According to Coindesk's April 26 report, a new proposal by Ethereum co-founder Vitalik Buterin indicates that he is considering adding incentives to certifiers who will ensure the next version of the world's second largest blockchain is up and running. .
Image source: pixabay
- Economic bandwidth without trust: why Ethereum is irreplaceable
- Data observation: Ethereum DApp ecology begins to recover
- Introduction | Market Development Model and Ethereum 2.0 Development Process
- Simple reading of Reddit's credits: how is it different from the token issue in the general sense of the crypto community?
- Locked ETH hits a new high of 3.1 million. Is DeFi too dangerous?
- Market analysis: market response to news tends to passivate
Ethereum's current market value has reached $17.5 billion. Ethereum 2.0 is by far the largest upgraded version of the Ethereum blockchain. Its ambitious goal is to eliminate bottlenecks in current transaction throughput and significantly reduce the cost of network operations.
Ethereum 2.0 will no longer use the Proof-of-Work (PoW) consensus agreement, but will use the Proof-of-Stake (PoS) consensus protocol. In the PoW Consensus Agreement, miners compete to package transactions into blocks and add them to a growing chain, and with the PoS protocol, certifiers can hold their own funds and verify the blocks created on the network and transaction.
Therefore, the security of the Ethereum 2.0 network will no longer depend on a large amount of computing power, but on a large number of currency rights. Fredrik Harryson, CTO of Parity Software Client Parity, explained:
"In a PoS system, the cost of attacking the network is to buy tokens. You may think that anyone can buy enough tokens to launch a cyber attack, but this is unreasonable."
As Justin Drake, a researcher at the Ethereum Foundation, has proposed in recent days, the network's target currency is about 32 million ETHs (based on today's estimates, it will exceed $500 million). And based on this target currency, the currency entity can earn approximately $1.6 ETH per year as planned, and these entities will replace the current miners ecosystem of the Ethereum network. .
But how can we set aside so many values to keep the network safe? To motivate this behavior, Ethereum developers need to set a rate of return (similar to interest rates) to reward those who lock ETH and block the chain. The verifier who contributed. ConsonSys agreement engineer Jonny Rhea revealed to Coindesk:
"They have to find a suitable number that will ensure the network security of the blockchain, but without paying too high a price. So, our idea is that they do some simple mathematical calculations in advance to determine if this value is How much, and how much we should pay to the verifier to ensure the security of the blockchain."
Initially, this rough mathematical calculation showed that considering that the total entrusted equity on the network was 30 million ETHs, the interest rate was determined to be approximately 2.20%.
If the ETH number of the entrusted equity falls, this return interest rate will increase to encourage more verifiers to go online. If the ETH number of the entrusted equity rises, the rate of return will drop to ensure that the network does not pay too much for the verifier's work. Harrysson explained:
“This reward has a floating range, depending on how many ETHs are entrusted. In a system where only a small amount of equity is locked, you need to encourage more people to lock more ETHs to improve the safety of the chain. Sex."
However, in January of this year, estimates by ConsenSys's token strategist Collin Myers showed that the current rate of return for Ethereum 2.0 verifiers is too low.
Taking into account the minimum entrusted equity standard of 32ETH, plus computational cost, code risk, general uptime and maintenance costs, Myers concluded that the current net income from the Ethereum 2.0 parameter “is unlikely to attract small verification. By". Rhea added that different groups, including miners and financial experts in the Ethereum community, reiterated the same conclusion.
The latest proposal submitted by Ethereum founder Vitalik Buterin this week shows that the return rate will be increased to 3.30% given that the total entrusted equity on the network has reached 30 million ETHs.
This would mean that Ethereum 2.0 verifiers can receive up to 100,000 ETHs a year, which is currently valued at about $160 million.
In contrast, the current annual output value of network miners in Ethereum is estimated to be close to $700 million.
Therefore, compared to Ethereum mining, the target valuation of the Ethernet network is much lower by PoS. At the same time, the overall inflation rate of ETH will also be much lower. At present, the inflation rate of Ethereum just exceeded 4%. In response to Buterin’s proposal, Ethereum researcher Justin Drake said:
"In this way, the basic inflation rate of Ethereum will be controlled at around 1%, and the basic rate of return will be around 3.2%."
Drake added that considering this dynamic extra gas cost on the current Ethereum network, it can be thought of as similar to the cost of writing a transaction into a mining block:
"With half of the gas burned, the inflation rate of ETH on Ethereum 2.0 will be around 0.5%, and the rate of return of the verifier will be around 5%. It feels so healthy!"
In Buterin's proposal, if the entitlement ETH entrusted in the network is only 1 million, the verifier's return rate will be as high as 18.10%. Conversely, if there are more than 100 million ETH entrusted interests in the network, then the verifier's return can be as low as 1.56%. Harrysson told CoinDesk:
"It's more like behavioral economics. What do you want to attack? This is a subjective measure. So, in the blockchain, you often ask yourself the question of how much it costs to attack this chain?"
The estimates made by Buterin are not static. Rhea told CoinDesk that the job of determining the rewards structure is to try to find the “best balance” between profitability and security. Rhea concludes:
"For now, Buterin's proposal is the future direction, but it is being proposed as a proposal. Developers will recalculate. I know that Consensys' Collin Myers will reanalyze this new data this weekend, he May get some interesting feedback."