Christopher Porter talked about Proof of Stake. Proof of Work vs. Proof of Stake. What problems are PoS solving? Ethereum Casper FFG.

1. Proof of Stake
Onward and Upward
Tip Christopher Porter
Bitcoin: 1oNxaYtieSaDV4GNxfL8U7kFtyAdfpMSM
Ethereum: 0xf63383480e657b29160bcb3bfbfedf3b71bded72

2. Ground Rules
● No Prices. No Politics.
● Don’t be an a$$hole
Sponsors
● Borderlands
● Unchained-Capital.com

3. What we will cover
● Why another validating system?
● Comparison of PoW vs PoS
● Types of PoS
● Byzintine Fault Tolerance
● Tragedy of the Commons
● Casper: Friendly Finality Gadget
● Learning Recommendation

4. Why Proof of Stake?

5. Both systems try to solve
● Distributed Consensus in adversarial environment
● Byzintine Generals Problem
● Crypto Economic Game Theory Issues
● Double Spend Problem
● Protection from Sybil Attacks

6. Where to start?
Proof of Stake
Proof of Work

7. What is Proof of Work?
● Brute force
● Solving cryptographic puzzle
● Hard to solve, easy to verify
● One way function
● A way to agree on canonical order of transactions
● Visual Explanation -> https://anders.com/blockchain/

8. Proof of Work: Benefits/Drawbacks
Benefits
● Never been hacked
● Longest running proof of Byzintine
Fault Tolerance
● Many miners -> decentralization*
Drawbacks
● Huge energy consumption
○ 32TWh -> Denmark (Dec 2017)
● Susceptible to 51% attack
● Centralization due to ASIC miners
● Tragedy of the commons

9. PoW (bitcoin): Quirks
● Probabilistic Finality
○ 6 confirmations -> https://people.xiph.org/~greg/attack_success.html
● Block Reward Halves every 210,000 blocks
● Risk of 51% attack increases over time -> Tragedy of the
Commons

10. Tragedy of the Commons
Source

11. Proof of Stake
Source

12. Vitalik Buterin
The “cypherpunk spirit” isn’t just about
idealism; making systems that are easier to
defend than they are to attack is also simply
sound engineering.

13. Proof of Stake: What is it?
● Digital assets staked as ‘guarantee’ of good behavior
● Prevent double spend problem -> Slashing conditions
● Many types of POS attempt to solve crypto-economic scenarios
○ Chain based PoS
○ Delegated Proof of Stake
○ Hybrid PoW & PoS -> Casper (Ethereum)
○ Hybrid PoS & Proof of Burn

14. Proof of Stake: Benefits/Drawbacks
Benefits
● Small Power Footprint
● Decentralized (?!)
○ Low barrier to entry -> increases
number of validators
● Finality exists
● Byzintine actors decrease value of
coins through attack -> decreasing
reward
Drawbacks
● Rich get richer (?!)
● Susceptible to Sybil attack
● Crypto Economics yet to be
proven solid
● Byzintine Fault Tollerant (?!)

15. PoS: Casper Friendly Finality Gadget
● Hybrid Delegated PoS system
● Slashing condition -> Validate two competing blocks
● PoW 49 blocks -> PoS validation on 50th block = Finality
● Active nodes on testnet -> http://34.203.42.208:3000/

16. PoS: Casper FFG -> DIY
● Setup a VPS of Casper FFG on the testnet
● https://medium.com/@socialmedia_63108/alpha-casper-ffg-testnet-instruction
s-de4b69994534
● Trouble? Google it!
○ https://www.reddit.com/r/ETHSTAKERS/comments/7nqvw3/who_else_is_running_the_casper
_alpha_what_are/

17. Further Learning
● https://www.youtube.com/watch?v=NRwA-uHkQlU (vitalik on PoS)
● https://schoolofcrypto.com/podcast/proof-of-work-vs-proof-of-stake-ltc010/
(podcast episode)
● https://soundcloud.com/epicenterbitcoin/eb-105 (Vlad Zamfir on PoS -
Podcast)
● https://www.reddit.com/r/ethereum/comments/6s304o/i_am_dumb_what_is_p
roof_of_stake_and_how_does_it/ (Reddit)