The tenth anniversary of the banking collapse might be greeted with a great party indeed in ethereum as cool kids and even cooler geeks alike await one of the biggest upgrade the network has seen since it launched in 2015.
Hybrid Casper FFG, that is the Proof of Stake layer on top of Proof of Work, which is to slash inflation by 80% and make eth’s new supply even more scarce than bitcoin’s, has now entered the very final stages.
Following the launch of Hybrid Casper’s specification, Parity, ethereum’s second biggest client, has now begun testing.
That’s after months of testing that begun in December to refine all aspects as well as cross the t-s and dot the i-s. With Parity’s testing now being more just double and triple checking as well as to see all is fine with their own client’s handling of it and so on.
He missed step 9.5, which is meant to be …, then you get to step 10, but we’ll forgive him for not meme-ing properly because Wei Tang has been good enough to take this initiative.
The above featured image is from the same ethereum developer who couldn’t quite hide his excitement when telling the world: “Casper works on Parity Ethereum Client!”
It moves. But not quite yet on the mainnet, where it matters. That is awaiting for auditors and academics to look at the code and all the rest and either give a dressing down or hopefully a thumbs up.
They would be far too kind if they do so by August to give us a narrative that may complement the genesis block this September.
Geth, the other main ethereum client, will also now need to start their own testing, then/or there might be a cross clients testnet, then we should get a date or a block number for when the upgrade is to go ahead.
Surprises are to be expected in this space, and that includes a lack of surprises which would be a surprise itself. Imperfect man may try all he can, but still might make a mistake. If nothing else cosmic rays might mess some little part somewhere.
Developers will, we are sure, take caution not just as prudence, but as necessity, however if there is some little bug somewhere once it goes live, it is just code so it would be fixed.
We do after all need some excitement now and then, and this upgrade has plenty of excitement to offer. For the upgrade will turn nodes into real nodes as it will give them the ability to really validate transactions and have an actual say in what is the real blockchain.
Ethereum nodes, therefore, will be given the option of becoming “mining” nodes, through staking. That is by locking up at this stage some 1,500 eth, which will then generate ~5% of the staked amount a year (75 eth) as a reward for participating in network security and validation.
Some $1 million worth of eth few have, which means pools will spring up. One of them might be Coinbase, which recently said:
“Our vision is to give customers the ability to participate in services like staking and protocol voting that are distinct to crypto.”
This is centralizing, we can hear you argue, but this is ethereum we’re talking of, the land where they speak of crypto-economics.
Vitalik Buterin, ethereum’s inventor, recently took the time to go into the nitty gritty details. That informed us of the design which compels pools and individuals to do what others are not doing because if something goes wrong and it is just you, there is little punishment, but if something goes wrong for 10% of stakers at the same time, then the punishment can be very severe indeed.
That means something like Coinbase will probably want to set-up their staking so that each node contains precisely 1,500 eth, and one node is perhaps on the cloud, one is maybe in the Antarctic, one on the moon perhaps.
We don’t know, we won’t meme, and we’re not the ones to advise them, but although that does clearly increase decentralization because you want to do things differently and you obviously want to run a full node for the highest level of security, you can argue all those nodes are still in the control of some dev at Coinbase.
Which is maybe why you don’t want to go to Coinbase, and you might not want to do so not only because of cute idealism, but because in ethereum staking it pays off to do things differently from others.
So while in Proof of Work you’re better off bundling together in as big a pool as possible to have the lowest variance in rewards, and perhaps slightly more in reward than otherwise, in Casper bigger means a far bigger risk.
That might mean tiny little pools scattered everywhere, or one big pool that scatters the staking eth in tiny little pools, or more probably a combination of the two.
Obviously if you’re a dev you’d probably set up your own staking pool, so we may get a lot of people popping up everywhere, while exchanges will probably offer the option, and staking optimizer might even become a job title.
That’s especially the case once the requirement is lowered to “just” 32 eth once simple sharding goes out hopefully in time for the roaring 20s.
We will also, during the transition period between hybrid and full casper, have a new class, the stakers, to complement the miners, the plain holders or investors, the speculators, the devs, the businesses, and the media.
The task of the stakers is to create a genesis block of sorts, called a checkpoint, beyond which the blockchain can’t be reverted, so providing finality of transactions, thus increasing security.
For the service they are rewarded because they take risk if something goes wrong accidentally, or more foolishly intentionally if someone with more than a billion dollars thinks it fit to throw them down the drain.
As risk is lowered by doing what others are not doing, say by using an operating system others aren’t, then decentralization you would think would necessarily increase.
It would also increase because in or around September (if all the testing etc goes fine) then finally everyone will be able to really be part of the network and to actually validate transactions.
The geographical centralization we are seeing in Proof of Work mining, therefore, would vanish once it goes full casper, and would be lowered in hybrid casper.
Electricity demands would also significantly reduce because you just need a laptop to participate, the knowhow, and 1,500 eth to start with then 32 eth or a pool. Once it goes full casper, ethereum won’t really have any electricity demand whatever.
So thus the march towards a peoples’ network. Only a few months now until quite a monumental achievement when we the people can once more “mine.”