Thanks. I had assumed PoS was more like a holy grail for cryptos? But this sounds like it’s entirely possible?
Will PoS lead to a run on other resources like hard drives?
Will PoS lead to a run on other resources like hard drives?
It could potentially lead to a run on Ethereum. The resource used in PoS is the cryptocurrency being secured itself. Basically, you agree to lock up a certain stake when you run a validator, and forfeit it if it's found that your validator "cheats". By doing this, you make cheating unprofitable - there's a financial incentive to catch cheats, and a financial disincentive to cheat, and the cheaters eventually go bankrupt (or end up on their own isolated chain where nobody transacts with them).
The financial effect of this is that a bunch of Ethereum gets locked up and illiquid. Instead of miners receiving Ethereum which they want to sell for dollars to run their hardware, stakers lock up Ethereum and effectively receive interest. This reduces immediate supply within the market. I'm wondering if a lot of the recent price movement is in anticipation of this.
Also does eth supply increase forever or does it have a hard coin limit like btc?
Currently no hard cap on issuance, 2 ETH are minted every block, but ETH burn rate is expected to outpace issuance post-POS.
For most of its history Ethereum was inflationary. It flipped and became deflationary a couple months back, and not coincidentally the price started rising again. It's likely to be significantly deflationary under Eth 2.0 with expected transaction and staking volumes.