Question Can PoS replace PoW for ETH?

[philosofool]

This goes in GPU mostly because that's where the people who know the answer are most likely to hang out.

It seems to me like the success of Etherium is partly built on its use of GPU mining. By providing GPU owners with a small economic reward to put their idle GPUs to work for ETH, they have created a level of investment in ETH. This has snowballed to the current state of GPUs living in giant farms just to mine ETH.

But if/when ETH moves to PoS, does that just dry up? That is, can the value of ETH survive a transition to PoS?

I'm am asking sincerely. I'm genuinely ignorant of how this stuff works. Is there a reward for staking that resembles the reward for working? Does stake work when the value of ETH falls?

 

[Leeea]

I certainly hope ETH can survive the transition away from proof of pollution.

If not, perhaps as part of the next climate accord we can just outlaw cryptocurrency.

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I can already see our inevitable future. The year is 2022, a dark and disturbing time. Crypto-mining scavengers have realized that Tesla's have nvidia chips installed for the optional Full Self Driving package. The cost of Tesla's skyrockets as perfectly functioning cars are gutted for their Nvidia GPU, with the rest of the car being discarded into the dumpster.

Other vehicles are randomly targeted in the middle of the night, ripped apart for their DRIVE AGX Orin Nvidia powered lane centering systems, capable of 90 MH at just 30 watts. Rumors spread of Elon activating the Full Self Driving function of customer Tesla's to secretly return them to Tesla salvage centers, where they are ripped apart to fuel Musk's ever growing bitcoin stash.

 

[fleshconsumed]

AFAIK as part of staking you would be given "rewards" for staking your ETH which would replace GPU mining rewards. The rewards would be in the form of ETH, so staking will still work, but just like with GPU mining your FIAT profit would depend on ETH price.

 

[Mopetar]

Even if Etherium survives it leaves a massive vacuum that something else will rush in to occupy. The problem isn't that PoW is bad by necessity, it's that that work being done isn't particularly useful unless you value having solutions to some cryptography problems. I don't see any reason that a PoW-based currency system couldn't involve finding solutions to other problems that require a lot of computational power. As long as it's the type of problem that's (relatively) easy to verify the solution to, then it can serve as a drop-in replacement.

The only other problem with PoW is that everyone is competing to be the first to solve the same problem, which is just a lot of wasted effort. It would probably work better to have a system that constantly assigns unique problems and that completing any of them forges a new block. If you didn't complete your problem yet, it's still good to keep working on it because once it does finish you can use it to complete a block.

 

[philosofool]

The only other problem with PoW is that everyone is competing to be the first to solve the same problem, which is just a lot of wasted effort. It would probably work better to have a system that constantly assigns unique problems and that completing any of them forges a new block. If you didn't complete your problem yet, it's still good to keep working on it because once it does finish you can use it to complete a block.

If the work is easy (e.g., if you just need one GPU working on it to finish the job on time), isn't it not very proofy, is it?

 

[Mopetar]

If the work is easy (e.g., if you just need one GPU working on it to finish the job on time), isn't it not very proofy, is it?

It's not as though these problems are easy, it's that they need to be easy to verify. If you want to find prime factors of a very large number, it's not particularly quick to solve for all numbers, but it's easy to verify that the solution is correct. The point of proof of work is that having the solution is proof that you did the work.

The issue with the way it's used in BitCoin is that everyone is trying to solve the exact same problem at the same time. The more people you have working on the problem, the more duplicated work being wasted because as soon as one person solves it, everyone else has no reason to try to finish.

 

[Shmee]

To my knowledge, after PoS, I would expect ETH value to rise. They are working on PoS, but it could be a while.

 

[reb0rn]

Why would price rise with POS?

atm all shitcoin you have on POS are centralized and guess why there are none decentralized, well POS attack vector are not know in decentralized blockchain at all, from 51% that is mostly know for both POW and POS, POS is open to dozen of unknown attack vectors and to date none made secure POS decentralized blockchain!

On top of that same as POW, POS do not fix or speedup scaling at all

 

[ozzy702]

For some reason miners are under the mistaken assumption that they give the Ethereum network value. I say this as an Ethereum miner since 2016, we don't. We are service providers, paid muscle, that's it. We are a net drain on the price of Ethereum. I happily mined because I made profit (I never sold my ETH and am now staking it). Miners secure the network, that's it, they're paid to do a job. Under staking validators secure the network and will be paid to do a job. At the end of the day, so long as the network is secure, there's no difference, just service providers.

Not only will PoS replace PoW, it will be significantly more effective in every way imaginable. Supply inflation with BTC is currently around 1.75% annually. It's over 4% for ETH right now under PoW, and with EIP-1559 and PoS it will be .5% or under. Right now the Ethereum network is paying over eight billion dollars a year in security, the vast majority of that is being cashed out by miners. That's a huge amount of sell pressure.

Proof of Stake will shrink supply with locked up ETH, remove sell pressure and replace it with buy support, and it will have a huge impact on price.

It's looking like October may be when the merge happens but we still don't know how that's going to take place. I suspect that they will allow PoW dummy mining of empty blocks for awhile after the merge to give miners the incentive not to attack the network and screw things up.

The move to "ETH2.0" which is really the move to PoS at this point, still doesn't fix everything. Ethereum is moving to a rollup centric model with L2s in the short term and sharding is still in the distance future for L1. All in all, extremely positive next year from a technical perspective, but not without it's bumps in the road.

 

[MrTeal]

Yeah, I've never understood the argument that miners will move to other coins and bring in comparable money. Ultimately someone has to be willing to dump fiat into these coins for miners to make a profit, and that doesn't appear to be happening now. I'm not sure why it would just because more miners show up.

 

[arandomguy]

Likely not comparable money but they can maybe drive up value of whichever crypto they muster behind. The predominant driver of current crypto valuations is based on sentiment and not any practical use they might have. Miner's are a large enough bloc in that can drive sentiment should they rally around a new specific crypto and promote it. Something they have a vested interest in doing as it's basically self promotion, which you see already widely done even if it's grass roots.

 

[ozzy702]

Likely not comparable money but they can maybe drive up value of whichever crypto they muster behind. The predominant driver of current crypto valuations is based on sentiment and not any practical use they might have. Miner's are a large enough bloc in that can drive sentiment should they rally around a new specific crypto and promote it. Something they have a vested interest in doing as it's basically self promotion, which you see already widely done even if it's grass roots.

But that value is completely independent of the act of mining and 100% based on hype. Their mining does nothing to the value of a crypto coin other than secure it from attack vectors. Once the threshold for security has been met, everything past that is a complete waste. In the case of Ethereum, and BTC for that matter, what we're seeing is a potential threat vector from mining cartels themselves. Once BTC's issuance is low enough, we're going to see some serious problems, which is why on a long enough timeline, I'm not bullish on BTC without a pivot in monetary policy. BTC Maxis worship at the alter of no change, and 100% predictability so there will come a time in which there are problems that don't easily resolve themselves and it will be ugly.

Proof of Stake aligns the incentives of long term holders with other users of the network. I see miners as parasites for the most part who sell sell sell and have no long term vested interest in the viability of the blockchain they are supporting. This has been illustrated very clearly with the miner's various responses to EIP-1559.