Blockchain Protocol Minima on the Ethereum Movement to Proof of Stake

Blockchain, Innovation, News, Opinion | August 4, 2022 By:

Last week, Ethereum announced its last test before it transitions to Proof-of-Stake this summer. ETH’s PoS Merge offers several improvements to the Proof-of-Work system.

Proof-of-Stake (PoS) is a consensus algorithm in which nodes with the native platform token at “stake” are responsible for validating new transactions. Often in these networks, the more stake a node has, the higher the chances to validate blocks and verify blocks. In contrast, Proof-of-Work (PoW) networks solve cryptographic puzzles (deliver work) in order to verify transactions. PoW first came up as a measure to fight spam and Denial-of-Service attacks.

Comment on the Ethereum movement to Proof of Stake from Jonathan MacDonald, of decentralized blockchain protocol Minima.

Ethereum uses 113 terawatt-hours per year—as much power as the Netherlands, according to Digiconomist. A single Ethereum transaction can consume as much power as an average US household uses in more than a week. Bitcoin’s energy consumption is even worse. Unsurprisingly, these stats from the criticism of Proof-of-Work (PoW) due to the energy drain and requirement for specific hardware that, once obsolete after a few years, can populate landfills. Ethereum needs to move to Proof-of-Stake (PoS) so it doesn’t further exacerbate the environmental horrors of Bitcoin, and increase the volume of transactions per second from around 30 per second today.

PoS networks, in general, don’t consume much energy to secure the network but the risk of e-waste can be equally as high. Also, in PoS, those who stake the most money, make the most money. And with Ethereum’s cost of being a validator set at 32ETH, the question is whether this is a level, decentralized playing field – or basically, just another version of a bank?