Ethereum Breaks Past $3k | Hacker News Reader

Ethereum Breaks Past $3k

reuters.com

40 pointswodow33 comments

I want to add more clarity on where Ethereum currently stands. I am one of the devs that worked on proof of stake and the future of the Ethereum protocol, bundled into an umbrella term called "Ethereum 2.0".

Eth2 is a monumental research effort to create a blockchain that makes no compromises on security, scalability, and decentralization. Given Ethereum is live today, secures a ton of value, and runs a lot of applications, it is almost impossible to upgrade to 2.0 via a simple network upgrade. As such, the project is split into phases. The first phase is a proof of stake chain that runs _in parallel_ to Ethereum today. People can join as validators via a "one-way burn" smart contract. The next phase is then "merging" the state of Ethereum today with this new chain using proof of stake via a docking process. That is, Ethereum will continue to function normally, but mining will be disabled and consensus will utilize proof of stake instead. My implementation of Eth2 is a client called Prysm written in Go here (https://github.com/prysmaticlabs/prysm).

Previous attempts at proof of stake were either too expensive, too centralized, or hard to scale to a large enough number of validators. After many years of research and hard work, and leveraging really awesome cryptography for signature aggregation called BLS (Boneh–Lynn–Shacham), the first phase launched December 1st, 2020 and the current proof of stake chain is now securing over $10bn worth of value at the consensus layer.

A few important things to keep in mind:

- Ethereum development for its future is quite decentralized, with 4 different teams having implemented high-quality, production clients for proof of stake. These teams are independent of the Ethereum Foundation. Most other blockchains have only one, canonical client implementation that has very large majority share

- The "merge" is happening later this year or possibly very early 2022

- The technology used in Eth2 is quite a breakthrough in cryptography and I urge those curious to dig deeper. Using BLS signatures, the protocol can support millions of validators at the consensus layer

EDIT: readability

How energy efficient is this new proof of stake? And was energy usage part of the motivation?

Once proof of stake is fully implemented and everything is migrated over, there will be no more energy intensive mining. Mining on a proof of stake chain just involves putting your Ether as a deposit that gets slashed if you act maliciously, the energy cost of this is just to run the servers, essentially, its you putting your money where your mouth is. Potentially, by the time proof of stake is fully released, the cost to run your own node (32 ETH) could be between 100-500k depending on the market value of Ether.

The benefit of this with the mining algorithm that Ethereum uses is that you can mine with off the shelf consumer parts. When proof of stake is fully switched to, those parts will just be sold on the market.

With Bitcoin, switching over to something like proof of stake will be extremely political and will only work out if the market decides that the new proof of stake blockchain fork is the 'real' Bitcoin. It will be political because miner's mining hardware becomes e-waste so they have an incentive to continue mining regardless of the fork. The only way that miners stop mining Bitcoin is if the blockchain becomes worthless in the market so that the miners no longer can afford to pay their operating costs with the mining rewards.

You can run a validator on a Raspberry Pi, or as most people do, on an Intel NUC or an AMD-based equivalent micro-PC. A modest power consumption would be a continuous draw of 10 watts.

Now, assuming every single one of the 110,000+ validators runs on a dedicated machine (which is not the case) and consumes 10 W * 24 h = 0.24 kWh of energy daily, we get an annual energy consumption of roughly 87.6 kWh per validator.

Extending this assumption to the 110,000 validators currently validating on the mainnet, the annual energy consumption of the network would be 9,636 MWh, or roughly 10 GWh annually. In reality, this value is close to a worst-case scenario, as running multiple validators on one machine doesn't affect the load of the machine in any meaningful way. One could run 1000 validators on one Intel-based NUC.

For reference, the current PoW Eth chain consumes roughly 40 TWh of energy annually.[1] Assuming the annual energy consumption of 10 GWh for the PoS chain, the energy usage would drop by 99.975% (three orders of magnitude; E12 -> E9).

Assuming an error of an order of magnitude in the calculations for the PoS chain's energy usage (which would mean running every validator on a dedicated PC pulling a continuous 100 watts, or alternatively 1,100,000 validators), we'd still drop the energy usage by 99.75%.

[1] https://digiconomist.net/ethereum-energy-consumption

I wonder how the community really feel about this changes? Is mostly positive?

Definitely positive. The changes coming in Eth2 will both improve the security and the scalability of Ethereum. There isn't really any pushback towards this in the community aside from a select group of miners

There's a gold rush to accumulate ETH for staking reward payouts, and there is a new fee burn mechanism that will make ETH more scarce than BTC on a production basis. Demand for ETH seems to also be driven by DeFi products, NFTs and huge enthusiasm for the upgrade to PoS (July/Aug).

I don't have an ETH position, but this is my understanding of price action.

https://twitter.com/DocumentEther is a pretty interesting read

I have high hopes for Ethereum. Bitcoin has no plans to ever move away from the "burn arbitrarily increasing quantities of electricity" approach to security. Ethereum is willing to experiment, and is willing to be pragmatic in the pursuit of scaling while still not sacrificing decentralization/uncensorability.

There are a number of innovations coming out on smaller alternative chains, but the Ethereum community still seems humble and nimble enough to adopt any of those innovations that work. That combined with its strong network effect make it likely to win.

It's not even security, just consensus.

I don't know how much money you have in Ethereum, but for me, it's irresponsibly too much in Bitcoin (I have been holding since 2013).

I'm happy that Bitcoin developers don't experiment with my money, as it's a great inflation hedge right now as it is. Of course I would love some of the innovations that Ethereum made, but it's OK to take things slow, as it's already good enough for 1 thing.

Bitcoin and Ethereum can happily coexist, they both have lots of options to grow, and I don't think either of them is going away.

ETH is the only crypto I’ve bought because it’s the only one that seemed to bring real value. It seems that with ETH2 it’s going to be the backbone for everything in this space, which will mean built in long term liquidity.

As far as I can tell, liquidity from every other coin seems to only come from constantly trying to convince people to buy it.

Same here. I never invested in BTC, but the moment I understood ETH, I put everything I had saved for months into it. That was back in 2017 early 2018.

I wish I’d done it sooner but happy with what I’ve got.

PoS is coming to ETH and MimbleWimble to LTC, good times ahead. It's hard to keep up.

And tether breaks $52 billion, $31 billion this year. With that exponential rate of printing we'll soon see six and then prob seven figure prices of bitcoin and co

I think there's a larger elephant in the room in regards to exponential rate of printing.

Different kinds. Tether is printing tether to prop up prices in the market and enrich themselves. The federal reserve actively manages the currency supply to achieve full employment and 2% inflation rate in basic goods. How can you conflate the two?

After 4 years of tether FUD can we finally put it to rest?

Also, this is about Ethereum not BTC… which is the primary target of tether complaints. Not even the most hardcore conspiracy theorists suggest tether is being used to buy Ethereum.

Have you read this? Their leadership signed a statement admitting to substantially everything that we’ve accused them of over the years.

[1] https://ag.ny.gov/sites/default/files/2021.02.17_-_settlemen...

I'll put it to rest the day they provide an audit. I don't understand how they could possibly keep printing tens of billions without any proof of actually holding anything, and how everyone is ok with that.

How many events have the ability to single-handedly takedown the crypto-ecosystem?

Edit: I'm asking because this is now mainstream and this is a thought experiment that should be well understood by now. It's hard to get a straight answer about the real world value of these instuments, so I guess I shouldn't be surprised of the [non-]response here. The problem is if questions like this continue to be scoffed at then a lot of people can get hurt.

An asteroid....is that what you're praying for so that you can be right?

Large enough solar flare might do the trick, too.

I appreciate the the response without the snark.

I was hoping for more plausible risks, like "a regulation restricting X" or "innovation in Y."

What makes you sure of my motives?

I want to know how risky this is considering everyone and their grandmothers are investing their retirements [and student loans].

A general economic downturn would hit crypto harder than the real economy so you'd probably see >90% drawdowns.

A new bubble in a different area could also cause people to get bored with crypto.

Your edited question is much better and deserves a less snarky response.

looking forward to see L2 scaling in JULY :)

Will the transaction fees for ETH ever adjust downward?

They're pretty low now... relative to a few months ago.

I tried transferring $200 worth of ether from one exchange to another one the other day and the fee was going to be $30.

So I traded the ETH for LTC, transferred it to the other exchange, then traded the LTC back for ETH. My total fee when transferring via LTC was around 30 cents or something like that.

If this is honestly how ETH transaction fees are, this doesn't seem viable...

What am I missing?

Ethereum L1 is indeed expensive. There are Ethereum L2 chains, like Polygon, xDai and Loopring, that offer very low fee transactions, but in order to be useful, exchanges need to integrate with them. It would also help if more inter-L2 bridges, like the current Polygon <-> xDai bridge, were set up.

XLM (stellar) I think is even cheaper than LTC to do these xfers with.

Reply on news.ycombinator.com