Ethereum Casper is a distinctive system that intends to eventually convert Ethereum into Proof of Stake (PoS) which was originally launched in 2015 as Proof of Work (POW). The research on Casper was being led by two brains namely Vlad Zamfir and Vitalik Buterin to mitigate the prevailing issues with the Proof of Work protocol. It also introduces a fresh consensus protocol where validators can bet on the prospective future of the blockchain which in turn will provide a proportional reward if the respective blocks get appended.
Issues with Proof-of-Work
Over the years Ethereum has been looking forward to switching to the Proof of Stake algorithm as there were many disparagers associated with the Proof of Work.
- The PoW consumed an intensive amount of energy to keep the network secure and operational.
- The PoW led the way for the Centralisation of Mining which stands irrelevant amongst the existing notion of decentralization.
Bitcoin has been largely plagued by PoW for several years whereas the other cryptocurrencies combat the issue by ensuring their ASIC resistance. Thus, it is believed that conversion to PoS will solve the problem up to an extension only if they certainly required alteration is made to the PoS algorithm for mitigating the “nothing at stake” problem which presently acts as a plague for its network. In most cases, validators are not punished for multiple validations by them which results in the piling of assets. Thus, Casper aims to serve the growing need of an era.
Integration of Casper
Casper is contrived to be implemented in stages that will lower the risk on the network. Thus, the research findings & execution flow has been split up into two faces as follows:
- Casper FFG: It is completely referred to as Friendly Finality Gadget and is the first stage with the blend of both PoW and PoS where the former acts as the main algorithm for securing the network while every 50th block will be validated using PoS. It is a consensus hybrid mechanism where the works of miners are immediately verified by the validators. Being the first stage it will not be observed as the big shift from the prevailing Proof- of -Work System.
- Casper CBC: It is the second and comparatively complex stage which practices on the protocol of correct –by- construction. Casper CBC is the way to design a system with a set of properties that are partially defined and provides the option to change the parameters if any malpractice is found. This system is been regarded as “safety oracle “or “ideal adversary” which tunes best with the rhythm of the PoS system.
Implementation of Ethereum
Casper has been implemented as a process where the malicious acts will be taken into consideration and punished for. This is expected to be practiced in the following ways:
- The validators will be allowed to stake their portion in the form of Ether.
- After staking, the validation of blocks will begin and if found suitable will be added to the chain of block backed by the bet on each stake.
- The appending of the block will fetch certain significant rewards to the validators. In case the validators are found acting in a malicious manner under “nothing at stake” protocol, then they will be reprimanded and their stake will be splashed off.
- In the Casper PoS the validation, proposing, and voting can be successfully incorporated rather than mining. With the varying size of holdings or stake, the weight of each vote varies as well, similarly, the concept applies to the Ethereum ecosystem as well.
- The voters have to have a stake in the proposal, no personal interest with 51% attack will be in notion. • Sharding under the Ethereum network with PoS becomes convenient.
- As per the proposal laid down so far indicates that the initial requirement will be of 1500 ETH which is not a small amount considering today’s prices of $157 each.
Why Ethereum Casper?
The consensus implementation of Casper and Proof- of -Stake is generally believed to fetch significant benefits with the introduction of a recent concept as follows:
- The consensus system is expected to make the Ethereum widely decentralized as it obtains great hash rate concentration. At present, in Bitcoin & Ethereum on an average 4 miners control 50% of hash power which otherwise will increase the 51% attack.
- PoS has the potential to diminish the loopholes of PoW as PoS consumes less energy & uses only for the continuous running of systems. Thus, it is less expensive and solves the hashing algorithms.
- The system is believed to ensure better security than PoW since the wealth of the validators will be stored and stacked in the form of an asset that aligns proportionally with their incentives. This will economically justify their concern for avoiding the attack on the network and devaluation of holdings.
- It would also provide assistance in scaling the Ethereum roadmap which will make the Sharding much convenient to be implemented.
Finality in Ethereum Casper
In general sense Finality refers to the situation where once any particular operation has been undertaken, and then such operation tends to be etched in the history without any further scope of reverting. Ideally, no system can ensure 100& finality as there is always a possibility of hacking the system or other risks are involved. So, the question that arises is, how does Casper provide Finality? As per Vitalik Buterin two- thirds of validators make odd assumption while betting and finalizing the blocks because of which there is a very minimal incentive for them to collude the network setup as they might put their own deposits at the stake of losing if they do so. However, if double finality pertains the validators will be provided with the choice to go for anyone blockchain as per their accord. The chain getting majority would dominate the other which in long run will end up as a hard fork rather than providing space for reversion.
The future of Ethereum Casper is quite prominent as it is potent to curb the gap with the required testing, research, and security boost which can lead to the transitional revolution in the crypto ecosystem. The plan to move towards PoS accelerates the growth of cryptocurrencies as it brings in the convenient procedure and protocol majorly considering the Ethereum blockchain at present.