Ethereum 2.0 under the competition of interests and power

So the advocates said, if you want to enter this church, then the infrastructure must serve it (Rollup as the center), if you want to enter this church, then the governance that everyone can participate in must be its premise (PoS), if you If you want to enter this church, the market in the past must prosper because of you (community confidence). If you want to enter this church, you must cast a vote and give up the current guard (Miner).

No one really expects this church, people only expect their own power to be exercised, even if this itself is not based on justice, even if the fair participation of assets brings about centralization, some people have given vigilance. But no one really expects this church, people only expect their power to be exercised. "

The above views are from Uncle Miao, who has a lot of research on Ethereum. On December 1st, ETH2.0 officially launched the genesis block. Since then, it has finally stopped lying in the white paper. After leaving the white paper, it has brought the market's high expectations for Ethereum, and at the same time triggered a possible long-term development in the future. A conflict of interest exists.

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The Misinterpreted Wealth Effect

"Ether has broken through 600. The 2.0-style pledge is equivalent to deflation. I think it is 1000. It must be a wave." Chen Chen, a retail investor, shouted in the currency group of less than 10 people, and then the group friends sent Daxing to respond: "Callback on Thanksgiving When I got on the car, I got off the car at 600, and it was already profitable, so delicious.”

The reflections of Chen Chen and Biyou Pai Daxing are to a certain extent a true portrayal of the market under the background of institutional bulls. As ETH2.0 has become a hot topic, these out-of-door Ethereum holders instinctively understand ETH2.0 as a good news that can stimulate the price of Ethereum, and at the same time dig out two investment opportunities, one can be in To increase the position of Ethereum in the secondary market, one is to pledge the Ethereum in hand in exchange for higher returns.

However, the arrival of ETH2.0 is nothing new to those experts who understand the development history of Ethereum. As early as the release of the Ethereum white paper in 2013, ETH2.0, the Tranquility stage, was already planned. Tranquility is also the fourth stage of Ethereum development. The goal is to transition the consensus mechanism of Ethereum from PoW to PoS.

In the past two years, stakeholders of Ethereum have had many discussions around this route change, either in terms of technology implementation and incentive mechanism, or the impact of ETH2.0 on all stakeholders in the existing industrial chain.

In the short term, there is no conflict between ETH1.0 and ETH2.0. After all, in terms of economic model, ETH2.0 will not issue new coins after it goes online. In terms of technical solutions, those expansion plans based on ETH1.0 will not It has not been denied, but to a certain extent, it is synchronized with the solution of ETH2.0's transition from PoW to PoS. Some people in the industry even interpret the current state as the Ethereum Foundation is using the "two-pronged approach" to solve the existing problems. Persistent performance issues.

Under this interpretation, the wealth effect of ETH2.0 has been weakened, but the transition from PoW to PoS means that a wave of Staking boom driven by ETH2.0 is coming.

Under the PoW mechanism, mining machines and electricity are required to become a miner; under the PoS mechanism, at least 32 ETHs need to be pledged to the storage contract, and hardware equipment, stable Internet environment and other conditions are required to become a validator, which is obviously not suitable for ordinary investors. too friendly.

However, this is a good business for node pledge service providers.

At present, exchanges such as Huobi and Binance, wallets such as TokenPocket and imtoken, and blockchain infrastructure service providers such as HashQuark, InfStones, Stkr and RocketPool all provide ETH2.0 Staking services. Although the user positioning is different, they basically belong to the center. In a centralized organization, users cannot grasp the private key of funds.

"I pledged the currency to platform A, and if there is a problem with platform A, is there something wrong with my currency?" In the intense ETH2.0 pledge discussion group, member Cang Hai asked. "Don't bet, the profit is too low, if it falls too hard, the loss will outweigh the gain." Another member, Hao Ran, complained while responding.

Gaining income by participating in staking should be the most significant "wealth effect" of ETH2.0 in the physical world. Discussion voices and consultants like this are spread across various communities in the industry: it basically shows that speculators look down on low income, ordinary investors three Ask and think twice, the scene of institutions entering the market silently.

At present, there are roughly three risks in participating in ETH2.0 pledge: free loss after lock-up, capital risk caused by network failure, and third-party service providers running away.

Of course, risks are on the one hand, and on the other hand, there are misunderstandings.

"The price rise depends on how the mainstream tells the story. If the mainstream market wants to tell the story of the rise, it can tell the story of the pledged lockup. Why do you want to tell it like this? The core reason is that the market sentiment is suitable for long. If you go back to 2018 At the beginning of the year, it would be suitable to tell negative stories.” Pan, the founder of TP Wallet, pointed out in an interview with Chain Catcher that although ETH2. The resulting derivatives staking plan is actually increasing the circulation, and the essence is still inflation.

In addition to being misinterpreted as deflation, the benefits of ETH2.0 staking do not constitute the wealth effect in Chen Chen's understanding. Based on the annualized return of 21.6% at the start of phase 0, the income per 32 ETHs is about 6.91 ETHs, and based on the recent 16.9% annualized return, the income per 32 Ethereums is about 5.43 ETHs , the income will decrease as the amount of pledge increases, so it is obviously not a good choice for investors with small capital and poor risk resistance ability.

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The story of the PoS type is a bit "fictitious"

"The three-stage roadmap is illusory, and the new roadmap is tasteless. There is no roadmap related to Eth2.0 that is worthy of Ethereum abandoning the current mode of operation and turning to a PoS-based system." A Jian, an Ethereum enthusiast Judgment on ETH2.0.

The misunderstood wealth effect can meet the market's expectations for the price of Ethereum in the short term, but in the long run, the price of the currency will always be affected by countless factors, so when the industry discusses ETH2.0, it is more about PoS mechanism with long-term value.

And this is also the controversial part of ETH2.0. At present, some people think that this kind of scheme has a lot of uncertainty, the effect cannot be expected, and the risk is too great; some people think that "two hands" is a hooligan; wrong.

Under the controversy, there are not only propositions about revolution and death, but also conflicts between ETH2.0 and ETH1.0 vested interests.

Regarding the proposition of revolution and death, Uncle Miao believes that the foundation of Ethereum is the courage to face failure, and the promotion style of the entire ecological community Test in prod is created from the initial TheDao incident to various subsequent incidents.

Similar to Uncle Miao’s point of view, InfStones marketing director Rudy believes that if Ethereum wants to continue to develop, it must accept uncertainty. "I now understand very well why Vitalik talked about the "death history" of Ethereum at the Wanxiang Summit. He said that Ethereum was about to die several times, but it still survived tenaciously. If Ethereum wants to move forward To develop and become the world's computer and a platform for carrying decentralized applications. If you want to maintain the world's second largest cryptocurrency market value and challenge the status of BTC, you must continue to innovate and explore new technical solutions. ’ he added.

From this perspective, Ethereum is reinventing itself, but from the perspective of the previous effect of the PoS mechanism, it is another understanding.

In the past, there were not a few projects that adopted the POS consensus mechanism. The more well-known ones include EOS using the DPoS mechanism and Polkadot using the NPOS mechanism. The former is the problem of malicious nodes, while the latter is very complicated and difficult to implement.

Taking EOS as an example, the DPoS mechanism adopted by it is to increase the transaction speed and the speed of creating blocks by reducing the number of verifiers. Validators are voted by token holders, and new blocks are created by validators, not token holders. The weight of each vote is determined by the sum of the assets of the voters. Its disadvantage is that the enthusiasm of the holders to vote is not high, and the node monopoly is high.

The risk is that there are many difficulties in dealing with bad nodes: community elections cannot effectively prevent the emergence of some damaged nodes in a timely manner, causing potential security risks to the network; super nodes are vulnerable to damage: if the elected super nodes do not have strong computing power protection It is vulnerable to DDOS attacks by itself, seriously affecting network stability.

Compared with DPoS, the NPoS mechanism adopted by Polkadot has always been considered to be extremely secure. NPoS also refers to the nominated equity proof mechanism, which is essentially a nominator + verifier mechanism, allowing the system to select a verification node with a larger total pledge and eliminate the total number of pledges. lower candidates. Although it has been widely expected, since the Polkadot network has not yet been launched, it is impossible to judge for the time being.

However, both are based on the PoS mechanism that ETH2.0 intends to adopt. It can even be said that DPoS continues the disadvantages of PoS and eventually leads to a significant reduction in the liquidity of DPoS coins. The poor get poorer and the rich get richer.

Of course, the POS mechanism itself also has various problems. The first is that it is easy to cause voters to be indifferent; the second is that it is easy to cause the bias of voting centralization, although V God attributes it to the collapse of game theory caused by public prejudice; the last is the dislocation of incentives, token holders and network users are two different kinds of people. Token holders are incentivized to drive up the price of the token, often resulting in erratic price increases, but are not held accountable for the system.