Thursday Community Call Recap 9.16.22

Hello everyone! Welcome to the weekly Thursday Community Call Thread. We really want to engage our community to think and learn about new topics in these calls. Unfortunately not everyone gets a chance to attend the call and those that do don’t always get a chance to speak due to time constraints.
There is value in continuing the types of conversation we start in these calls. We don’t want the call to be the last time people engage with the topics addressed. We want to enrich your days with inspiration and open eyes to new concepts. These topics might be applicable to some of your works or spark a personal interest. It is our goal to facilitate new ideas and creative thinking through this thread.

Community Call Link: The Ethereum Merge - SCRF Community Call - September 15, 2022

9/8 Community Call Recap:

Lucas Nuzzi has give a presentation on the Proof of Work (PoW) To Proof of Stake (PoS) change that took place during “The Merge.” There are several changes on how Ethereum intrinsically works that he discussed. The big questions are
What are these changes?
What do they represent?

When evaluating a new system it is important to consider that many things are poorly understood or have yet to be fully explored (like Maximum Extractable Value - MEV)
The goals of this research is to normalize the concepts around merge as well as the dynamics post merge. He is trying to educate on: What is PoS and what are its mechanisms - especially those around consensus?

Based on this post, Lucas highlights at a high level that it would be great to discuss the future of Ethereum post merge. He gives many primers to establish a good background of what the new system is and its dynamics.

Highlights:

How, in a distributed system, do we agree on statements?

  • PoW solves this problem by allocating electricity to brute force a solution to a puzzle that proves the statement. Acting nefariously is very costly. PoW has blocks that are counted and based on time.

  • PoS tries to replicate POW without electricity consumption. PoS uses stake/capital and a set of participants that are known ahead of time, so if you misbehave you lose your staked capital. There are still blocks, but time measured in slots. The opportunity for network participant to produce a block has no guarantee. Slots are organized in groups of 32, known as an epoch.

  • There has been something known as the Beacon chain that was used to test this PoS implementation. It has been running since Dec. 2020.

  • The merge is where the main chain and the beacon chain converge and become one. There is no more mining of blocks. The production of blocks is the role of the beacon chain using PoS

  • LMD-Ghost is the protocol used to decide which blocks are valid via votes. It does not offer strong finality guarantee as it can be reorganized.

  • Casper-FFG is the protocol used at end of an epoch to approve the set of blocks is final.

  • Combined, these two protocols are the backbone of the Ethereum network.

Issues

  • Staking brings centralization similar to mining where a set of stakers is dominating the % of hash power
  • Unlike the 51% needed to attack a PoW chain, 33% of hashpower is needed to attack PoS… and LIDO is already past this threshold.
  • The so claimed 99.9% decreased use of electricity is unconfirmed because validators need redundancies to operate.
  • These redundancies, along with the 32 ETH needed to activate your own validator, create a higher barrier of entry that PoW.

A few questions to consider

  • Are the two consensus protocols sufficient in providing security for Ethereum moving forward?
  • Are there vectors where decentralization can be curbed / is there an attack vector that might happen to Ethereum?
  • What are thoughts on there being a final settlement layer using PoW that all future PoS chains report to?
  • How do we lower the barrier of entry?

If any of these spark your interest or you have other questions / thoughts, please discuss below!

Resources

Research Summary: An Economic Analysis of EIP1559
“EIP1559 is proposal to make several tightly coupled additions to Ethereum’s transaction fee mechanism, including variable-size blocks and a burned base fee that rises and falls with demand. The proposal has attained considerable interest given its potential to reduce ETH’s free float supply in the long run, improve UI in times of fee congestion, and disincentive miners from accepting payments in any assets other than ETH. The paper assesses the game-theoretic strengths and weaknesses of the proposal and explores some alternative designs.”

Byzantine Generals Problem
“Reliable computer systems must handle malfunctioning components that give conflicting information
to different parts of the system. This situation can be expressed abstractly in terms of a group of
generals of the Byzantine army camped with their troops around an enemy city. Communicating only
by messenger, the generals must agree upon a common battle plan. However, one or more of them
may be traitors who will try to confuse the others. The problem is to find an algorithm to ensure that
the loyal generals will reach agreement. It is shown that, using only oral messages, this problem is
solvable if and only if more than two-thirds of the generals are loyal; so a single traitor can confound
two loyal generals. With unforgeable written messages, the problem is solvable for any number of
generals and possible traitors.”

EEA EthTrust Security Levels Specification v1
This document defines the requirements for EEA EthTrust Certification, a set of certifications that a smart contract has been reviewed and found not to have a defined set of security vulnerabilities.

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