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Comment by gruez | Hacker News Reader

The difference is that with PoW you constantly have to do "stuff" (ie. buying equipment, running datacenters) or get left behind. PoS on the other hand you can just sit on your ass and wait for the $$$ to roll in.

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This is not the case. In Ethereum's PoS model, you put value at risk when you sign up to be a validator. You have to lock funds up to play a part in consensus.

This means that if you start acting maliciously, or even just not fulfilling your responsibilities (e.g. you let your computer go offline), then you are punished for it (depending on the severity of your offense, obviously).

Aka, you can't just wait for the money to roll in. You have to run a node, you have to verify blocks, and you have to make sure you're acting in the best interest of the network + keeping things running smoothly.

Who gets these funds? This is beginning to sound suspicious.

The other actors in the network running validators.

Specifically you are punished for:

- Being offline (the penalty is small, and roughly equal to the rewards earned by being online

- Running the same validator twice (huge penalty, be careful!)

Are the funds paid in fiat or ETH?

ETH of course, this is an automated part of how the system works, not some behind-the-scenes deal based on reputation or whatever.

This is something I don't understand. You lock the funds on a chain and you lose them on the chain. But what happens if two groups decide to split the chain, and both chains lock the opposing chains funds? It seems like there's no way to prevent social forks in the longer term, just a lot of hand-waving about that if the current social contract stays in place, some minority malicious group will be punished for secession.

It would seem that if some participants on the network can't abide by their national laws while running some contracts, the outcome would be inevitable. And then you would just get multiple chains running under multiple governments. This seems like a reinvention of the international banking system?

Ethereum has already proven that there's no way to prevent social forks, correct? The DAO incident comes to mind as a very controversial instance, but there are others. Ultimately, it's up to the individual nodes to decide what code they want to run and what rules they want to use to decide what the chain is. I'm not sure I understand how PoS makes this worse (although maybe there's something I'm missing)

Right, but then the model is not trustless but is instead a complex implementation of the current system of international banking. Maybe I don't understand the point of cryptocurrencies. Most applications of cryptography are trustless.

"Trustless" is relative. In this case, the protocols are still trustless—the trust lies one meta level up, where you decide which protocols to use. In this situation, there are network effects as well—you can come up with your own perfect protocol in a vacuum, but if nobody uses it, who cares?

In this case, you can think about it as one person saying "I think it's a good idea if we do this" and a few hundred other people saying "I agree with you". Obviously, they're more likely to agree with the first person if they have some sort of institutional legitimacy. But is that "trust"? That's very different from the definition of "trust" that's generally used in protocol design.

I found the following article to be helpful in understanding some of these processes

https://haseebq.com/ethereum-is-now-unforkable-thanks-to-def...

This article makes a good point about the fragility of DeFi, but it fails to demonstrate that the broader Ethereum community cares enough about DeFi to let it influence their decisions. It makes a general, hand-wavey gesture to other parts of ETH ("All websites, interfaces, block explorers, and wallets ultimately point to the majority chain. Game operators like CryptoKitties lock their D-ETH contracts so as not to confuse their users."), but it fails to justify this point—it already says "a civil war is brewing" and that individual developers (presumably including CryptoKitties) would have reason to support one or the other.

So while this article is a (good?) argument for why all DeFi operators must follow USDC, it fails to make the case for why anyone else should care about the fate of centralized stablecoins. Maybe these reasons are obvious! But I don't know them.

What stops chain forks to begin with? This isn't a flaw that's limited to PoS.

I think GP's point is that in the event of a fork, in a PoW fork miners have to choose to either mine for chain A or chain B, whereas with PoS stakers can choose to stake for both. This is bad, because either side can use their staking power to disrupt the other chain, by doing double spend attacks or refusing to confirm transactions. On top of that, staking is free to do, so you don't even have to expend resources to pull off such an attack, whereas with mining you have to spend real world resources to pull it off.

This is the point of slashing, to prevent the same coins from being staked on multiple chains at the same time. To stake you need to issue proofs of the stake which can be used to slash you on other chains.

Thank you, this is a good description of the issue! This does seem like a complicated problem to solve, but I'm not necessarily convinced that one set of incentives is always worse or better—aren't there some situations where you do want to import the existing set of "stakes" to gain adoption?

Vitalik talked about splits like this, read https://vitalik.ca/general/2021/03/23/legitimacy.html

I don't think that helps my comprehension of this. Unless I am mistaken, it seems like a long winded essay on how cryptocurrencies are simply social constructs.

Why would you want to prevent social forks? Social forks are not only good, they are the killer feature of crypto. They are what makes crypto truly consensual and voluntaryistic (if that's a word). As for the problem of national laws, I hope that can be alleviated with better privacy, so people can safely run a node even in violation of laws.

This is largely done by software. If you are not mucking around with the software, there is zero risk.

I find comments like yours hilarious. The idea that the ethereum foundation has spent years and years designing a PoS system, writing papers, doing tests, building proofs of correctness aaaaaand derp they just didn't think of people sitting on their asses.

Maybe answer the question instead of scoffing at how ridiculous it is?

No, I refuse to put in effort to correct the level of confident ignorance the OP displayed.

It's not that hilarious when you realize that this is the same kind of thinking some cryto-boosters apply to hundreds of years of financial regulation and history.

In PoS, you are still permanently burning the time value of the money you have staked. That's unrecoverable just like the electricity spent in PoW is unrecoverable.

Yeah, but obviously the "stuff" has led to a Red Queen problem, with the outcome being incredible waste of electricity and computing resources (compared to PoS or having a less competitive eth mining industry)

Except, using the same kind of pooling that POW depends on, you can still get in at just about any price level. .01 Eth can be staked just as easily as 10,000 eth. And running a validator with 32 isn't nothing - you still have to keep a machine on and online 24/7 with an uncapped connection or pay someone to host that machine.

This isn't really true. You also have to buy equipment and run specialized software to participate in PoS. It requires keeping a node connected to the internet with high uptime, and maintaining its software and hardware.

Plus, due to slashing, you are uniquely responsible for mistakes your validator makes. So, staking comes with both responsibilities and consequences for breaching them, just like any legal contract.

The fact that you can rent a turnkey cloud solution to do all this work for you and split the profits isn't really relevant to the argument IMO (I consider staking with Coinbase "renting cloud computing" in a specialized way).

Or you can pay someone a flat amount to do the "stuff" and experience your own unlimited percentage-based gains, like in pretty much any other market where "capital" is a thing.

Good point. But I still don't understand how it changes the premise presented by the comment, of "The one who has the money controls the network".

There are lots of participants in the global economy who has money. The idea is that you have enough different people with competing incentives. PoW provides incentive model which separates different actors (pools, exchanges etc) and also at the same time doesn't seem to lead to monopolies.

Can you explain what “sitting on your ass” means? I thought you had to maintain a validator?

Exchanges like CoinBase will stake for you. You as an individual don't have to do anything.

An earn interest, right? So I could lend Coinbase some of my ether for staking and they pay me interest in return. So PoS could give us an interesting investment possibility.

Well, its not called interest, its called 'staking rewards'. You can also earn interest lending out your ETH, but that's a different process and entails counterparty risk.

Yes and no. Keeping up with the day to day details is something you delegate at some point. PoW is also "just" an investment, with extra steps to set things up.

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