Vitalik Buterin argues that the PoW mechanism will punish miners with low hash power.
Proof-of-Stake and Proof-of-Work consensus mechanisms have long been the subject of debate in the crypto community, even though the former promises more energy-efficient solutions and better throughput. It is
Some PoW proponents, especially Bitcoin maximalists, have revealed certain perceived flaws in PoS. Buterin recently launched a refutation of his one such allegation.
Udi Wertheimer, a noted Bitcoin maximalist and former blockchain research lead at Colu, took to Twitter to point out some perceived problems with PoS. According to Wertheimer, contrary to post-popular belief, PoS is not built to give stakers a yield. Wertheimer argued that these yields given to investors were actually a way of punishing non-investors.
“PoS rewards are not ‘yield’. Not even a reward, actually. It’s just a penalty for those who don’t bet.
Staking m.rons does not earn rewards. You will only be penalized for not staking. I can’t believe you still don’t know lmao” Wertheimer added.
PoS rewards are not “yields”. Not even a reward, in fact. It’s just a penalty for those who don’t stake.
You don’t get paid for betting fools
If you don’t stake, you will be punished
i can’t believe i still don’t know
— Woody Wertheimer (@udiWertheimer) September 12, 2022
Ethereum co-founder Vitalik Buterin thought it necessary to refute Wertheimer’s bizarre claims. Buterin argued that if assertions are taken into account in all consensus mechanisms, PoW will penalize those whose percentage of hash power is lower than the percentage of the asset supply.
“And PoW penalizes anyone with a smaller percentage of hash power than the percentage of coin supply.
(Actually, it penalizes you much more than that because profit < revenue, but you get the point.) Mr. Buterin pointed out in a tweet.
And PoW will penalize anyone whose hash power percentage is less than the coin supply percentage ☺️
(actually it penalizes you much more than that because profit < revenue, but you get the point)
—vitalik.eth (@VitalikButerin) September 12, 2022
Buterin’s rebuttal highlights some of the problems that have arisen with the PoW mechanism. In general, miners do not get much profit when their hash power is relatively low compared to the coin supply ratio. This is due to increased competition in the Bitcoin mining industry as mining difficulty increases as more miners enter the market.
Additionally, rising electricity prices will make miners less profitable in the industry than they used to be. Buterin’s argument is intended to refute Wertheimer’s argument. Wertheimer’s point was based on the fact that non-stakers become diluted as more tokens are put into the space to reward stakers. This adds to the asset’s inflationary tendencies.
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