Vitalik Buterin, Ethereum founder, and Brian Armstrong, Coinbase CEO, believe that a gradual shift in mindset and important contributions from the community led to them backing Ethereum’s move from a proof of work (PoW), to a proof-of–stake (PoS), consensus.
The two industry giants joined Coinbase protocol specialist Viktor Bunin for an informative discussion on The Merge which will take place in mid September 2022.
Buterin thought about his past of considering proof of stake as a possible consensus mechanism for Ethereum blockchain. This was initially met with suspicion due to a variety of unsolved issues that made it seem unviable.
The Ethereum co-founder said that one of his first blog posts in 2014 suggested an algorithm called “slasher” which would penalize a node for voting for contrary actions.
“This was my attempt to make inroads in solving the proof-of-stake problem, which critics refer to as the “nothing at-stake” problem. If you want to build on top two blocks in proof-of work, you must do twice the work. In proof-of stake you can sign as many things you like.
Buterin believes that an explicit penalty for signing contrary actions is a viable option. Through 2014, research continued to examine the security assumptions Ethereum would need to rely upon with PoS. It was also possible to make PoS more secure than PoW by reducing penalties that eat into staked deposits instead of staking rewards.
Buterin then thought about a concept he had introduced at the close of the year, “weak subjectivity.” He said that for a PoS system to have full security guarantees, it must be available at regular intervals.
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It could be every week or month. Longer time periods can become more difficult for liquidity-minded stakers. This was Buterin’s key consideration when he decided to make the PoS transition.
It was, ironically enough, realising that this was an inevitable tradeoff that made me feel comfortable with it. This made me realize that I was weak, but at the same it allowed me to feel confident that it’s all there is.
Armstrong joined the conversation and admitted that he was skeptical about PoS at first. It took him a few years to change his mind.
“When people began talking about a Turing complete languages on a blockchain I was like, this sounds so easy for me to attack. So I was initially skeptical.”
After explaining that his initial belief in Bitcoin as the central blockchain of the ecosystem was flawed, the Coinbase CEO started to explore the idea again. Armstrong was more open to the idea of PoS after seeing the success of Ethereum-based decentralized applications (Dapps).
“Just watching Vitalik’s progress on it, and the Dapps, we eventually came to the realization at Coinbase that every token and chain that is out will be out, and that we won’t be able to sit in our ivory tower focusing on one asset.
Buterin explained his belief in PoS being more robust and decentralized that PoW. With the ability to set up an Ethereum validator anywhere in the world, Buterin also shared his thoughts. To do this, all you need is a computer and internet access.
They also discussed the move by the United States Treasury to sanction USD Coin (USDC), Ether (ETH), addresses linked to Tornado Cash. Coinbase, however, stated that it would prefer to stop its staking operations to preserve the integrity and security of the entire network in the unlikely event that it had to censor transactions.