Industry News Ethereum’s Consensus Change is beginning to take Shape

Ethereum’s Consensus Change is beginning to take Shape

May 8, 2018

Individual users will have to possess 1,500 ETH is they wish to participate in the testing process of Casper, the upcoming change in the ethereum’s consensus protocol. This was presented by Vitalik Buterin himself during the last day of the ETH conference in Toronto. There, he took to the stage to talk about the software change which was designed to modify the way ethereum network reaches agreements.

The full name of the change is Casper FFG and its algorithms have made a lot of progress after their first specs came in April 2018. Buterin stated that he expects the tempo of experiments with Casper to speed up, even though there has not been any mention of exact timelines. Casper has been heralded as a fairer way of keeping the network in sync thanks to the ability of its proof-of-stake to set their funds aside and these will be used as mining machines in virtual space.

During his talk, he stated that even those who own less than the needed 1,500 ether can take part through pools as well as groups of nodes that will work together. They would also split the profits that come from the process.

A High Access Bar

Right now, users have to buy a form of specialized hardware that allows them to participate in Casper’s system. At present prices, the access point can be reached by investing around $1 million in ether into a particular smart contract.

However, Buterin underlined that nodes should consider pooling their assets and accessing the system that way. According to him, the experiment should be one of the more “joyous” experiment that has recently taken place on the network.

The high sum needed for access is in part due to the ETH scaling challenges which stop it from supporting more than a certain number of nodes. But, once the process of sharding begins, acting as a scaling solution where the blockchain will be split into smaller groups, the price should drop. Buterin thinks that this sum should be around 32 ETH.

Also, using Casper testnet will allow users who own even less than that to take part in the experiment. Buterin thinks that this will happen soon, but not sooner than two weeks later or more.

Knowledge Base

Aside from this, Buterin provided a breakdown of the different steps that will be involved in setting up a validator for Casper, which is a node that will take part in the network’s proof-of-stake protocol. For developers, the Casper FGG code provides a lot of freedom to customize. In the first stage of a setup, the code will allow for adding of additional security or for multiple keys.

At the same time, like many digital ventures that are designed for the mass market, including eSports and other online services, the non-developers will be able to use it easily. Buterin stated that he believed that the good news is that no one needs to worry about the validation code they’re employing. Instead, there will be only a single deposit button that will do all the work.

Once the deposit process is completed, the users will only need to set the wallet on which they plant to attain their returns. The entire set up essentially mimics a bank’s procedures for attaining deposits and setting them into a savings account.

The Bank Principle

When the users have submitted their 1,500 ETH they will have these funds locked up into a deposit. Here, they will run the software and the rewards will be provided based on the amount of ether that has been deposited by the user.

The nodes will vote on potential block automatically and the regular users will not even know they are there. All they have to do is to keep the same node running. As long as it is running and online, it will do its whole job automatically.

Buterin also touched upon the principles of return calculations. In his words, if the stake is 10 million ETH and its validators are always online, the return will be between 0 and 5 percent, but most likely closer to 5 than a zero.

Yet, if the nodes are offline most of the time, they will begin making losses on the same deposit. This will come in the form of penalizing nodes that are inactive, but Buterin thinks that being online between two-thirds and one-half of time will be enough.

The Role of the Community

Right now, the rules consist of the network seeing its users as the good actors in the system. Yet, the case of bitcoin and many other networks shows that bad actors are sooner or later drawn into any process.

Buterin believes that the protocol will be able to find and stop these bad actors by taking away their deposit, anywhere from 1 and 100 percent of the bulk sum. Buterin is clearly hopeful that this does not have to occur regularly.

Yet, the experience of everyday mentality shows that any potential friction inside of a community also provides an almost certain battleground between the opposing ideas. Here, the opposites are having a means of generating profit in crypto with nothing more than a HODL approach and those who would try to use the same rules to somehow influence the system.

Financial Opportunity

Every investor in crypto who is not fully rigged for the dynamic of quick sales and buys has likely thought about using their investment to generate a passive income source. Casper seems as a great tool for the process of creating full crypto banks.

The effect this could have on ethereum network is incredible and potentially great for further raising of the price of its token. After all, anyone who would want to work on creating their wealth portfolio would think about this option.

Of course, it remains to be seen how the ETH proof-of-stake pools would work and how would they go about distributing the profits. But, even if the same process is not nailed down immediately, it still offers an incredible chance for the network. With a project like this, the network really has a chance to demonstrate its true tech potential.

Source: CoinDesk