Proof-of-Stake is less wasteful

When someone says “Proof-of-Stake is less wasteful”

Image of a diesel generator powering an EV charging station.

The prelude

What the tweet aimed to convey was simply Paul Sztorc’s assertion that “Nothing is cheaper than Proof-of-Work” from perhaps the most influential thought piece in public discourse on the economics of Proof-of-Work versus Proof-of-Stake.

Point David Schwartz: PoS gives a bigger bang for your buck

Counterpoint Paul: You can’t control the size of block rewards

Counter-counter-point Eric

Point Dan Robinson: Money is not a resource

Let’s agree as an industry to always use cows and volcanos for these analogies.

Counterpoint Paul: Money is actually a resource

Counter-counter-point Eric (#1)

The way I understand Paul is by thinking about how entropy works. In thermodynamics, we say:

Counter-counter-point Eric (#2)

So the point above wasn’t actually a counterpoint, I just agreed with Paul. Now let’s attack Paul with a real counterpoint.

Staking yields drop when the size of the staking pool grows from increased competition (source).

When someone says “Proof-of-Stake is less wasteful”

Going back to this image; the reason it was humorous was because it captures the argument that Proof-of-Stake is just an obfuscated form of Proof-of-Work.

What does this mean for PoW?

From a narrow, economic point-of-view, there does seem to be advantages to PoS which I had not fully considered before, but I still believe that Proof-of-Work is the most robust way we have to secure a chain, and the soundest way to architect a cryptocurrency.

Courtesy of John Adler.

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