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Why I don't like Proof of Stake (PoS)

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At what cost?

Original Title: "Why I Don't Like Proof of Stake (PoS)"

Original Source: Ethereum Enthusiast

- In the process of cryptocurrency mining, Using a Proof of Stake (PoS) mechanism can greatly reduce energy consumption, but at what cost? The price is - to reach a consensus in the PoS mechanism, you have to rely on huge data centers, not the equipment that people use every day. Image from Kvistholt Photography -

Poca, Near Protocol, Ethereum 2.0, and other well-known blockchain platforms currently choose to use the proof-of-stake mechanism (PoS) instead of the proof-of-work mechanism (PoW, which drives Bitcoin and the original consensus mechanism of Ethereum). Because some advantages of PoS can solve some obstacles and limitations encountered by existing blockchains, we can fully understand the current choices of these project parties.

First of all, PoS consumes much less energy than PoW. Secondly, the community of the PoS chain can directly destroy the attacker's funds, so (theoretically speaking) PoS can make the cost of attack (51% computing power attack) more expensive, so the probability of being attacked is smaller; PoW's ability to resist attacks The means are relatively limited. In conjunction with other popular technologies (that is, the sharding mechanism), PoS can also improve scalability: dynamically group validators around different shards randomly, which can block attacks against any shard.

But it must be said that PoS also has some shortcomings that are easily overlooked. I've been telling everyone that I don't like PoS, and I think it's worth listing the reasons here with an explanation.

· PoS cannot be used for initial token distribution, but PoW can be done - because PoW can pass Completely neutral, permissionless mechanism to distribute tokens. PoS requires that tokens be distributed artificially in advance to potential stakeholders (stakers), which may lead to tokens eventually being concentrated in the hands of friends or investors of the project party, which is what we don't want.

Technically speaking, PoS cannot achieve "permissionless", because any stakeholder who wants to become a PoS chain must first Convincing someone (including the project party) to sell tokens to themselves makes the barriers to entering the PoS chain higher—compared to PoW chains that can use existing hardware to mine tokens (such as Bitcoin, Or the upcoming Spacemesh); just to get the initial tokens, everyone who wants to be Token holders of the PoS chain must first create an account on the exchange, complete the KYC/AML process, associate a bank account, wait for the verification to pass, and a series of procedures; after finally obtaining the token, they can carry out other activities on the PoS chain. Behavior.

The previous question will also be derived: once one party (or multiple parties conspire) controls more than 50% of the tokens in the entire network, the network will Trapped in perpetual control. To make matters worse, since any party can spread funds across countless small accounts, this "hijacking" process is likely to go undetected by others; the "permissionless" property of PoW prevents it from happening. question.

As a verifier, the threshold for participating in the PoS consensus mechanism is very high. Validators typically need to hold staked tokens worth greater than $1000 and must Mastering the complex architecture of the entire system; this high barrier to participation shuts out many potential validators and makes the entire system more centralized - in fact, the validation of most PoS chains today Only a few companies are responsible for the latter.

In addition to facing technical challenges, supporting the operation of validators for the entire network requires continuous social coordination—including continuous monitoring of validators Document delivery, education, and regular communication; in real practice, multiple organizations in the entire blockchain ecosystem are required to cooperate. For a network with a delegation mechanism (users can delegate the right to generate blocks to others), validators need to carry out activities to attract pledged funds to join, and large funders need to know the reputation, fault status, update status, and development status of the validator at the same time etc. information and may require transfer of funds. A "permissionless" network simplifies most of the process, but it becomes very complicated on a PoS network.

·The data needed to fully verify the PoW chain exists on the chain: the main chain is always the chain with the most calculations. For example, you don't need any outside information to completely, independently, and objectively verify the entire Bitcoin network and the transactions it contains. But this is not the case for PoS chains because of the "nothing at stake" feature of PoS Will lead to weak subjectivity problem . Under the PoS mechanism, forging a complete chain does not need to involve any proof of work, so unless you have followed a certain chain from the creation block, or 100% trust a node to send you information about the chain data, otherwise you cannot be sure whether the message from the PoS chain currently received actually comes from the main chain. (Specifically - when the verifier gets back his pledged funds, he can build a forked chain at any time and at no cost, whether he is tempted or takes the initiative.)

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·The security of PoS is like ouroboros: the security of the entire PoS network depends on the value of tokens used for pledge; however, the value of tokens also depends on the security of the network. Once a black swan event occurs (for example, the market price of tokens plummets), the entire PoS system is likely to collapse. Note 1

For the blockchain, it is very important to have a reliable source of random numbers. During the operation of PoW, it can naturally inject pseudo-random number seeds into the system in the form of nonce and block hash. In contrast, PoS has to figure out how to construct the randomness itself; from a security point of view, in this case It is difficult to ensure the security, unbiasedness, and distributed characteristics of random numbers at the same time.

·It is very expensive to initiate a fork in the PoW chain, because if the forked chain is to run stably, it must control enough computing power to avoid attacks ( precedent). In contrast, in a PoS system, as long as the attacker changes the validator set at the moment of the fork, the fork of the PoS chain can be completed. This makes it easier and cheaper to initiate a fork on the PoS chain. Note 2

Because token holders usually put their tokens on large exchanges, for PoS chains, exchanges usually hold a lot of voice and get a lot of block rewards, The problem is that exchanges usually do not share these benefits with real holders, so PoS networks tend to be dominated by large exchanges.

PoW is more simple and natural in resisting attacks: even if the network cannot be synchronized, or some miners are offline, other miners can still continue to mine blocks, and always know which one is the main chain. The reason why PoS is more complicated is that if too many validators go offline, the entire network may not be able to produce blocks, and it is more difficult to recover from a wrong consensus state. Note 3

Simply put, PoS feels like an old thing before the advent of the blockchain-a few wealthy people control a lot of money and loot most of the blockchain. block rewards. While there is nothing wrong with choosing PoS for a specific purpose, it goes against my original intention to enter the blockchain space.

PoW of course has its own problems, the most serious is its huge energy consumption, and the block reward has been completely monopolized by professional miners - which means There is serious centralization of PoW mining (we can no longer mine at home by ourselves). So I chose to join the development of Spacemesh, one of the main reasons is that Spacemesh adopts a new consensus mechanism——Proof of Spacetime (PoST), which solves the problem of PoW and avoids the shortcomings of PoS. While Proof of Spacetime is complex, the Spacemesh testnet has been running successfully for months, at least in theory proving that the mechanism works.

Blockchain technology is still in its infancy, I don’t think PoW or PoS is the final or best consensus mechanism, we still have a lot of room for improvement. I am incredibly excited about the prospect of PoST, and other ongoing innovations in the blockchain space.

What do you agree or disagree with this article, or what do you think is missing? What is the consensus mechanism that interests you the most?

1. The same is true for Bitcoin - a plunge in the price of Bitcoin will cause miners to stop mining, which will further make The value of the entire Bitcoin network collapses in a negative cycle; the same goes for fiat currencies, and if the U.S. government loses people’s trust, the U.S. dollar will depreciate relative to other currencies. The depreciation of the U.S. dollar will cause political and economic turmoil, which in turn makes more people lose confidence in the U.S. dollar ... There is a potential for this endless loop of anything that has no intrinsic value. PoS is still very new and lacks sufficient verification, time will tell how PoS performs in market extremes.

2. Is this a shortcoming or a feature? — depends on how you look at forked chains. I'm actually kind of a fan of forked chains, so I'm more inclined to think of it as a feature; /forks_destroy_value_overall/">forks destroy value", then you might disagree with me. (I describe it as a shortcoming in this article because most people think that forks will destroy the value of the network.) One will not make people fall into the difficulty of identification, such as BTC/BCH fork, because the consensus rules are different, and both chains have their own main chain, so there will be no difficulty in identification; but the other will make people fall into the difficulty of identification Difficulties, such as reorg in the chain operation, and 51% attack, and the long chain attack on the PoS consensus mentioned here. The latter will obviously weaken or even destroy the value of the network, so the difficulty of the latter is security One of the indicators. But the former does not necessarily destroy the value of the network, nor is it an indicator of security. The author likes the former, but the comparison in the article is the degree of difficulty of the latter)

3. Judging from intuition, we can re-establish consensus around the objectively longest chain at any time for PoW; There is no easy way to re-establish consensus immediately (p.s. I haven't found any relevant research on this topic, please help, thank you). Of course, PoS itself is not a consensus algorithm. Different mechanisms deal with this problem in different ways, and the specific implementation details depend on the overall system architecture.