From the perspective of consensus cost, why is the market value of EOS less than 20% of ETH?
Author: NEST Enthusiast_Nine Chapters Tianwen
Author: NEST Enthusiast_Nine Chapters Tianwen
The consensus mechanism is the most special thing of the blockchain. Different from the consensus in the real world, the blockchain is based on an algorithm program, which agrees on the transaction data on the chain, thereby creating value. The value in our lives is also based on consensus, but except for exchange prices, most of the consensus does not have a serious process and is not mandatory, so it is difficult to quantify. The interesting thing about the blockchain is that this kind of consensus can be measured, such as BTC citing computing power indicators, POS passing the currency holding test, DPOS based on voting, and so on. Do these differences in consensus represent differences in value and risk?We think this holds true,That is, the cost of consensus determines the value of the blockchain. According to the current BTC model, this cost is computing power.Many people may focus on the application of the blockchain, thinking that as long as there are enough applications on the chain, its value will be the greatest. This is a typical product thinking that does not apply to the blockchain. A public chain, if its consensus cost is high enough, that is, its computing power is large enough, it is indeed more valuable than a public chain with low computing power. Many people will question this sentence, saying, how can the computing power maintained by centralized institutions represent value? This sentence actually confuses value and risk.
Computing power determines the value, and the composition of computing power and the application on the chain determine the risk.
Computing power is completely provided by an institution, if it cannot effectively share the cost of computing power, this kind of consumption will be unsustainable. The computing power provided by the market is the result of the calculations of thousands of rational individuals. Each of them tries to achieve their own economic closed loop. As long as they are still providing computing power, it means that they can still achieve the net efficiency of input and output. These people who provide computing power are different, so as to effectively avoid the situation where one loses all and one prospers.
No matter how the incentives of the public chain fluctuate, there will always be people entering and others going out, and they will not exit collectively at the same time. This decentralized structure reduces the risk of consensus.If the public chain or the corresponding token has usage scenarios, it will also indirectly reduce the consensus risk. On the one hand, the consumption of tokens has been settled, and on the other hand, the secondary market of tokens has stable expectations, which enhances the purchasing power and brings certainty to computing power providers. These two aspects regulate the development of the public chainconsensus risk, but the value is always determined by。
consensus cost
According to the design of BTC, when the computing power is large enough, the cost of completing a 51% attack will become exaggerated. Even if the computing power attack is successfully realized, miners can fork out from the attacked block and re-maintain the original block. consensus, it is meaningless for an attacker to obtain a blockchain system without consensus. Therefore, once a public chain is maintained based on a decentralized consensus, it will become very powerful, and the cost of this consensus seems to be irrelevant to actual production, but it is the foundation of value, and production activities only make the risk of consensus decline.
To exaggerate, even if BTC cannot be used anywhere, or no one is willing to use it, as long as its consensus cost is maintained at tens of billions per year, it still has its current value.Ethereum 2.0 will change the consensus mechanism from POW to POS, which has a great impact on Ethereum, and this impact is mainly reflected in the evaluation of the cost of consensus. At present, the industry is not fully aware of this problem, but simply analyzes the impact of consensus changes on applications and development. I think it's putting the cart before the horse,
Because the number of applications for a blockchain system is only a matter of risk, not a matter of value.A public chain with applications has a low risk of maintaining value; a public chain without applications may have potential risks at the same consensus cost. We need to spend more energy thinking about the comparative analysis between POW and POS, and how to compare the costs of the two under one framework. In fact, many people know that for a long time, even now, the applications on EOS, from the number of participants to the number, are no worse than ETH, but the market value is less than 20% of ETH. Some people think it is because of USDT or DEFI It is not true that such asset-heavy projects are not issued on EOS.The fundamental reason is that the consensus cost of DPOS is far lower than that of POW. No matter how many applications there are, it can only be seen that the risk is low under a given consensus cost, and it cannot represent high value.
