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I have read six different articles now trying to understand this fully and completely and have been unable to get to that point.

I get that you are giving the validator/forger chosen with the privilege of forging the block the fees for that block. But what exactly is preventing them from including tx's that favour them?

I hear that you have to put up some stake/bet in Ether prior to forging, but how EXACTLY is this enforced? When do you lose your stake/bet? Who ensures it?

I have alot of questions here that just seem to be totally unanswered.

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    Hello, Neeraj, Thanks for your questions. It would help if you provided links to what you have read. Documenting your research makes your post more valuable to others. I also recommend a more specific title to more easily attract those who could answer you, and those who may already know some about PoS but not the answer to your question (which they might then want to upvote). For instance: "How exactly does the Proof of Stake get enforced?" If you are new here, it might help to read guidelines about asking questions + best practices. ethereum.stackexchange.com/help/asking – Tesa Jun 2 '17 at 11:04
  • What does "tx's" mean in your third sentence? Also didn't understand "forging the block the fees for that block"... what did you mean to write there? – Tesa Jun 2 '17 at 11:15
  • Just got that tx is transaction, so forget that question :) – Tesa Jun 2 '17 at 11:49
  • By "tx"'s, I mean transactions. – Neeraj Murarka Jun 7 '17 at 7:46
  • In terms of "forging", some articles described the process to be "forging". Not like forging money by like forging a bar of gold -- an industrial process. So basically, whoever is chosen to "validate" the block earns the fees on that block too. I don't have a list of the links I looked at. I simply went to Google and looked for any information i could find on PoS to really understand it. It still left many questions unanswered. – Neeraj Murarka Jun 7 '17 at 7:48
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This is still all theory rather than practice because CASPER is still under development, but here goes:

Validators have to place a security deposit (bond) in order to build blocks and participate in the consensus-generating process. This is what keeps them honest. The PoS protocol (Casper) controls these bonds and this is how it enforces proper behavior. When Casper detects that validators do not create blocks in a protocol-prescribed order, it punishes them by withholding transaction fees and deposits. So the answer to who ensures it is the protocol itself. Vitalik Buterin describes these slashing conditions (i.e. the rule-breaking scenarios that will lead to the destruction of the validator's bonds) here: https://www.ethnews.com/proof-of-stake-vitalik-buterin-shares-casper-contract-code

It looks like certain things are still in development stage, for instance the minimum size of validator deposits that need to be staked "to offset the gas costs (transaction fees) of sending prepare/commit messages and make a profit"

Buterin's response:

This is a tricky issue. Here there is an implied minimum because you have to pay gas to prepare/commit, and so altogether it's not profitable unless you deposit at least 1000-4000 ETH. One possibility that we're thinking about is in later stages hardforking in a discount specifically for execution associated with this contract, but that's still nowhere near finalized.

https://www.ethnews.com/proof-of-stake-vitalik-buterin-shares-casper-contract-code

Read more here: https://blog.ethereum.org/2015/08/01/introducing-casper-friendly-ghost/

  • Thanks for this feedback. One of my specific questions... If a validator is chosen on the basis of their stake, this process will favour the rich, giving them a higher chance of staking a higher deposit and therefore becoming a validator. They will, provided they follow the rules, earn the fees, and get even richer. Ultimately, won't this model result in a centralized consortium of rich nodes or validators who control the truth of the "universe"? How is that centralized or let alone fair and democratic? – Neeraj Murarka Jun 7 '17 at 7:51
  • I have the same question, Neeraj, and don't yet have a clear answer. But I recommend checking out Nicolas Massart's answer to this question: ethereum.stackexchange.com/questions/3523/… – Tesa Jun 8 '17 at 1:39

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