Is it so hard to imagine that coinbase or some other exchange accumulates enough eth to sway transaction validation? Seriously, please ans…

https://vitalik.ca/general/2020/11/06/pos2020.html >For certain kinds of 51% attacks (particularly, reverting finalized blocks), there is a built-in "slashing" mechanism in the proof of stake consensus by which a large portion of the attacker's stake (and no one else's stake) can get automatically destroyed.

To be honest, even without the actual 51% attacks happening, it would really suck to live in a world where just one entity had more than half ownership of a currency used by the people.

Re: Ethereum just activated its ‘London’ hard fork

#66

Post by dyndos »

fogof wrote: post #34
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…

> You need permission from an existing player in order to start participating. This is an incorrect explanation of what a permissioned blockchain is. A permissioned blockchain is one in which the ability to add blocks is limited to a certain collection of entities whose public keys are hard coded into the blockchain's consensus mechanism. We don't say that needing to buy tokens constitutes needing "permission" any mo…

Manufacturing ASICs from scratch requires a lot of capital, but it is fundamentally possible. There is no way to acquire a permanent, unassailable monopoly over ASIC hardware in general.

It is possible to acquire an unassailable monopoly over PoS tokens. You might be able to buy scraps from random traders, but will the >51% whale be willing to sell their core holdings when they can simply live off their staking yield?

>A permissioned blockchain is one in which the ability to add blocks is limited to a certain collection of entities

I agree. Ripple is an example of a chain which explicitly follows that model. PoS regresses to something like this because a 51% majority attacker can control consensus.

Re: Ethereum just activated its ‘London’ hard fork

#68

Post by lasagnaphil »

bugzz wrote: post #18
mmmeff wrote: post #14

Earlier quoted context omitted.

What does it mean for Eth to be burned?

This change burns the "base fee" instead of giving it to miners, which means it goes to nobody and is gone forever

If it goes to nobody, is it really "gone forever"? Did it even exist in the first place?

The confusions arise from thinking cryptocurrency tokens as material things (like gold). Money is just a numeric representation of the social relationship people have with each other, and the rules of the monetary system is just an technical agreement on how we should have relationships with others. This is a change of rules for the relationship between miners and owners: nothing is "lost" or "burned". Whether you agree upon that change of contract is up to yours, but the actual "disappearing" of money isn't an issue in the slightest here.

Re: Ethereum just activated its ‘London’ hard fork

#70

Post by dyndos »

skybrian wrote: post #51
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…

It seems like this argument proves too much for your purposes, in the sense that it can be used to show that neither algorithm is any good as far as distributed governance is concerned. While it’s true that you can’t buy Bitcoin (for example) unless someone else is selling, most people aren’t concerned about market liquidity for buyers due to whales being unwilling to sell. The permission to buy doesn’t seem hard to…

It's not about distributed governance; it's about abusing a dominant role in consensus. PoS is easier to capture, allowing the dominant party to censor and manipulate the settlement chain.

As for governance, with Bitcoin everyone is equally powerless to dictate how things should go. If you appreciate the fixed ruleset, you can choose to participate.

Ethereum is far more nebulous, being piloted by a foundation which hardforks the protocol at will.

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