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In kidding mode, but also to mark the copybook, the word is Casper, that which was initially part of Ethereum effort, and went insurrection, soon to face the world in own image and on own merit
Even as I staked claim 12 months ago, am still struggling w/ Proof of Work vs Proof of Stake, but never mind as it all rises in pricing irrespective of merits.
Finally sort of understand how my staked Caspers shall give rise to baby Caspers
No wonder such can be BetterGold for Gold does not do work and cannot give rise to baby Gold
Proof of stake fundamentally changes consensus. Instead of presenting a challenging puzzle, proof of stake simply selects someone at random to assemble and verify a block’s contents. However, to prevent that random person from creating false transactions or attacking the network, the algorithm requires the verifier to put up their own personal funds as collateral. If the network accepts the verifier’s transactions, then the verifier receives a reward. If the transactions are found to be false, the verifier loses their collateral.
What is Ethereum Casper Protocol: A Comprehensive Guide
1. What is Proof of Stake
Before we dive into the specifics of Ethereum Casper’s implementation, it’s important to understand the context for the change. Casper’s main objective is changing Ethereum from its current proof of work (PoW) consensus to proof of stake (PoS) consensus that uses far less energy and opens the door for new ways of scaling the network. Blockchain researchers have discussed the flaws of proof of work consensus and imagined proof of stake solutions for several years now. However, proof of stake is inherently more complex, making implementation a challenge that requires a significant understanding of economics, game theory, and incentive structures.
In a proof of work system, miners compete to solve a challenging puzzle in order to add a new block to the ledger. The only way to solve this puzzle is by guessing and checking billions or trillions of possible answers until you find one that works. PoW miners use high-powered computers to run these computations, guzzling electricity with every wrong answer they find. Ultimately, it’s a race, and only the first computer to find the answer will win the reward. All the other wrong answers from every other mining computer in the world are wasted effort.
Proof of stake fundamentally changes consensus. Instead of presenting a challenging puzzle, proof of stake simply selects someone at random to assemble and verify a block’s contents. However, to prevent that random person from creating false transactions or attacking the network, the algorithm requires the verifier to put up their own personal funds as collateral. If the network accepts the verifier’s transactions, then the verifier receives a reward. If the transactions are found to be false, the verifier loses their collateral.
As we’ll see, the potential benefits of proof of stake are numerous, but PoS consensus requires a well-written algorithm and planning for every contingency. When you introduce the idea of collateral, reward, and punishment, predicting behavior becomes more complicated. Additionally, miners who have invested heavily in hardware for PoW mining will lose the value of their hardware investments. For this reason, Ethereum Casper proposes a gradual shift from PoW to PoS over the course of years and many iterations to ensure security and transparency.
6. Weak Subjectivity & Long-Range Attacks
Throughout history, humans have actually been quite good at establishing consensus. However, this consensus is often social and takes a long time to settle. For instance, as a species, we’re not likely to forget about World War Two or the existence of the Han Dynasty. Therefore, we’ve reached a type of social consensus where everyone agrees on a shared history. However, not everyone knows the same details about our shared history, and we all have different states of knowledge about these events. Our social subjective consensus is also slow and error-prone. For example, it might take me a long time to find a given piece of information about the Han Dynasty, or you could easily give me false information about World War Two that I would believe.
In fact, humans have used this weak, subjective social consensus to power currency systems before. On islands in the Pacific, natives use 3500-kilogram rai stones to trade value. Being so heavy, these stones never move. Instead, oral history maintains a record of who owns what at any given time. This consensus requires that you trust the oral history, specifically choosing historians to listen to. However, there is no central rai stones bank that maintains a ledger. With a little bit of added technology, social consensus blockchains like Ripple or Stellar function similarly. You simply need to decide which nodes in your network to trust.
Of course, finality and objectivity are good characteristics in a digital currency, so subjective consensus isn’t exactly ideal. This is the main selling point of proof of work. It provides a definitive state of the blockchain at any time based on the rules of the protocol alone. You don’t need to trust anyone in order to believe in the truth of a proof of work ledger. That trustless truth, however, comes at a high resource cost.
Ethereum Casper also suffers from subjectivity. New nodes in the network need to trust other nodes to give them the correct state. Once they have the correct state, a new node can operate independently, but that initial state must come from a trusted source. As a result, proof of stake is not trustless. Instead, it’s subjective. This is because proof of work incentivizes working on the longest chain, whereas chain length doesn’t matter in proof of stake. As soon as a PoW miner discovers a longer chain, the incentive is to switch, thus preserving one true chain and finality. In proof of stake, there’s no such incentive, just confusion. That’s why a trusted recent state must be established upon joining, so that new nodes can verify validators on all new transactions for themselves.
Opponents of proof of stake claim that this is a very big deal. The whole point of a blockchain is non-reliance on a third party. Nevertheless, for many users, acquiring the state from existing nodes is trivial. Since you only need to acquire the state if you’ve been offline for some period, the thinking goes you can trust the rest of the network to maintain security and act honestly.
Casper is the implementation that will eventually convert Ethereum into a Proof of Stake (PoS) blockchain (also known as Ethereum 2.0). Although Ethereum was launched in the summer of 2015 as a Proof of Work (PoW) blockchain, developers were already planning a long-term transition to the staking model. After the transition is complete, mining will no longer be part of the Ethereum network.
To date, there have been two co-developed Casper implementations in the Ethereum ecosystem: Casper CBC (Correct-by-Construction) and Casper FFG(Friendly Finality Gadget). The CBC version was initially proposed by Ethereum Foundation researcher Vlad Zamfir. Although research on CBC was initially focused on PoS protocols for public blockchains, it has since evolved into a wider field of study, comprising a family of PoS models.
Research on Casper FFG is being led by Ethereum co-founder Vitalik Buterin. The initial proposal consisted of a hybrid PoW/PoS system, but the implementation is still under discussion, and new proposals may eventually replace it with a pure PoS model.
Notably, Casper FFG is the one being planned to initiate the Ethereum 2.0 rollout. But, that doesn’t mean Casper CBC won’t be of any use. In fact, it may end up replacing or complementing Casper FFG in the future.
While both versions have been developed for Ethereum, Casper is a PoS model that may also be adopted and implemented in other blockchain networks.
How Casper WorksThe transition from Ethereum 1.0 to 2.0 is dubbed the “Serenity” upgrade. It will consist of three different phases. In its initial phase (Phase 0), a new blockchain called Beacon Chain will be launched. Casper FFG rules will drive the consensus mechanism of this new PoS-based blockchain.
Unlike PoW mining, where miners run expensive and specialized machines to create and validate blocks of transactions, Casper implementation will remove the process of mining from Ethereum. Alternatively, the verification and validation of new blocks of transactions will be done by block validators, which will be selected according to their stake.
In other words, the voting power of each validator will be determined by the amount of ETH they put at stake. For example, someone who has deposited 64 ETH will have double the voting weight of someone who deposited the minimum staking amount. To become a block validator in the first phase of Serenity, users will need a minimum stake of 32 ether (ETH) - deposited into a special smart contract based on the former Ethereum blockchain (1.0).
If all goes well, random committees of validators will be selected to propose new blocks and eventually receive block rewards for doing so. The block rewards will likely consist only of transaction fees as there won’t be a block subsidy.
It is worth noting, however, that each PoS implementation may present a different approach, with different rewarding models. The Casper model is still under development, and many details are yet to be defined.
Advantages of CasperOne advantage of Casper is that, in making staking possible, it will help Ethereum become environmentally friendly. When it comes to electricity and computational resources, PoW-based systems are very demanding. In contrast, PoS models have a much lower demand. When a full PoS model is finally implemented in Ethereum, miners will no longer be needed to secure the blockchain, so the required resources will be much lower.
Another potential advantage of Casper is related to security. In essence, Casper will be used as a selector, responsible for ordering the chain of blocks. Basically, it will act as a bookkeeper of the Ethereum 2.0 ledger. So if a validator acts maliciously, they will be quickly removed and punished. The penalty for cheating the rules is a validator’s stake (in ETH), meaning that network transgressions will be very expensive. However, developers are still discussing the possibilities of 51% attacks.
Lastly, some people defend that Casper will give Ethereum greater levels of decentralization. For now, those who are most powerful on the network are those who have the resources to run mining operations. In the future, anyone who can buy the appropriate amount of ether will be able to help secure its blockchain.
LimitationsThere is a long way to go until Casper is finally developed and implemented. Currently, its efficiency and security are still unproven. There are many details to be defined and adjusted. Until a version of it goes live in Phase 0 of the Serenity upgrade, we can’t be sure of how it will look like and behave.
As far as theoretical limitations, Casper won’t be able to finalize blocks if Ethereum’s validating system becomes corrupted. As it is currently structured, Casper is still not totally resistant to 51% attacks. Other than that, a formal specification is still needed to outline a fork rule that may be needed when responding to attacks.
Closing thoughtsEthereum is moving away from mining and toward staking, where users will stake ether (ETH) in a deposit address to secure the blockchain. Casper is a technology used to finalize blocks that will facilitate that shift.
Casper will help create the foundation upon which further Ethereum 2.0 advancements will rely on, and is set to make the transition to a PoS model smoother. In addition, the open-source nature of the blockchain space also means the outlined benefits of Casper can be forked out, modified, and built upon by other projects in perpetuity going forward.
When Casper is formally rolled out, it will mark an important milestone in the history of Ethereum. As for when Casper could arrive, Ethereum researcher Justin Drake has previously floated the possibility of launching the first phase of Casper on January 3rd, 2020 (the 11th birthday of Bitcoin). However, that date was a tentative proposition. The launch could happen at any point in 2021.
