Ethereum (ETH) founder defends move to Proof-of-Stake

While The Merge update and the full move to Proof-of-Stake finally approaching, the defenders of the Proof-of-Work remain in their position. For them, the Proof-of-Work still has a bright future to ensure the decentralization and security of the network. A few days before the passage of The Merge update on the first testnetVitalik Buterin goes on the offensive by publishing a eulogy of the Proof-of-Stake on the Hackernoon website. Article surprising by its radicalism, as if Vitalik knew that the ultimate battle was beginning for the next stage of Ethereum.

  • the Proof-of-Stake will guarantee decentralization and security
  • How to repair the network in the event of an attack? The ultimate argument for the PoS
  • After The Merge, the consecration of Ethereum (ETH)

Should Ethereum (ETH) continue to follow the Bitcoin consensus?

We all know that the capitalization of Bitcoin (BTC) is due to two things. It is the most secure and decentralized blockchain. It is technically impossible to take control of the network. Moreover, the Proof-of-Work prevents large amounts of capital from being able to buy the blockchain. However, Vitalik Buterin shows that we should not fear the transition from Ethereum (ETH) to Proof-of-Stake, on the contrary: it is a desirable transformation. Solving the blockchain trilemma will not lead to scalability at the expense of decentralization and security. In fact, Vitalik Buterin approaches the problem from an economic angle. This involves calculating the cost of an attack to assess which type of consensus is the most dissuasive.

In the case of Proof-of-Work, someone wanting to attack the network should have enough CPU to be in the majority. If he hires them, the cost is actually very small compared to what they can get, especially since he will also earn rewards from mining. It is then possible to use ASICs like the Bitcoin. This must be purchased and represents a higher cost. In addition, if there is a risk of an attack, miners can change the algorithm to increase the difficulty. However, this cost is nothing compared to the cost of attacking the Proof-of-Stake because security depends not on computing power, but on the deposit of tokens. It is therefore necessary to have 51% of the staked tokens to attack the network. However, as investors stake their tokens to take advantage of returns, an attack will become impossible.

The architecture in Proof-in-Stake helps to remedy a network attack

Vitalik uses another type of argument. Suppose the attacker succeeds in attacking the blockchain. How to react to this situation? With the Proof-of-Work, There is nothing to do. Either the attacker is bored and leaves the network, or the blockchain will become useless because it will no longer be reliable (attack of the type spawn camping). On the contrary, a response is possible in the Proof-of-Stake. The ” slashing » allows in case of attack to destroy the tokens of the attacker. A second attack would require as much capital as the first attack. Moreover, as we have seen in the case of Juno, the community can decide to empty the wallet of the attacker. In addition to having a huge cost, the attack could therefore be useless. So there is no need to worry about the security of Ethereum after The Merge update. It will even be reinforced.

Will The Merge have an influence on the price of ether?

Even if this final update has not yet been made, it is possible to imagine the changes that will result. For Ethereum, the need for staker ethers to secure the network will in fact create a scarcity of ether. In addition, the network will be both faster and cheaper than today. We should therefore expect a return to the rise in the price of ether once the update has been carried out.

However, Ethereum will not be the only winner of the update. All of the layers 2 are also preparing for this transformation, because they too will gain in scalability and reduced costs. The war of layers 2 will be tough, we can already see it with the rise of Optimism. Behind him, Arbitrum, MetisDAO are also trying to attract projects. Polygon also continues its update to become competitive against these outsiders. Ethereum will remain the primary network for institutionals. But the layers 2 will make it possible to develop all the applications which will require speed and which will attract many users.

After several years of waiting, Ethereum is soon completing its transformation. The Merge update will mark its transition to Proof-of-Stake. To sweep away the persistent criticism, Vitalik has therefore decided to go on the attack with this long plea in favor of proof of stake. This flattening shows that this transformation is not insignificant. It is the end of an era that is coming, that of the supremacy of miners on Ethereum. But also the beginning of a new era, that of an even greater domination of Ethereum and its layers 2 on the world of DeFi and Web3. We will know in a few months if Vitalik’s bet has succeeded.

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