Vitalik Buterin, the co-creator of Ethereum is once again making key contributions for the future of the Ethereum blockchain, according to latest ethereum news. In Ethereum news now, we consider a proposal made by Buterin in relation to Staking when ethereum 2.0 which replaces the Proof of Work (PoW) algorithm with a Proof of Stake (PoS) eventually goes live.
Vitalik Buterin Proposes Higher rewards for validators on Ethereum Proof of Stake (PoS)
Ethereum cofounder Vitalik Buterin has reportedly made a proposal to increase the reward of block validators on its planned PoS system. As Smartereum reported in an earlier ethereum news, the second largest blockchain network plans to move away from a Proof of Work (PoW) consensus algorithm to a Proof of Stake (PoS) which will support its blockchain scaling efforts.
Following the successful ethereum Constantinople hardfork, ethereum blockchain went a step closer to the PoS era. Ethereum core developers are now discussing proposals and contributions towards the new era otherwise referred to as Ethereum 2.0. One of the considerations that will be looked into will be Buterin’s latest proposal.
He proposed an increase in staking rewards to 3.3 percent assuming an overall amount of 30 million ETH staked on the blockchain. With this, validators will receive a maximum of around 100,000 ETH (or around $160 million) annually. Though high, this compares favorably to a total of $700 million earned annually by PoW miners on Ethereum.
PoS versus a PoW System
In the PoW system, decisions on the ethereum blockchain is dependent on the mining whereas, in the PoS system, block validators stake an amount of ETH to be able to validate blocks on the blockchain. If the validator performs a bad practice, the validator would forfeit the ETH staked.
In the PoS system, the security of the blockchain depends largely on the amount of ETH staked as this will discourage validators from engaging in malpractices. According to Fedrik Harryson, the CTO of ethereum software client Parity, for attackers to succeed on a Proof of Stake network, they have to acquire so much ETH to compete against the staked ETH. In an interview with cryptocurrency news outlet Coindesk, he explained:
“In a proof-of-stake system, your cost of attack is just buying tokens. You basically want it to be unreasonable that anyone would be able to buy so much tokens that they’re able to attack the network.”
Ethereum Developers make ETH Stake target
As reported, ethereum core developers are targeting a minimum ETH stake of 32 million ETH which is about $5 billion worth of ETH. It is believed that this value will discourage bad actors from attempting to compromise the blockchain by accumulating ETH.
Experts Analyze Vitalik Buterin’s Proposal
The proposal by Vitalik Buterin to increase staking rewards resonates with members of the ethereum community as it enhances the security of the blockchain. Developers had agreed a 2.2% interest on staked ETH is ideal while hoping for about 30 million ETH staked on the network. But Harryson observes that a “sliding scale” is the best option; one that increases rewards to incentivize people to lock ETH when there isn’t much ETH staked.
In support of Buterin’s proposal, Collin Myers, a token strategist for ConsenSys admits the original benefit is simply too low considering factors like a minimum stake of 32 ETH, computing costs, code risk, and maintenance costs. Many members of the ethereum community are of this opinion.
Jonny Rhea, a protocol engineer at ConsenSys, however, warned against overpaying. He said, “They have to find a number that is appropriate. You don’t want to overpay to secure the chain and you don’t want to underpay.” He said the developers will go back to the drawing board with the proposal from Vitalik Buterin to design the best staking reward system.
Ethereum Price Today – ETH to USD
Ethereum [ETH] is currently trading at about $156 as the market tries to recover from the sudden dip caused by negative speculation in the Bitfinex case with Ney York prosecutors. Ethereum market cap is about $16.5 billion at the time of writing.
Riccardo Lopp is a writer specializing in Crypto, ethereum and whole blockchain ecosystem. His background is in economics and statistics.