ProfessionalCrastination on Nostr: Always good to get a refresher ...

Always good to get a refresher

quoting nevent1q…e4ep

Mostly because Staking increases the power of the already rich (in that token) over time. Those making decisions on which blocks to add to the chain get a bigger share of those decisions as time goes by.

On top of that, the staker's weight on those decisions is proportional to the number of tokens the staker has. In Bitcoin, for instance, a miner's power is based on their hash rate and not the amount of bitcoin they are holding. They have to spend bitcoin to acquire hash power to try to get more bitcoin. In Ethereum, stakers don't need to spend their ETH to get more ETH

Staking is also not as risky as mining. If a staker behaves minimally well, he/she will never lose their tokens. A miner, on the other hand, can easily go out of business on any unforeseen business situation. A risk-free process is more centralizing.

Separating the power of having all coins from the power of running the chain is a unique feature of proof of work systems. By merging the two powers, Ethereum centralizes control between those who have coins and coders of the protocol. And one might argue that coders and those who have coins are also the same group of people today.

Governance will be tricky.

In my mind, Ethereum is a company. People are, of course, free to buy shares of that company. It might be a profitable trade but it is entirely dependent on the humans running that company. After all, those humans can always decide to dilute shareholders further or have a buyback program in a similar process to what regular corporations or central banks do.

The council of Elders controls the chain. And the Council of Elders also happens to be the richer folks in that system. The rich control the token dilution process and are the first in line to receive new tokens when they dilute them further.