“In the beginning, this was still a small market (15 years of ETH). People didn’t know what to buy or sell, but the market gradually formed in this way, and even small shops were born. Someone was doing money market business. (Compound, Aave), some people do the exchange business (Uniswap). But there is a goal set at the beginning of the establishment (no one knew whether it was right or wrong at that time), that is, to build a cathedral (ETH 2.0), people waited, and Often meet and discuss.
Time is very fast, several years have passed, and the days of delivery have gradually progressed, and the veiled cathedral has never been seen by everyone. So people keep asking the people who set up the market stalls when we can enter the cathedral.
Under constant persecution, things are advancing, and disputes and abuses are disclosed. So the advocates of the church once suggested gathering in the square to answer any questions from everyone, but they did not explain how the decision was changed. (Call#52), people also pretend (or are unable to really) not care, because they worry that their doubts will bring criticism from others.
People in the square talked to themselves. In a question and answer, they were looking for the possibility of being brilliant after entering the church. Most people knew that they didn’t really need the church or were uncertain. After all, compared to the small market a few years ago, We have a faster infrastructure (Rollup), we have a guard (Miner) to ensure market order, but they hope that they can have some power to change the form of this church.
So the advocates said that if you want to enter this church, the infrastructure must serve it (Rollup is the center). If you want to enter this church, the governance that everyone can participate in must be the premise (PoS), if you If you want to enter this church, the past market will be prosperous because of you (community confidence). If you want to enter this church, you have to cast a vote and first give up the current guard (Miner).
No one really expects this church, people only expect their own power to be exercised, even if it is not based on justice, even if the fair participation of assets brings about centralization, some people have given vigilance. But no one really expects this church, people only expect their power to be exercised. “
The above point of view comes from Uncle Miao, who has a lot of research on Ethereum. On December 1, ETH2.0 officially launched the genesis block. Since then, it has finally ceased to lie in the white paper. After leaving the white paper, it has brought high expectations of the market for Ether and triggered a possible long-term future There is a conflict of interest.
01
Misunderstood wealth effect
“Ether is breaking 600, 2.0-style pledge is equivalent to deflation. I think it is 1,000. It must be a wave.” Retail retailer Chen Chen shouted in a group of less than 10 coin friends, and the group of friends sent a big star to respond: “Thanksgiving callback When I got in the car, I got off at 600 and it was already profitable. It’s really fragrant.”
The reflections of Chen Chen and the big stars of Biyoupai are to some extent a true portrayal of the market in the context of institutional bulls. As ETH2.0 has become a hot topic, these out-of-door Ether holders instinctively understand ETH2.0 as a piece of good news that can stimulate the price of Ether. At the same time, they have also discovered two investment opportunities. In the secondary market, adding ETH to the warehouse, one is to pledge Ether in exchange for higher returns.
However, the arrival of ETH2.0 is nothing new for understanding the history of Ethereum development and those experts. As early as when the Ethereum white paper came out in 2013, ETH2.0, the tranquil phase, was planned, and tranquility was also the fourth stage of Ethereum’s development. The goal was to transition the consensus mechanism of Ethereum from PoW to PoS.
In the past two years, the stakeholders of Ethereum have been discussing the change of this route, either in terms of technology implementation and incentive mechanism, or the impact of ETH2.0 on all stakeholders in the existing industrial chain.
In the short term, there is no conflict between ETH1.0 and ETH2.0. After all, in the economic model, new coins will not be issued after ETH2.0 goes online. In terms of technical solutions, those expansion plans based on ETH1.0 are not It has not been denied, but to a certain extent, it is synchronized with the solution of ETH2.0 through PoW to PoS transition. Some people in the industry even interpret the current state as the Ethereum Foundation is using the “two hands” policy to solve the problem. Long-term performance issues.
Under this interpretation, the wealth effect of ETH2.0 has been weakened, but the transition from PoW to PoS means that a wave of staking craze driven by ETH2.0 is coming.
Under the PoW mechanism, to become a miner requires mining machines and electricity; under the PoS mechanism, to become a validator, you need to pledge at least 32 ETH to the storage contract, and have hardware equipment, a stable Internet environment, etc., which is obviously not for ordinary investors. Too friendly.
However, this is a good business for node pledge service providers.
At present, exchanges such as Huobi and Binance, wallets such as TokenPocket, imtoken, HashQuark, InfStones, Stkr, RocketPool and other blockchain infrastructure service providers all provide ETH2.0 staking services. Although users are positioned differently, they basically belong to the center. In a centralized organization, users cannot grasp the private key of funds.
“I pledged the currency to platform A. Platform A has a problem. Is there a problem with my currency?” In the heated ETH2.0 pledge discussion group, member Cang Hai asked. “Don’t bet, the profit is too low, if you fall too hard, you will lose more than you gain.” Another member Haoran responded while complaining.
Obtaining income by participating in pledges should be the most significant “wealth effect” of ETH2.0 in the physical world. Discussions and consultants such as this are all over the various communities in the industry: basically it shows that speculators look down on low returns and ordinary investors. Asking and thinking about the situation of the institution silently approaching.
Uncle Miao told the chain catcher that whether in the end Ethereum chooses to implement Rollup quickly on the current chain or chooses to make more technological breakthroughs on the new chain, this process is valuable, but for individuals, the current participation ETH2.0 staking is a matter of high risk and relatively high return, and needs to be treated with caution.
At present, the risks of participating in ETH2.0 pledge are roughly three points: the gratuitous loss caused by the lock-up, the capital risk caused by network failure, and the third-party service provider running away.
Of course, the risk is on the one hand, and there are misunderstandings on the other.
“Price rise is based on how the mainstream tells the story. If the mainstream market wants to talk about the rise, you can follow the pledge lock-up story. Why do you want to say that? The core reason is that the market sentiment is suitable for long. If it goes back to 2018 At the beginning of the year, it would be suitable to tell a bad story.” TP Wallet founder Pan pointed out in an interview with Chain Catcher that although ETH 2.0 has brought about an increase in the amount of locked positions, it cannot achieve the deflation as understood by the outside world. The subsequent derivative quality pledge plan is actually increasing the circulation, and the essence is inflation.
Except for being misread as deflation, the gains of ETH2.0 Staking do not constitute the wealth effect that Chen Chen understands. Calculated based on the annualized gain of 21.6% at the start of Phase 0, the revenue per 32 ETH is approximately 6.91 ETH, and based on the recent 16.9% annualized revenue, the revenue per 32 Ethereum is approximately 5.43 ETH , The income will decrease as the amount of pledge increases, so it is obviously not a good choice for investors with small capital and poor risk resistance.
02
PoS-type stories are a bit “virtual”
“The three-phase roadmap is illusory, and the new roadmap is tasteless. There is no Eth2.0-related roadmap worthy of Ethereum abandoning the current mode of operation and switching to a PoS-based system.” Judgment on ETH2.0.
The misunderstood wealth effect can meet market expectations for the price of Ether in the short term, but in the long run, the price of the currency will always be affected by countless factors. Therefore, when the industry discusses ETH2.0, it is more talked about PoS mechanism with long-term value.
And this is officially the controversial part of ETH2.0. At the moment, some people think that this scheme has a lot of uncertainty, the effect cannot be expected, and the risk is too great; some people think that “grabbing with two hands” is a hooliganism; some people think that abandoning PoOW to PoS brings losses and results wrong.
Under the dispute, there are not only propositions about revolution and death, but also conflicts between ETH2.0 and ETH1.0 with vested interests.
Regarding the proposition of revolution and death, Uncle Miao believes that the foundation of Ethereum is the courage to face failure. The promotion style of the entire ecological community Test in prod is created from the initial TheDao incident to various subsequent events.
Similar to Uncle Miao’s point of view, InfStones marketing director Rudy believes that if Ethereum wants to continue to develop, it must accept uncertainty. “I understand very well why Vitalik told the “death history” of Ethereum at the Wanxiang Summit. He said that Ethereum was about to die several times, but it still survived tenaciously. If Ethereum wants to move forward To develop and become a platform for the world’s computers and carrying decentralized applications. If you want to maintain the world’s second largest cryptocurrency market value, and want to challenge the position of BTC, you must constantly innovate and explore new technical solutions. “He added.
From this perspective, Ethereum is revolutionizing its own destiny, but it is another understanding from the previous effect level of the PoS mechanism.
In the past, there were not a few projects that adopted POS consensus mechanisms. The more well-known ones were EOS with DPoS mechanism and Polkadot with NPOS. The former is the problem of node evil, the latter is very complicated and difficult to implement.
Taking EOS as an example, the DPoS mechanism adopted by it is to increase the transaction speed and the speed of block creation by reducing the number of validators. The validator is voted by the token holder, and the new block is created by the validator instead of the token holder. The weight of each vote is determined by the total assets of the voters. Its shortcomings are that the holders’ enthusiasm for voting is not high, and the node monopoly is high.
The risk is that there are many difficulties in dealing with bad nodes: community elections cannot prevent the emergence of some corrupt nodes in a timely and effective manner, posing security risks to the network; super nodes are easy to be destroyed: if the elected super nodes do not have strong computing power protection By itself, it is easy to be attacked by DDOS, which seriously affects network stability.
Compared with DPoS, the NPoS mechanism adopted by Polkadot has always been considered extremely secure. NPoS also refers to the nominated equity proof mechanism, which is essentially a nominator + validator mechanism, allowing the system to select a verification node with a larger total pledge and eliminate the total pledge Lower candidates. Although it has always been highly regarded, it is temporarily impossible to judge given that the Polkadot network is not yet online.
However, both are based on the PoS mechanism that ETH2.0 intends to use. It can even be said that DPoS continues the drawbacks of PoS and ultimately leads to a significant reduction in the liquidity of DPoS coins. The poorer the poorer, the richer the richer.
Of course, the POS mechanism itself naturally has various problems. First, it is easy to cause voter indifference; second, it is easy to cause voting centralization bias, although V God attributed it to the collapse of game theory caused by public bias; finally, it is incentive dislocation, token holders and network users are two different Different kinds of people. Token holders are incentivized to push up the price of tokens, which may lead to erratic price growth under normal circumstances, but they are not responsible for the system.
In addition, there is a conflict between ETH2.0 and ETH1.0 with vested interests. “PoS mechanism is absolute centralization.” Zhang Cimi (pseudonym), who has studied Ethereum quite well, believes that although PoW can also cause an arms race and evolve into a game of capital, it has driven the development of an industrial chain, but POS Neither can it prove that its decentralization may also impact the cake of vested interests.
Zhang Cimi’s concerns were also mentioned in Vitalik’s recent AMA. “Even if a solution that perfectly merges ETH1.0 and ETH2.0 can be obtained in March 2021, he and his team will still have to wait until the end of next year to start, because they need to spend a lot of time persuading all parties in the community to accept the new solution. “He said.
In fact, in this competition, the real difficulty lies not in the technology, but in persuading those with vested interests to abandon their personal interests and balance and coordinate the interests of all parties. At present, the stakeholders with ETH1.0 as the core can be simply divided into the Ethereum Foundation, core developers, validators, miners, and various teams based on the old chain for expansion solutions, etc., to a certain extent, each group The interest demands are different, and the most difficult to balance is the group dominated by miners. “The interests of miners and mining pools are too great. How to achieve the greatest degree of consensus and peacefully upgrade 2.0 instead of creating a split through a hard fork is really a problem.” Zhang Cimi said.
At present, no one knows how much advancement the Ethereum Foundation needs to complete this matter, but I believe that most people do not want the upgrade of ETH2.0 to evolve into the next permanent fork. Lose more.
