Ethereum: Transition to Proof of Stake

Published on
December 31st, 2020
Duration
27 minutes


Ethereum: Transition to Proof of Stake

The Interview - Crypto ·
Featuring Preston Van Loon and Alex Saunders

Published on: December 31st, 2020 • Duration: 27 minutes

Preston Van Loon, cofounder of Prysmaic Labs, joins Alex Saunders, founder & CEO of Nuggets News, to discuss the transition to proof of stake, its security implications, and benefits. Van Loon expounds on the differences between Proof of Work (POW) and Proof of Stake (POS) and the ability to stake Ether after the transition to POS turns Ether into a yield bearing asset. Van Loon also explains why Eth 2.0 is beneficial from both a security efficiency standpoint and from an investment perspective. Filmed on July 14, 2020. Key Learnings: Ether becomes a yield bearing asset with the transition to proof of stake, and the cost to secure the network is reduced compared to proof of work protocols. As a result, the stock to flow ratio for Ethereum will be significantly better than that of Bitcoin once the transition to proof of stake is made.

Comments

Transcript

  • JD
    John D.
    1 January 2021 @ 03:09
    Claim that one can stake at home on a $50 machine is such an unethical lie. There is always high risk of loss of capital. If your computer clock is off you lose your ETH. If electricity is out you lose your ETH. If internet is down you lose your ETH. Between ETH inflation and expenses of running the node and risk of getting slashed staking is low margin business with risks and high demand on technical excellence.
    • HS
      Han S.
      11 January 2021 @ 06:27
      What about staking through exchanges? Many offer staking through their exchanges and you don't have to worry about running your computer on and all that stuff. Yes, there is a still a risk of losing your ETH through theft and security breach.
  • TP
    Timothy P.
    31 December 2020 @ 18:31
    I'll just leave this here since RV's interviewers don't drill down into the issue: There is no such thing as "free" network security on the blockchain. The complaint that Proof-of-Work is too "energy intensive" shows the participants in this conversation don't understand why enforcing digital scarcity requires WORK. The energy input into the cryptographic puzzle that secures the chain, and the subsequent hashing of not only the prior block, but the 'found' solution ensure that undoing transactions that have been validated is VERY expensive to do. This is what makes PoW secure. In Proof-of-Stake, you have to externalize your security mechanisms, "oracles" and the rest, because you are merely putting piles of tokens in one address and calling it a day. I've personally used these systems before, and PoS is rife with abuse - for instance, Steem - it was taken over by a well-financed rival that ended up with the biggest stake. That's right - PoS replicates the legacy system in its ability to grant prime voting/veto power to the entity that has the most coins. And if you don't think that isn't ripe for abuse, then you haven't been paying attention. Also, take careful note of ETH's "difficulty bomb" -- their effort to force themselves to pursue a scaling solution by a certain blockheight -- because that particular can has been kicked several times. You know, just like local govts when they raise their "debt ceiling" to avoid dealing with difficult problems. Budget Geddy Lee may be optimistic, but like most in this space, they are full of promises and short on definitive answers. Oh, and as an aside another massive DeFi token hack happened -- what a complete shitshow -- https://www.financemagnates.com/cryptocurrency/news/binance-halts-trading-of-hacked-defi-project-cover-protocol-token-crashes/ Also for fun, a roundup of the top 2020 DeFi loss events (Millions in total) -- https://cryptobriefing.com/50-million-lost-the-top-19-defi-cryptocurrency-hacks-2020/ Enjoy!
    • bf
      bill f.
      31 December 2020 @ 18:51
      thank you , i appreciate these pragmatic answers
    • HJ
      Hendrik J.
      31 December 2020 @ 23:49
      Happy to see others also understand the value of pow.
    • tc
      thomas c.
      1 January 2021 @ 01:49
      Thanks. this addressed some of my questions that I never find answered to. You should be interviewed by RV. Would you DM me on twitter or Insta @roycash15 if you are interested in sharing more of your views.
    • AT
      Arthur T.
      1 January 2021 @ 07:51
      You have no understanding of PoS Enjoy remaining poor
    • JC
      Julian C.
      1 January 2021 @ 08:44
      What nonsense. Steem had a market cap of about 80m at the time. Eth is 40b. Nobody is going to stake the type of capital required to seize control of a network that would crash the price. Just won't happen. It is math, pure and simple, that secures a POS network. That is all there is, and it is all that is needed. If you take a hard look at the math behind the attack, if it was a POW network, it would have taken even less financial resources to perform the same attack with hash power. Also, it was only able to happen because of all those steem tokens with the "founders". No such weekness with Eth. The reality is that if designed correctly (and eth 2 certainly is), POS is far more secure than POW. Maybe you should inform yourself with eth classic. Same POW hash as bitcoin, and successfully attacked several times.
    • TP
      Timothy P.
      1 January 2021 @ 14:39
      @Arthur T - My, what convincing counter-arguments you have. Enjoy remaining ignorant.
    • TP
      Timothy P.
      1 January 2021 @ 14:50
      @Julian C - My, what a bunch of run-on sentences. I see I struck a nerve. You clearly don't understand the attack vector. No one is talking about "crashing the price" -- what I AM talking about, is that PoS allows collusion and cartels to form to push their agendas through. Much like a 51% attack, except they don't have to deal with the difficulty leaping to higher levels, which would require more funds as the attack wore on. This is the superiority of PoW, the moment you initiate such an attack the cost of the attack will rise, and keep rising, until you can't afford to continue. In PoS, the attack only requires that you have a majority position compared to the rest, and given the distributions of coins in various blockchain ecosystems, that isn't hard to achieve, as Steem found out. By the way, the Steem validators weren't "founders" by any means, but frankly its immaterial to the argument. As for your laughable claim that PoW is "cheaper" to attack -- I can just point to Bitcoin. Never in its history has anyone dared to try. Because buying specific mining equipment, finding energy suppliers, and the rest of the logistics isn't a simple problem. As for your example of ETH Classic - the fork that occurred when Vitalik decided to do his "oopsie rollback" of the chain without majority consent - ETH Classic has far less hashpower than Bitcoin does. This is why I know you are ignorant and flailing around defending your coin -- your lies betray you. I'd suggest you educate yourself, but I can clearly see that even posting a coherent reply is a challenge for you.
    • JB
      Jamie B.
      2 January 2021 @ 05:10
      Seriously TimothyP, you appear to be a BTC Maxi. That's cool but you turn up on all the Ethereum vids and communicate the same info and criticise anyone with a different viewpoint. Have you found a forum where you know more than others and finally get to act like you know everything. Find a more constructive communication style please. Don't bother replying, I'm not interested in your kind of debate.
    • TP
      Timothy P.
      2 January 2021 @ 07:29
      @Jamie B - I know the truth hurts. Instead of using Vitalik Buterin's favorite slur against me -- "Bitcoiner" is just fine, thanks -- perhaps you should examine why I have issue with ETH and its fundamental flaws, instead of attacking the messenger. Or just keep on going, misallocating capital and find out for yourself. No skin off my nose.
  • DS
    Dom S.
    31 December 2020 @ 15:42
    No real mention of the effect of the value of the ETH, yeah earning 15% on your capital is insane compared to standard means but that is done in a cash "risk-free" environment. What if you tie up your ETH get your 15% interest but ETH drops in $ value by 30% that year......
    • JD
      John D.
      1 January 2021 @ 03:15
      Staking is only for people who already have ETH. Exchange rate risk is always orders of magnitude higher than the yield so nobody will buy ETH just for the purpose of staking
    • JC
      Julian C.
      1 January 2021 @ 08:51
      wrong question. The correct question is "what if ETH increases in value by over 30%
  • AP
    Aneil P.
    1 January 2021 @ 06:49
    This is old stuff! Why are you guys posting something so old as if you just interviewed? So much have changed! Crypto changes weekly, Can't deal with something this slow. Common guys!
    • JC
      Julian C.
      1 January 2021 @ 08:20
      RV crypto is free. If paying customers didn't get it first, there would be no need to be a paying customer. And then who would pay for the site's expenses?
  • SP
    Stephane P.
    31 December 2020 @ 16:32
    Can you explain why it was release just now ..Filmed on July 14, 2020 ???????
    • bf
      bill f.
      31 December 2020 @ 18:54
      good point, for reasons of integrity all the videos should have a time stamp that can be seen
  • DB
    David B.
    31 December 2020 @ 15:48
    I liked the content, but then realized this his a old video.
  • DS
    Dom S.
    31 December 2020 @ 15:20
    He has coders eyes...lol
  • MJ
    Marius J.
    31 December 2020 @ 12:26
    Old
  • MS
    Marius S.
    31 December 2020 @ 10:48
    Thanks for the great content!
  • MD
    Michel D.
    31 December 2020 @ 10:12
    Lol what, publishing a 6-month-old interview as new content