With the current trends of prices in crypto and the long term vision supported by the community (HODL!), the implementation of Proof of Stake could eventually derive in big ETH stakeholders getting the majority of the mining fees. Will not this derive in a more fat-tailed distribution of the currency holders, continually increasing the wealth inequality of the system?
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Those are two separate, but related things, when it comes to proof of stake: decentralization and wealth inequality. You seem to have conflated the two. The wealth inequality question is answerable as a technical question. The decentralization effect, not so much (in part, because different shades of "decentralized" can apply to many aspects of Ethereum and you need to be more precise).– lungjCommented Dec 19, 2017 at 16:11
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@lungj My question is about the increasing wealth inequality of the network, sorry if I didnt express myself.– MontyCommented Dec 19, 2017 at 16:19
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@lungj could you expand a bit more wealth inequality question is answerable as a technical question– MontyCommented Dec 19, 2017 at 20:40
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The question as to who will get rewards from staking is answerable. The answer to that is "the rewards go to those who are staking". So someone who has nothing cannot stake, thus increasing inequality. And, those with more ether can stake more (if only by pretending to be a lot of smaller individuals). And, therefore, the answer to the question of whether someone holding more ether will get more ether as rewards is likely "yes". OTOH, there are many other economic effects that can take place (especially given some of the proposed mechanisms), so it's hard to say what the result of will be.– lungjCommented Dec 19, 2017 at 20:45
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@lungj thanks for the answer. I have to review Casper a bit more in detail.– MontyCommented Dec 19, 2017 at 21:14
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1 Answer
At some point you're right, as ETH stakeholders will more likely be chosen to mine the next block of the chain, the risk you describe exists.
However this is a problem that already exists also with PoW. If we take bitcoin, a small minority of miners represents a big majority of the hashpower. Why ? Simply because to be able to compete with the biggest mine farms you need to deploy an infrastructure you'll need to inject a lot of money to build it.
Also, something to consider is that maybe there is not perfect consensus, and different consensus should be deployed depending on the state and maturation of a blockchain.
PoW bring it's bunch of limits, as PoS & dPoS seems to bring its own bunch of limits, etc.
Consensus debates are a deep subject, we could consider at a still experimentation maturation, but that makes it nonetheless fascinating.
i'll leave you here a topic of reddit where this topic has been debated but pretty sure you'll find tons more on many places ( blogs, bitcointalk,etc. )
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However, the fundamental difference with PoW is that the miners have to invest both hardware and energy to get the rewards (even though there can be some sorts of centralization). In the case of PoS, big stakeholders could just commit most of their ETH to get the mining rewards ( probably the same strategy of not-selling as without PoS)– MontyCommented Dec 19, 2017 at 16:26
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1Yes they could, however i'm not sure committing forever is the best strategy. If regarding the demand there is too few tokens circulating, the fees will become quite expensive too as we have to pay for the gas with ether. If this happens, then smart-contracts might be deployed on a less expensive chain.– AsoneCommented Dec 19, 2017 at 16:35
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The best strategy for who? You should acknowledge that any participant of the network has its own best strategy.– MontyCommented Dec 19, 2017 at 16:44
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