But here we are and there is no obvious problem in sight. I'll keep my fingers crossed, and if it goes off without a hitch, I'll have to admit I was too pessimistic and revise my opinion of the Ethereum ecosystem upwards.
Also alarming is the question marks as to when you'll be able to withdraw staked Ethereum, given the security risks from attacks intended to cause slashing and the dependence on total stake for what the staking rewards are.
Those exchanges are then a ripe target for existing securities regulation, and they'll also be the biggest validators on the network, so risk for them is risk for the whole network.
Ehereum PoS is just a financial asset with a weird governing structure (like a currency future? idk). It's basically standard stock.
Now the incentives are perverse. Since prices aren't anchored by real world expenses, the incentives of whale stakers is extreme price volatility, so that they can increase the share of the network they hold. They are free to pump and dump as they please even more than before because there's nothing anchoring them to reality. They get to set the price alone.
Again, naively, people panic and a smaller but substantial move could cascade, but a news article could do that as well. Stakers don't have a monopoly on the ability to cause a stampede.
Last I read on the mechanics of all of this, the emission rate, burn rate, fee burn and staking requirement were designed in such a way as to keep a certain amount of total ether staked. I don't recall what that percentage was, I think around 10% and it's not exact, this is game theoretical after all and incentives are what drives this so it will fluctuate a bit.
There are problems with not having an ongoing cost to validation, and not having assets external to the system at risk, a big one is the so called "nothing at stake" problem which ethereum claims to have solved (and have a compelling case as to why if you read about it) but I don't believe this problem you speak of is one of them. I am somewhat concerned that these metrics to maintain a certain percentage at stake will not shake out the way they planned and have to be adjusted with a hard fork, this happens in ethereum all the time with incentive structures.
Market manipulation is prevalent in all markets all the time. The risk of market manipulation comes from other participants (the bigger a share of the market a whale has, the less risk he has) and from real world anchors (which are what sets the price of stocks in the longer term despite their short term randomness).
ETH whales always had the ability to do price manipulation. And they did it to some extent mostly to the upside. But they risked breaking the market if they manipulated to the downside.
The miners also had real world selling incentives. The game was rigged but at least price incentives aligned.
The problem isn't about whether PoS works. The problem is that the lack of real world anchors means the whales are free to manipulate price as they please. They can agree as a cartel on a price, low or high, beforehand, and keep buying from retail low and sell high and gain higher and higher share, manipulating both to the upside and the downside.
The problem is that PoS has no downside price manipulation disincentives, and it encourages hoarding. You'll end up like diamonds where most of those are hidden outside the market by a huge whale that exploits a monopoly on supply.
> Ultra sound money is an Ethereum meme focusing on the likely decrease of the ETH supply.
> If capped-supply gold is sound, decreasing-supply ether is ultra sound.
I have no idea what this last sentence means.
Capped supply assets are good because that combats inflation, so decreasing supply must be even better (=ultra), right? That's the meme.
So congrats, that's one major negative externality tackled, assuming that this all works out.
How many Ethereum nodes are there compared to, say, iOS or Android or Windows deployments? What’s their hardware diversity? What’s the complexity of Ethereum compared to the aforementioned operating systems?
- Operating systems, browsers, etc are not distributed systems. Their deployment procedure has no availability or liveness requirement. And they can be done asynchronously, at the discretion of the user. If you think about it, deployment for this type of software boils down to uploading build artifacts into a public folder.
- Most other massively deployed software is developed by a single organization that completely owns the pipe. Ethereum has multiple client teams that need to coordinate and rigorously test their specs.
- Any failure has potential to severely damage the reputation of Ethereum, and in turn a multi-billion dollar market.
> How many Ethereum nodes are there compared to, say, iOS or Android or Windows deployments? What’s their hardware diversity? What’s the complexity of Ethereum compared to the aforementioned operating systems?
The code size for the core software of Ethereum isn't huge. It's possible for one person to understand it, and it's much simpler than iOS, Android or Windows. There are many things running on top, but those are supposd to keep running, similar to applications when you upgrade an OS.
But the finance attached to Ethereum is huge. I checked the figures just now.
$194 billion of ETH is being transferred from one blockchain mechanism to a radically different one, in about 40 minutes (estimated). Instantly, in what is effectively a single special transaction.
The consensus algorithm around that transaction is special and complicated, and it will only ever run once. It has been very carefully tested in advance by many teams at different companies, because it coordinates a handover between two robust but very different kinds of consensus protocols that don't normally link up.
It's unusual for another reason: Blockchains rarely merge two existing blockchains into one. Forking is more common, but not merging two different kinds of blockchains.
This is also an open source style software upgrade, because that $194 billion transaction only happens if enough users of the software have chosen to upgrade and run the new software by then instead of the old software (don't worry, it looks like most of them have). The necessary software was only ready to use a couple of weeks ago, and nothing forces people to upgrade, only incentive and getting the news out to them.
Not only is the consensus algorithm different, the p2p networking protocols are also different after the merge. There are many changes, though most of them are running already on one of the two chains being merged together.
Countless third party applications, defi, secondary blockchains and so on running on top are supposed to be able to continue running, seamlessly. There's a lot of those, running from many authors and companies, and some of those have their own financial value that's not even counted in the $194 billion I mentioned above. Their total value is not clear.
Those third party applications have not, in general, been tested on the new system. Nobody can be sure exactly which ones or how many will fall over, because it has not been possible to test them. It's a big like upgrading Windows XP to Windows 10: Applications are not supposed to be affected if the OS authors did it right.
Unlike most software updates rolled out on large networks, which can be done gradually with the old and new running alongside each other for a while, the Ethereum Merge is one single transaction to transfer everything over including protocols, and requires the whole network to do it all at the same virtual time.
Nobody knows in advance which block will contain the transition. Only the statistical conditions for the transition are set, and there is a kind of meta-consensus protocol to ensure the transfer between very different consensus mechanisms is itself going to satisfy special rules of both consensus mechanisms during the handover.
When it's over, the merge code will probably be deleted from client software, because it is only supposed to run once.
There will be future upgrades, as there have been "hard forks" in the past, but they don't appear require such high levels of carefulness and coordination as the merge. That said, maybe things like the planned switch to sharding, state expiry, change of hash tree structure, and zk rollups will be fairly radical too.
If they mess up they can just roll back the immutable blockchain again, same way they did it last time
Also PoS fans watch out and lets talk again in the future, I believe you are loosing some of your desired properties and may be surprised long-term..
Bitcoin has hard guarantees of user rights. Ethereum is a centralized project masquerading as decentralized.
The charts on this website are great, but people outside of the ecosystem likely won't understand them, which is a real problem if Ethereum wants adoption.
What nobody pays attention to is that the entire thing is a cartel and only incentivizes restricting freedom over time and automating turmoil.
It’s a complete disgrace to what cyberspace represents. It’s an opportunistic, exploitative, incompatible, deprecated, deficient paradigm stuck in a physically-constrained view of the future perpetually hindering progress due to preventing the mind in being able to contemplate non-physical things as infinite.
Pathetic, sad, crappy, leaky.
All driven by greed and ignorance.
People are being played to act as pawns for the same “elite controllers” that they complain about; being led to perpetuate playing the same game. The only thing worse than actual scarcity is completely artificial scarcity and erecting simulacra around that notion as if it were real. Way to go building an actual matrix of ignorance and slavery.
I don't know in which world you live in, but from where I'm sitting, it sure as hell doesn't look like this.
All eyes should now be on Bitcoin to also switch to a non-planet-burning proofing system. Ethereum proved that it can happen and all other blockchains should be held to a similar standard.
EDIT: I'm rate limited/soft banned so I can't reply to most of you/anyone until tomorrow. While I can still edit:
-Cash is the ultimate scammer currency, it would take a ages for crypto to match or replace cash as the best "scam" currency"
-Privacy =/= laundering. Privately transacting is not implicitly a crime.
-Crypto has value as trustless value transfer outside the nation-state system, especially in these uncertain times
-Smart contracts are criminally undervalued. Programmable money is the future.
That said, I fundamentally disagree that crypto is "overall negative", and with the move to PoS the largest negative aspect of crytpo (the environmental cost of PoW) goes away.
It's only been months aways for a few months though. I have endured years of gaslighting comments like this _specifically_ from this asymmetrically moderated community, despite knowing for example in 2017 that PoS was years away. The "maybe this year" started in Jan 2020. COVID happened. They didn't start saying "within a year" again until end of 2021.
Meanwhile the _beacon_ chain launched in 2020, which is what's taking over for the PoW chain in ... 1 hour.
Maybe you're acting in good faith and you misheard that the beacon chain was launching 2 years ago and thought that was this. But how likely is that really?
One very popular cryptocurrency is making the switch. That still leaves Bitcoin, with double the trading volume, and most of the other popular cryptocurrencies.
More importantly it doesn't change the fundamental problem with crypto: it's deliberately difficult to regulate, which means that it's still a scammer's paradise.
And Ethereum's price can still fluctuate wildly on any given day, making it unsuitable for most real-world transactions.
Untrue. Check e.g. top 10, 20 or 50 on Coinmarketcap. Most are PoS. Further, with Ethereum being PoS the mining behind everything except Bitcoin is a rounding error.
>And Ethereum's price can still fluctuate wildly on any given day, making it unsuitable for most real-world transactions.
You might want to look into stablecoins or more generally into Ethereum if you think using it for daily transactions is the main usecase.
They will now just congratulate the re-centralization of Ethereum running on Proof-of-Stake.
The crypto-skeptics will never be silent, but I can assure you that crypto is still here to stay, with some crypto projects surviving and some of them will not survive.
Proof of work solves issues like: - What to do with electricity before the generating source is connected to the grid
- Reduces carbon emissions by incentivising the burning of methane gas (20x worse than CO2)
- Makes it more viable to research new energy sources by lowering the cost.
- Acts as a load-balancer for the grid and makes it way more stable. This in turn means that we can build out huge amounts of solar and wind that rely on the weather.
Of course there are situations where Bitcoin is mined using non-renewable sources but if you believe that Solar and Wind are so cheap, then that issue will sort itself out, no? And it won't take long.
If you're an environmentalist and you want to solve the global issue of CO2 emissions, Bitcoin (and PoW) is a very very valuable tool. Don't throw it away because of a faulty belief.
