Opinion on proof of stake in future

Summary:

The conversation centers around the security challenges with Proof of Stake (PoS) systems. The "nothing at stake" problem in PoS is identified as a key challenge that prevents its adoption in decentralized consensus. The discussion delves into the potential for attackers to exploit this loophole and gain significant control over the network, even with a small fraction of the stake. The conversation also covers the problems associated with quorum-based PoS systems, where pre-selected minters are targeted by powerful Distributed Denial of Service (DDoS) attacks, leading to lower liveness of the system.Proof of Burn (PoB) is presented as an alternative to PoS systems. Burning coins to be used at a future block height is seen as a better proof mechanism than staking on a node somewhere, waiting to be stolen. However, there are concerns around the possibility of attackers focusing their burns on specific blocks to double-spend, minimizing the cost of attack. The conversation highlights the need for an actual solution to the security issues with PoS before its adoption in decentralized consensus.The debate over proof-of-stake (PoS) versus proof-of-burn (PoB) for cryptocurrency mining has been ongoing. PoB eliminates the issue of giving responsibilities to the holders of coins that they do not want and cannot handle. Miners have a strong long-term investment in the stability of the chain with PoB. Furthermore, PoB solves the "nothing at stake" problem in PoS, where the optimal strategy for any miner in the event of a fork is to mine on every chain, so that the miner gets their reward no matter which fork wins.Algorand's approach is to only allow online stake to participate in the protocol. Keys holding funds have to be online to author blocks when they are chosen. In Algorand, users can authorize a set of "participation keys" that will be used to create blocks on their coin holding key's behalf. However, this opens up a new social attack surface and it degenerates to Proof-of-SquareSpace.The email thread discusses the possibility of using Verifiable Delay Functions (VDFs) to achieve more constant block times in Bitcoin. The proposed method involves using a VDF that takes around 9 minutes to resolve, and then using the current Proof-of-Work (PoW) mechanism with lower difficulty so that finding a block takes an average of 1 minute. This would greatly reduce variation in block times. However, there are concerns that miners could focus on improving the amount of energy they pump into the VDF circuitry, potentially leading to even worse competition and more energy consumption.Another proposal in the thread is the use of "burned coins" as a replacement for PoW. The idea is to use blind-burned coins of a specific age as a form of "proof of burn", where the required "work" per block would simply be a competition to acquire rewards. The miner risks losing all of their burned coins, and new burns can't be used while old burns age out. The proposer believes that a "burned coin + VDF system" might be more secure in the long run, and that if the entire space agreed that such an endeavor was worthwhile, a test net could be spun up, and a hard-fork could be initiated.

Updated on: 2023-06-14T21:25:10.596778+00:00