Why Proof of Stake is Flawed with Lane Rettig

 
 

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“When you make this change that we just talked about going from Proof of Work to Proof of Stake you break a lot of the really cool stuff…I don’t think any of us appreciated the complexity and how much fixing we’d have to do after breaking Nakamoto consensus.”
— Lane Rettig

SHOW DESCRIPTION

Location: New York
Date: Sunday 5th December
Project: Ethereum
Role: Core Developer

The Proof of Work (PoW) consensus protocol is under relentless attack. 

Earlier this month The House of Representatives held a hearing on digital assets. Rashida Tlaib dismissively questioned PoW, quoting erroneous Bitcoin transaction energy cost data. In response Stellar’s CEO Denelle Dixon implicitly agreed PoW was energy intensive, and that “we all need to focus on minimizing the energy consumption as much as possible”.

The next day Ripple’s co-founder Chairman Chris Larsen published a medium article that stated “Bitcoin’s code needs to be changed to a low energy consensus algorithm like those used by nearly all other major crypto protocols.” 

Last week CNBC interviewed the CEOs of 2 wealth management firms. One stated the following:

“Bitcoin operates on PoW: that’s the older technology, it’s slower, it’s really a drain on energy. Proof of Stake (PoS) is the newer system, it’s where I’d want my money going. It’s less energy intensive. It’s faster. It’s more secure."

In potentially the biggest change to any blockchain ever implemented, Ethereum is planning to move from PoW to PoS. PoS has been argued by its proponents (most notably Vitalik Buterin) to not only be less energy intensive than PoW, but to also provide significantly much cheaper security, and greater decentralization.

But, the arguments dismissing PoW and recommending PoS are fundamentally flawed.

In this interview, I talk to the former Ethereum Core Developer Lane Rettig, who now works as a core developer for Spacemesh. We discuss the history and logic behind PoW, the drivers for developing new consensus protocols, how PoS is set to work within Ethereum, and the significant flaws and risks this proposed change entails. 

TIMESTAMPS

00:02:32: Introductions
00:09:08: The Byzantine Generals Problem
00:12:56: PBFT protocols
00:15:59: Nakamoto Consensus
00:19:13: Basics of mining a block
00:27:05: The fork choice rule
00:32:22: Proof of work scalability limitation
00:37:37: The "spectrum" of decentralisation
00:46:08: Bitcoin PoW vs Ethereum PoW
00:52:40: Ethereum's blockchain bloat and classes of nodes
01:03:58: Proof of stake
01:13:24: ETH 2.0 and The Beacon Chain
01:18:17: Proof of stake benefits
01:20:38: The Merge - Ethereum upgrade to proof of stake
01:23:15: Risks to proof of stake
01:46:20: Existential threats to Ethereum
01:49:10: The strength of the Ethereum Virtual Machine (EVM)
01:54:15: Final comments

 

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SHOW NOTES

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