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The Merge

ethereum.org

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Re: The Merge

#291

Post by everfree »

wyager wrote: post #6
numlock86 wrote: post #5

> The Merge will reduce Ethereum's energy consumption by ~99.95%. That's something Bitcoin needs ... or even better get rid of it altogether. https://ccaf.io/cbeci/index https://digiconomist.net/bitcoin-energy-consumption/

Proof of work is the only way to get acceptable security properties for a monetary system. Proof of stake suffers from the "nothing at stake" problem, leading to grinding attacks etc.

Slashing fixes the "nothing at stake" problem, and the RANDAO fixes the stake grinding attack.

Both of those were open questions in 2015, but they are solved problems now.

Re: The Merge

#292

Post by everfree »

fizzynut wrote: post #11

Given that the merge reduces the electricity cost for new Ethereum by ~1000x, won't the price just tank in a race to the bottom?

Price is due to supply and demand, not due to energy cost.

The amount of new Ether being minted is projected to drop by 90% after the merge, so new supply will be much lower. If anything, this creates upward price pressure rather than downward price pressure.

Re: The Merge

#293

Post by sktrdie »

bhaak wrote: post #112
sktrdie wrote: post #37

I don't get proof of stake. What's stopping anyone from presenting a new chain made up of thousands of fake transactions? And why wouldn't such chain be accepted by the network? Is it just "checkpoints" hardcoded in the software that don't allow this?

All the nodes that have been online long enough will know that the fake chain is fake. Because it doesn't match the state that they have been observing all along. So as long as you have no extended downtime, your nodes know what the right chain has to look like. Ethereum dynamically adds checkpoints so that block reorgs can't reach too far into the past but that is mostly a convenience function as it alone couldn't s…

Thanks, this answers my main concerns. I guess that same level of validation applies also for the wallet software we download: we need to make sure the app comes from a source that people have agreed upon, and that usually means applying some sort of general intuition on where to find stuff (googling, forums, reddit etc.). And as you mention, the same trust-game is applied to finding the right chain.

But then, I wonder, if we're all anyway looking for the trustworthy data ourselves (based on general human intuition), why use blockchain at all? Why not just apply the same level of trust towards, say, a regular database?

My thinking is that PoS makes it easier to trust because we'd only have to trust the beginning of the chain, and the rest is verified via the PoS math. Whereas with a normal database we'd have no real way of verifying it hasn't been tampered with?

It does seem a bit scary though that so much money is going into a system where "you have to find the trustworthy data yourself based on your own social network".

Re: The Merge

#294

Post by everfree »

bitL wrote: post #158

OK, so you stake 32ETH, buy a dedicated server for a validator, and you'd get up to 5% reward per year. How is that going to pay off your dedicated server? Moreover, you are risking losing those 32ETH in case your validator goes down. Your payment would be proportional to the number of attestations, so if only a few people use ETH for transactions, your reward will be low. Did anyone think about making staking actual…

> Your payment would be proportional to the number of attestations, so if only a few people use ETH for transactions, your reward will be low.

Attestations are a staking consensus concept, not a transaction concept. Attestations occur 24/7, not just when people decide to use the network.

Re: The Merge

#295

Post by akelly »

mypastself wrote: post #283
WFHRenaissance wrote: post #30

Ethereum in its current state is using proof-of-work (PoW) to ensure consensus amongst the thousands of nodes in the network. While PoW is reliable and secure, it is also extremely energy intensive. To produce each block on the network participants are required to use powerful and energy-hungry GPUs to solve a complex mathematical problem. Alternatively, proof-of-stake (PoS) guarantees the security of the network in…

I’ll just paste my questions from below: Can someone clarify the point about expected price action changes for ETH/USD and other pairs? Presumably the author believes a smaller proportion of Ether will be regularly traded than on the PoW system, but will the total staked (i.e. held) amount be sufficient to impact prices significantly? Also, why would we expect stakers to not take their profits on a regular basis? (No…

Today there is $20mm a day of ETH being printed and given to miners, most of which is sold immediately to pay their operating costs. After the merge there will be only $0.5mm a day being printed and given to stakers. Plus the money printed will go to people who are ETH holders, and are therefore less likely to sell.

Re: The Merge

#296

Post by nicbou »

paulpauper wrote: post #48
numlock86 wrote: post #5

> The Merge will reduce Ethereum's energy consumption by ~99.95%. That's something Bitcoin needs ... or even better get rid of it altogether. https://ccaf.io/cbeci/index https://digiconomist.net/bitcoin-energy-consumption/

That's something Bitcoin needs ... or even better get rid of it altogether. As the price keeps falling, presumably so will energy consumption. The energy consumption problem fixes itself as the bubble bursts and people lose interest and mining becomes unprofitable, without the need for regulation.

I just wonder how much longer we must damage the environment before it happens. Bitcoin has showed us just how much precedence greed has over environmental concerns, and this time it wasn't just big corporations showing their true nature.

Re: The Merge

#297

Post by pa7x1 »

rakoo wrote: post #249
WFHRenaissance wrote: post #117

Earlier quoted context omitted.

1. Punishment mechanisms here are kind of complicated, but in short, you're punished for mainly 2 reasons: being an offline validator, or for an attestation violating. Slashers are entities that enforce the two above rules. If a slasher determines that you're node is down, or that you're committing an attestation violation (i.e. that you're signing more than one attestation in a given epoch mainly). The slasher actua…

Thanks for the reply ! 1. So if I get it correctly, there is an actor in charge of surveiling the network. There is no financial incentive to do that which means only a few actors will be running a slasher, and thus completely remove all decentralization. Once a fraud has been detected, the proof of fraud is to be spread by nodes with a financial incentive, meaning they might spread whatever the slasher says like gos…

There is no actor in charge of surveilling the network. Every validator is. And every validator is incentivized to do so because you get a reward coming from the slash penalty. So everyone is checking on everyone else.

Re: The Merge

#298

Post by irusensei »

My main issue with PoS is that people wont run nodes. Contrary to bitcoin there isn’t a self hosting culture on Ethereum. Its all about trading and tokenomics. They will stake through exchanges, which already control the fiat ramps and are easily controlled by regulatory pressure. Since those guys are now validating on chain transaction censorship might become a thing.

And then there is the biggest irony on the fact that PoS basically recreates the legacy financial system where banks and central banks being the stewards of the network.

Re: The Merge

#299

Post by rakoo »

pa7x1 wrote: post #297
rakoo wrote: post #249

Earlier quoted context omitted.

Thanks for the reply ! 1. So if I get it correctly, there is an actor in charge of surveiling the network. There is no financial incentive to do that which means only a few actors will be running a slasher, and thus completely remove all decentralization. Once a fraud has been detected, the proof of fraud is to be spread by nodes with a financial incentive, meaning they might spread whatever the slasher says like gos…

There is no actor in charge of surveilling the network. Every validator is. And every validator is incentivized to do so because you get a reward coming from the slash penalty. So everyone is checking on everyone else.

Validators only add transactions to the ledger. What I was talking about is the slasher, which makes sure nodes are behaving correctly.

Re: The Merge

#300

Post by mypastself »

akelly wrote: post #295
mypastself wrote: post #283

Earlier quoted context omitted.

I’ll just paste my questions from below: Can someone clarify the point about expected price action changes for ETH/USD and other pairs? Presumably the author believes a smaller proportion of Ether will be regularly traded than on the PoW system, but will the total staked (i.e. held) amount be sufficient to impact prices significantly? Also, why would we expect stakers to not take their profits on a regular basis? (No…

Today there is $20mm a day of ETH being printed and given to miners, most of which is sold immediately to pay their operating costs. After the merge there will be only $0.5mm a day being printed and given to stakers. Plus the money printed will go to people who are ETH holders, and are therefore less likely to sell.

That makes sense, but why are they labelled as “structural outflows and inflows”, respectively, if both amounts are referring to, as you put it, “ETH being printed and given to” miners/validators?

Perhaps it’s referring to the ratio of Ether being supplied on a daily basis compared to its total supply?

So in summary:

With PoW, each day fresh $20M is created and sold, which increases the ratio of traded Ether compared to its total amount (“outflow” from held ratio).

With PoS, each day fresh $0.5M is created and held, which decreases the ratio of traded Ether compared to its total amount (“inflow”).

Do I have this right? That does still leave the question of whether this daily ratio change will be sufficient to impact prices significantly.

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