ryebit

I don't think that invalidates the quote. It's how I came across it in the first place.

I think economists are well aware of the nature of the beast they're studying.

And even if doing the task is daunting, and the landscape changing as it's described, it's still worth it.

Especially if anyone finds fixed points which do have the property that describing them doesn't invalidate them.

To clarify: I don't think proof of stake is perfect.

I think the original pie in the sky dream, as hinted at in the Bitcoin white paper, was for decentralization through anyone (all the way to students in their dorms) being able to participate in consensus.

I don't think proof of stake gets things all the way there, but I think it does get closer to a linear ROI curve, compared to how proof of work is right now.

History of stuff like Antminers has been stages of private access, high end market, then low end ...

But while products are moving down those stages, more wattage-efficient ones are entering at top.

I think you're right that ROI curve will get closer to linear (utility costs aside), but I don't think it's going to be a very fast progression.

Except under mining, increased investment opens up access to better equipment like ASICs, access to cheaper energy agreements, etc. But no amount of $ unlocks the ability to validate faster (per unit staked).

Reversibility could probably be added on top via smart contract if someone wanted to provide the service, and people trusted the third party.

But you can't make a trustless exchange on top of a custodial framework.

Base layer has to be trustless / permissionless; all manner of third parties can build all kind of things on top of that.

But reverse isn't true - if base layer controlled by small number of third parties; nothing built on top can claw back that control.

Thank you! That's... well, beautiful isn't the right word, given nature of example... But I was hoping to find a simple non-ergodic example.

The situation the article explores was interesting, but made the jump to something mathematically complex before I sunk my teeth into the fundamental bit.

Ethereum is working to address a lot of those points. When it switches to Proof of Stake (beacon chain is already live), energy costs will drop significantly (talking < 100 watts / node)... Just doing minimum to process blocks, no wasteful mining.

That means network has to pay less in block reward under PoS, so inflation drops to 1% or less.

Eip-1559 upgrade this summer will also start "burning" a portion of fees. Estimates have this around 0.5% - 1.5% deflation.

Combine those features together, and Ethereum should have long term issuance at around 0% indefinitely, while still paying for validators to secure it.

It's a feedback mechanism too... If usage goes down, burn drops, supply inflates slightly, stimulating use, increasing burn again.

The idea is to make an elastic self-securing system.

I don't understand where the pyramid scheme is in that... The money being paid out to validators will by nature barely cover costs (otherwise more people will validate, reducing margins to match). Since anyone can join, and the network punishes correlated misbehavior, that incentivizes decentralization and wide disbursement of block rewards.

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In the case of topic here, spare CPU cycles will no longer be valuable to exploit under PoS. The valuble qualities will be availability and uptime... Which won't be had by exploring in-broswer mining scripts, or CI exploits.

Not to find a solution, it was already found. The roadmap plan was always to switch to PoS, the miners and PoW were always temporary until it was developed / ready. Now the beacon chain (core of PoS) is live, with around $6 billion staked. Some of the miners (not all of them by far) are complaining they're no longer going to be needed, going so far as to make a show of "force". Others (like f2pool) have calmly been preparing with rest of Ethereum community, and are transitioning to staking themselves.

What would a successful attack even look like?

My understanding was that malicious validator has to publish votes for two different blocks in one round; which then can be used to slash them. Unlike PoW they can't "sit" on their second vote, because voters are known ahead of time, and once vote is done, opportunity is gone.

They also can't choose transactions to go into block unless they're the proposer, so that's only time they can control whether attack will even benefit them.

So they'll have to wait to get randomly assigned as proposer, in a committee where they control enough of the other randomly selected validators, and have pending txns at the ready to double spend (while receiving party has been sitting waiting for funds).

And even then, won't that just create a fork where the minority of the validators recognize the double vote, and slash them anyways? And what users / services will stay w original fork given that proof?

That's pretty much describing Ethereum (once it finishes switching to PoS in the next year or so). Popularity wise it's already doing way more than others in txn or $ volume.

It's NFT market for asset ownership (mainly artwork right now) is huge, there was literally a Christie's auction for an NFT token (and the art it represents) this week.

There aren't official stocks/commodities yet (I think) but a bunch of sythetic derivatives already. A couple of banks have even done test runs of bond issuance.

ETH itself is does have "store of value" qualities in background, but a trick was developed of using it as collateral to back on-chain stablecoins like DAI. That allows on-chain token markets/contracts to rely on USD-valuations for liquidity and baseline reference, independent of general "crypto" speculative fluctuations.

There's also Earnst & Young's "Nightfall" project that trying to bring b2b accounting on-chain using Eth's zero knowledge tools to retain privacy.