A detailed explanation of the main pain points under the PoS mechanism

Looking back on this year, concepts such as DeFi, DAO, and NFT have exploded. In essence, its fundamental logic lies in the PoS consensus mechanism. The diversified expansion of pledges has led to the explosion of DeFi.

Although it is good, its disadvantages are also obvious. I have analyzed the advantages and disadvantages and specific instructions of some proof mechanisms for you before, so I will not elaborate on the basic concepts. Today I want to start from the actual scene of PoS. Let me explain.

The POS mechanism itself is a joint-stock company, and everyone can hold it, but the people who finally hold the meeting are those who hold a relatively large share. They can participate in the governance vote and decide whether the proposal is passed, while the small shareholders have to choose the major shareholders they trust , Pledge your own shares and just wait for the income.

You can think that all the projects that mainly use the POS mechanism are like this?

From the Ethereum 2.0 pledge analysis chart that everyone is paying attention to, it can be seen that the higher the pledge amount, the less the income. As the price of the currency continues to rise, the cost of the participants is also getting higher and higher, and the income will be less in the later stage. When the price of the currency falls, investors who enter the market later will even reach a situation where their profits and losses are out of balance. In fact, in detail, all liquidity mining is just an upgraded version under deduction. No matter how it is modified, such a factor cannot be changed.

It itself is a better solution for retail investors who cannot participate in the PoW mining mode, but it is also an indicator to evaluate whether the node is competent according to the number of pledges, and then decide whether to continue to provide services. In this case, it will inevitably Vicious competition caused the node side to collect tokens from the secondary market instead of continuing to cultivate through technical methods. When the currency price fell, this became the most painful pain point for the node side.

This is the first problem with the PoS consensus mechanism.

From the Ethereum 2.0 pledge analysis chart that everyone is paying attention to, it can be seen that the higher the pledge amount, the less the income. As the price of the currency continues to rise, the cost of the participants is also getting higher and higher, and the income will be less in the later stage. When the price of the currency falls, investors who enter the market later will even reach a situation where their profits and losses are out of balance. In fact, in detail, all liquidity mining is just an upgraded version under deduction. No matter how it is modified, such a factor cannot be changed.

Traffic attracts users, which is the main strategy of Internet companies, and it has also become the main operation method under the blockchain PoS mechanism in today's era. Nodes with a large number of currency addresses can distribute tokens for the public through activities, but most of them just attract The arrival of some cash-strapping people led to the sell-off of tokens in a short period of time. The airdrops of UNI, LON, and 1inch just confirmed the pain points under the PoS mechanism. The sell-off caused the currency price to drop, causing dissatisfaction among miners.

The voting power of many people is meaningless. If you meet a few bigwigs who hold a lot of coins, they will decide the final voting proposal and become the object of competition for nodes. The previous capital game, this is similar to Baidu's bidding ranking model. For example, we can see that after Unsiwap issued its currency in September, its governance token UNI is still held by some large households. This is confirmed by the news that the proposal was not passed.

This is the third biggest problem with the PoS consensus mechanism.

Traffic attracts users, which is the main strategy of Internet companies, and it has also become the main operation method under the blockchain PoS mechanism in today's era. Nodes with a large number of currency addresses can distribute tokens for the public through activities, but most of them just attract The arrival of some cash-strapping people led to the sell-off of tokens in a short period of time. The airdrops of UNI, LON, and 1inch just confirmed the pain points under the PoS mechanism. The sell-off caused the currency price to drop, causing dissatisfaction among miners.

This is the fourth biggest problem with the PoS consensus mechanism.

These are the four main problems of the PoS consensus mechanism I think from this year, but I have to admit that at this stage, it is the best mechanism model, which will make Ethereum change from PoW to PoS, but the circulation will change. Will there be new problems when it is extremely low?

Although it has not happened now, it cannot be guaranteed that there will be no such possibility. Therefore, I think that in the future, there may be more innovative consensus mechanisms that will promote the development of the entire blockchain industry and truly empower the industry.