Founder Leads the Way! Vitalik Stakes 3,200 Ether, Elaborates on the Benefits of Proof of Equity

Ethereum 2.0 is tentatively scheduled for release on December 1st. With the exception of uncontrollable factors such as insufficient staking funds, the official launch of 2.0 is largely confirmed. Ethereum founder Vitalik Buterin not only contributed 3,200 ETH for staking but also published an article "Why Proof of Stake Nov 2020" detailing the reasons why Proof of Stake (PoS) is superior to Proof of Work (PoW). Vitalik believes that compared to PoW, PoS is a more superior blockchain security mechanism, consisting of three key factors:

Same Cost, Higher Security

GPU Mining

Vitalik assumes a daily block reward of 1 USD. Miners' mining costs must be lower than 1 USD, or they will exit due to lack of profitability. Therefore, an attacker only needs to rent GPU hash power worth more than 1 USD for a short period of time. An estimated attack cost of about 0.26 USD in 6 hours, potentially reducing the cost to zero even after receiving the block reward.

Professional ASIC Miners

Assuming a daily block reward of 1 USD, the daily cost for ASIC miners is around 0.67 USD for the machine and 0.33 USD for electricity and miscellaneous expenses. With ASIC miners typically expected to be usable for 2 years, the attack cost is approximately 486.75 USD (machine) + 0.08 USD (electricity), significantly higher than GPU mining. Vitalik believes that while ASICs increase security levels, they also greatly increase mining costs, leading to centralization in mining.

Proof of Stake (PoS)

In PoS, costs mainly come from capital (staking Ethereum), with operating costs only including running nodes. Unlike ASIC miners with a 2-year usability period, tokens staked in PoS retain value even after 2 years. Therefore, with the same daily reward of 1 USD, PoS participants are willing to invest higher capital costs.

Vitalik assumes that a 15% staking return (2.0 expected return rate) is sufficient to incentivize user participation. With a daily reward of 1 USD, attracting approximately 6.667 years of staking return, which is 2,433 USD, deducting 10% daily operating costs, the attack cost is 0.9 USD * 6.667 = 2,189 USD, significantly higher than the attack cost for ASIC mining.

With more participants, Vitalik estimates that profits will gradually decrease, making the staking mechanism more efficient. He personally expects attack costs to increase to over 10,000 USD, which is more than 20 times the attack cost of ASICs.

Resilient to Attacks, Faster Recovery

In a simulated blockchain attack, Vitalik points out that GPU mining mechanisms are defenseless, and miners may exit due to lack of profitability, continuously reducing the attack cost. Regarding ASIC mechanisms, the community can fork and change algorithms, but as no one has time to develop new ASIC miners for the new algorithm during the attack, it reverts back to GPU mechanisms, allowing attackers to continue renting hash power for attacks.

On the other hand, PoS has an inherent "slashing" mechanism, where most of the attacker's staked funds are automatically destroyed without affecting other stakers. If attackers persist, they must spend millions of dollars each time to purchase new tokens, making the attack cost and returns highly asymmetric, putting attackers at a significant disadvantage.

Higher Decentralization

Compared to expensive ASIC miners, Vitalik points out that the amount staked in PoS is relatively low, requiring only a regular laptop to participate. He emphasizes the "rich get richer" theory present in PoW and PoS mechanisms and notes that as more participants join, staking returns will continue to decrease (0.5 to 2% of total Ethereum supply), potentially taking a century to double the asset concentration.

However, Vitalik also mentions a drawback of the PoS mechanism, where being offline for too long requires finding a third party for synchronization, such as client developers, other nodes, etc., unlike PoW, which does not require this. He believes this requirement is relatively low in software applications.

According to the official announcement, Ethereum 2.0 Phase 0 is set to be released around December 1st. To become a valid validator, users must deposit at least 32 Ether for over seven days before the release date. Vitalik has also sent 3,200 Ether to the mainnet deposit contract address, which had a balance of 42,277 Ether before the deadline, still below the 8% threshold.