Seems like one of the core arguments of this is that the the core devs have pushed the difficulty bomb multiple times because they've missed their original timelines for switching to PoS without any repercussions.
It seems to me that this is actually the correct thing to do. I'd rather the core devs take their time and iron out the issues instead of being incentivized to play fast and loose with a system that manages billions.
Agreed. The article feels a bit like it's salty about a very complex software project behaving like a very complex software project.
My understanding of the changing of the rules "as you go" is that it's based on the reality being faced by the system. Bitcoin's proof-of-work is simultaneously one of it's strengths and one of its weaknesses, and Ethereum has chosen to move from PoW to PoS because of the belief that it's the right path to follow in attempting to solve the problems the system is facing in reality.
I don't think the "working class" vs. "ruling class" analogy is particularly fitting. However, to continue the analogy, the profitability of Ethereum mining (from what I've heard) would have allowed pretty much all of the early "working class" to have climbed the social ladder to "ruling class" if they held onto some percentage of their earnings (you know, like "savings" or "investments" in this real-world analogy). If the "working class" believed in the longevity of the project they've chosen to work for, wouldn't they see the investment opportunity? Otherwise they're just there for the immediate profit, and there's no long-term contract or agreement that's been broken. The system is evolving, like what happens in the real world.
> As a Bitcoiner...
> We wouldn’t dare...
> We would never...
> doesn’t have a ruling class to take advantage of other classes
Bitcoin Cash, Bitcoin Gold, Bitcoin Satoshi Vision. Take off the rose-coloured glasses, "your community" isn't sunshine and roses either.
Personally, I think PoW may be what brings Bitcoin down in the long-term.
>Bitcoin Cash, Bitcoin Gold, Bitcoin Satoshi Vision. Take off the rose-coloured glasses, "your community" isn't sunshine and roses either.
I think this is unfair. These are splinter communities. It's like critiquing Ethereum's community by pointing at Ethereum Classic and Binance Smart Chain.
>Personally, I think PoW may be what brings Bitcoin down in the long-term.
I pretty much agree with this part. I think it'll probably cause very serious issues for it over the next decade. I predict they'll actually eventually move off of PoW or drastically alter the PoW algorithm, but only after many years of infighting and stubborn refusal to consider the possibility.
Don't get me wrong; I think the article is very unfair and awful in many ways. I just thought that particular counter-argument wasn't valid. I think their point about ETC can't really be compared to the Bitcoin community splinters, since the point is about the DAO hack rollback. The block size debates were very controversial and heated, but not to the degree of the DAO hack incident.
Ethereum is the cryptocurrency I personally like the most, but I do find supporters tend to downplay just how controversial that incident was.
It's very outdated now, that's not the point. The point is that every circle on the road map is a very complicated project in and of itself that needs tons of research, development and testing to be implemented properly. Just the code itself is thousands of commits.
Absolutely, not to mention Eth just rolled out a major update last week. This rambling, bizarre article boils down to a few very basic, extremely played out arguments.
Argument 1: Proof of stake concentrates wealth more than proof of work.
You can make that argument, but POS advocates have for a long time argued that proof of work mining has more economies of scale than proof of stake and therefore the opposite is actually true. Equating proof of work miners to the working class & stakers or developers as wealthy elites or rulers is so massively cringe it's tough to even read.
Argument 2: Ethereum is in active development, is planning to switch to proof of stake, has things like difficulty bombs, and therefore is somehow dishonest.
Decentralized blockchain communities come to consensus around different values and philosophies. Eth has for a long time been a community which values consistent iteration and improvement around fundamental aspects of the protocol. The transition to proof of stake has been known for years and years. There's nothing dishonest about any of this. If anything the community has been asking for faster iteration to solve high transaction fees and improve usability. Bitcoin's development stagnation works fine for bitcoin. Ethereum is clearly making the right move in continuing to improve the base protocol. Which as you mention is a huge, extremely complicated undertaking.
The article goes on to some cognitive dissonance about how Ethereum doesn't deliver on promises despite the fact that it just delivered a major protocol update last week... might as well throw in the dao hack and icos and whatever else in there and see if anything sticks. I guess with nothing to develop or build, bitcoin maxi's have a lot of time to ramble incoherently about Ethereum. And they probably always will.
While reading the article all I could think about was that it sounded like it was written by a bitcoin maximalist, so many things were framed in bad faith that it makes it difficult to take for granted that it is an honest attempt at discussing the issues surrounding Ethereum, especially when it is basically rehashing things that have been discussed many times before. It makes me wonder how this got to the top of HN, maybe an enemy of an enemy is a cryptocurrency skeptic's friend or something.
Thank you for taking the time to type this. The topic of PoW vs PoS is very misunderstood and I see a lot of dishonesty in online forums.
I am very optimistic about Ethereum. It is not perfect but it is massively and consistently improving. The past few years, all crypto innovation was incubated within the Ethereum community.
I'll preface that I somewhat dislike how Ethereum has established their PoS consensus. The lack of first class support for delegated staking poses a problem IMHO as it requires handing control of your coins over to a third party considering this is the only option for people without 32ETH(102k USD) that they can tie up. I also have opinions on locking periods but until we see some extended battle tests proving where the sweet spot is (I'm for no-lock staking personally), I won't consider this a major issue. These aren't criticism of PoS itself but rather critiques of this particular implementation.
---
Now that that is out of the way, I don't necessarily believe that Argument 1 is inherently true (I know you aren't necessarily supporting it but I figured I'd throw my 2p in).
Ultimately Proof of Stake is just moving from a system with an external resource to one with an internal resource. This theoretically allows you to largely divorce the system from the harsh realities of the outside world (whose rules those external resources are bound to). By isolating the system you can better structure the rules of the game (from a game theory perspective) without being influenced or bound to rules from the outside system. Of course this isolation is only as strong as the network (larger market cap makes attacks harder) but generally once the network reaches scale it is largely independent of the outside world.
How a system influences the distribution of wealth ultimately depends on those rules in the system and by PoS largely granting the system the ability to decide those rules for itself, you can theoretically design a system with an expected steady state at or around the middle class at which the system can help lift those with less wealth up and weigh those with more wealth down. Balance it incorrectly and you run into issues one way (concentration of wealth) or another (lack of staking support opening up risks for attack) but theoretically it can be done right.
One of the key features of that balance is that wealth is worth the same whether it is held by many people or one person. It should be just as viable for a thousand people to lend 100 dollars as it is for a firm or wealthy individual to lend 100k with both groups exposed to the same amount of risk all other things the same.
Various mechanisms of the network including staking (including delegation), access to a democratically controlled treasury, first class support for governance primitives, and other such features are essential for making such a system work. Proof of Stake on its own may generally provide an accrual of wealth but in combination with the other forces on the network it should be perfectly viable to create a network that promotes distribution towards a reasonable steady state (with deviations due to merit of the individuals or just outright luck and not maintaining such deviations long term).
---
/rant
I'm generally pretty cynical but no matter how hard I dig into it, I can't find a reason why PoS shouldn't be one of the last pieces of the puzzle to produce such a system and if it's even just a chance I think it's exceptionally valuable that we pursue it. Or maybe I'm just a crazy Crypto-LibSoc. ¯\_(ツ)_/¯
>The lack of first class support for delegated staking poses a problem IMHO as it requires handing control of your coins over to a third party considering this is the only option for people without 32ETH(102k USD) that they can tie up.
You should take a look at RocketPool. It is a project that will introduce decentralized staking pools allowing people with >0.01 ETH to trustlessly stake (except for smart contract risk, of course).
Support for delegated staking is already here, it's just not widely used yet. The trick is that you specify a contract address as your validator's exit address, and that contract keeps track of who has partial "ownership" of the validator and thus is allowed to withdraw their fraction of the stake after the validator exits.
Lido for example, a staking provider, already keeps their new deposits in custody of a contract like this.
But hasn't dPOS shown that people don't care that much about governance and will just hand their coins to someone, anyone who promises to reward them? The current crop of dPOS coins leaves a very stale taste in my mouth as they all seem to be run by an oligarchy of validators who conspire to let no one else in.
Staking services like RocketPool just bring the idea to ETH but if you were early, you can stake on your own.
> This time the working class has their pay reduced from 4 Eth to 3 Eth per block, a 25% pay cut. Miners now earn 40% less per block than at the time of the community’s constitution, which promised that code was law, and which the ruling class later said they would break only once, for what was an especially good reason. But the code is law promise has now been broken so many times people expect it to occur at regular intervals and even worry that “progress” is slowing down if there aren’t frequent enough hard forks (to break that promise yet again).
The way that's written like Ethereum owes the miners a job strange. Ethereum isn't a work program for miners to manage mining hardware. Ethereum functions on proof-of-work and needs some people to sell their compute time and electricity. Miners aren't doing a generous service that would be useful outside of Ethereum that should be encouraged any further than Ethereum's specific needs.
With PoS, the pay for miners is planned to be cut from 3 eth all the way down to 0, and that's great that Ethereum will become more efficient in that it no longer needs so much compute time spent on it. Ethereum will switch to needing stakers to provide a service to it that they're paid for, but if people designing Ethereum knew a way to not require that while still staying decentralized, then that would also be a great upgrade.
> The way that's written like Ethereum owes the miners a job strange
I think it's fair that if you've purchased specialized mining equipment, you expect the ROI you were promised. Doesn't seem strange.
> Ethereum functions on proof-of-work and needs some people to sell their compute time and electricity
So compensation for work. If not 'workers', you could call them 'investors', or perhaps 'sole traders', or 'merchants', not sure what the best analogy would be. To be fair, I don't necessarily put them in the same class as people making socks in a sweat shop on slave wage. The down-trodden Ethereum miner is not someone I lose sleep about.
> I think it's fair that if you've purchased specialized mining equipment, you expect the ROI you were promised. Doesn't seem strange.
ROI was never promised. Ethereum has always had a "Minimum Necessary Issuance" policy. Keeping issuance constant would be deviation from the policy, reducing it when possible is in line with the policy. From the docs:
> Ethereum's Monetary Policy is defined by the rewards that are paid out by the protocol at any given time. Ethereum's current yearly network issuance is approximately 4.5% with 2 Ether per block and an additional 1.75 Ether per uncle block (plus fees) being rewarded to miners.
> Ethereum does not have a fixed supply because a fixed supply would also require a fixed security budget for the Ethereum network. Rather than arbitrarily fix Ethereum's security, Ethereum's monetary policy is best described as "minimum issuance to secure the network".
> Ethereum has had a history of reducing issuance to these estimated minimums and the network has never increased issuance. The move to proof-of-stake is also part of Ethereum's effort to reduce issuance to minimum amounts without sacrificing security.
Many miners buy purpose built servers for crypto mining.
> Was there not enough warning before the changes?
That's the main plaint of the article, and reiterated multiple times. The article claims that the prices was dropped with 2 of the forks, each time it was promised (including at the very beginning) that changes would never be made. Each fork seemed to be of gain to the people who were part of the ICO, but at an income loss to miners. There were several broken promises of no further forks.
I'm not sure the GPUs could be reused for some other purpose that generates as much value. Perhaps another alt-coin is the best way to redeploy this resources
> I'm pretty sure proof of work was supposed to be dead years ago. The current state is more than promised.
Miners for Ethereum are incredibly profitable and benefit enormously from side-channel MEV (miner extractable value) payouts that tip them for transaction ordering. In doing so, they extract value from users making trades. In addition, a reduced issuance in crypto tends to lead to the underlying asset appreciating in value, as noted by the Bitcoin stock-to-flow model in the wake of each halvening.
The "code is law" is not some universal absolute. Blockchains have always been forkable. But a chain can't have a contentious fork without a cost and it becomes costlier and riskier to do later in a chain's life.
My understanding of MEV was "Maximum Extractable Value", and to clarify: MEV is the process by which a miner takes advantage of their ability to view pending transactions so they can "front-run" (add their own transactions ahead of) the transactions of others, bumping up the costs for the transactions that come after theirs, thus "extracting maximum value" from their privileged position.
Using the original article author's analogy, the "working class" are adding their own percentage to the retail price and taking those profits home.
MEV began as Miner Extractable Value, but a lot of people are adopting Maximum so that they can keep the same acronym for proof of stake.
They typically don't have the on-chain analysis or skill to reorder the transactions in the highest extractable way, so people bid for these opportunities through side channels they signal the miner to do (off-chain) based on the mempool (backlog) of transactions. Miners profit from this activity and in some cases these profits exceed the 2ETH per block issuance. The class analogy is strained and doesn't fit at all. These are only possible because Ethereum has a rich application layer (and if anyone is 'working class' it's the users, devs and dapps on the chain). But these profits more than made up for any offset in EIP1559 losses.
Also, Ethereum Classic has been 51% attacked and then reversed transactions a few times. So not sure if author is recommending ppl avoid altcoins entirely?
Honestly, that's where the article becomes totally bizarre. ETH is now worth in fiat 3000x more than in 2015, and miner's expenditures are in fiat. So instead of cutting mining rewards by say 95%, it got cut by 25% and that's somehow evil?
Miners don't earn 40% less, they earn 180000% more than back then. Of course not individual miners, but as a "working class".
This argument is so old that it's almost endearing to see people arguing about it time and time again. Code isn't law, and it never was. Consensus is. This is true for all blockchain-based cryptos.
Miners are free not to upgrade every time a new protocol version is proposed. Why do they upgrade then? If consensus was established around the older set of rules, that would be it. But instead there's consensus around the newer rules. And that's simply because miners individually decide that the newer rules are better, for whatever reason.
Another point that's underemphasized in the piece: forkable governance with voluntary participation is very different from the scenarios that go with a "ruling class".
Correct, the bomb is meant to be moved. It is more like a carrot/stick. It is the gadget that allows the devs to turn off the lights on the miners when they are ready to turn them off. Having a forced migration knob is a good thing.
Why have this fake deadline at all then? That sounds like it is playing fast and loose with the system, since it practically requires a nontrivial action to postpone.
The point of the difficulty bomb isn't to put a deadline on the developers, it's to prevent a situation where node operators get complacent and stop updating their nodes.
It forces node operators to come to consensus on whether to fork alongside the developers or to fork in a different direction. It removes the option of doing nothing and letting the Ethereum chain stagnate.
The Community calls didn't reach agreement with miners, and the fact that they kept protesting it is why the Ethereum Foundation decided to move the ETH 2 timeline forward.
>As a very large miner, I was always for 1559 because I understand the underlying mechanics.
I don't know what mechanics you think others didn't understand. Your profitability has dropped and the move is basically moving miners' profit to the largest holders (e.g. everyone who pushed for the change). It's not like the fees have dropped since EIP-1559 if that's something you thought the change will bring for some reason.
As for profitability changes, that's almost impossible to measure right now. There is too many variables. One is that there isn't any wallet support for 1559 yet (MM came out today and is apparently, um, lacking). People are still over paying for transactions. Difficulty + price changes + pool luck + changes in hardware stability also make things nearly impossible to track accurately. I have a margin of error, but it doesn't look too bad right now actually.
Exactly. 50% isn't enough to reach consensus. I also know pools that voted against it, which kind of regret that now that they understand things better. A big issue is that miners and some of the pools were still raw over progpow.
Point #1 is a big one. A huge number of people thought that fees would go down.
They brought the miners onto the weekly cat herders (the name for core dev weekly sync) meeting they hold. I watched the stream. They listened to the feedback, some other miners that were for it including Stakefish were present. The arguments weren't strong at all from the miners that were opposed and in the end, they dropped it.
It isn't quite that simple. There is a whole bunch of game effects happening here that add a lot of complexity to a statement like that.
One key one is price, another is that most miners barely understand how the network works and therefore couldn't exert any force even if they wanted to.
Pools concentrate the force, but miners can move to whatever pool they like the best (usually the most profitable... which is where the main store of wealth is)...
It seems to me that this is actually the correct thing to do. I'd rather the core devs take their time and iron out the issues instead of being incentivized to play fast and loose with a system that manages billions.