Co-founder of Ethereum and a major pillar of crypto community Vitalik Buterin tweeted earlier that Proof of Stake (POS) algorithms should be designed to have safeguards against 51% attacks and any attack should be dealable mid-level nuisance rather than a disaster.
I think PoS should be designed so that 51% attacks are a recoverable medium-sized nuisance and not a stop-this-at-all-costs nuclear disaster. And I have some ideas for how to push the eth2 design in this direction.— vitalik.eth (@VitalikButerin) January 29, 2020
He further added that he has some design ideas for the next iteration of Ethereum (also known as Ethereum 2.0) to contain such safeguards. This is a significant statement in light of the ETH 2.0 stability arguments and debate on the effect of an attack on Ethereum and its possible impact on DeFi products, which have hundreds of millions of dollars locked in them. This instills confidence that the Ethereum team is aware and recognizant of the potential problems and working hard to make a smooth transition to the next version of the blockchain platform.
What is Proof of Stake?
The algorithm which relies on interested users locking in their coins (or stake) to manage and run the network. The stakers receive the staking rewards for their contribution towards running the network, mostly in terms of fees paid for transactions on the network. It is called Proof of Stake because stakers can lose their coins (or stake) if they act in contrary to the health and interests of the network. It is much more efficient and resource friendly than competing Proof of Work (POW) which relies on lots of expensive resources, to run the network.
The 51% Attack
The fifty one percent attack relies on miners or stakers controlling majority of the hash power on the network and acting in a malicious way to harm the network. It doesn’t have to be any single entity (since its impossible for any single entity to have such processing power) but different entities coming together and conspiring against the network. If successful, 51% attacks can disrupt the network, since malicious actors can start to reverse transactions even after they have been confirmed or double spend tokens or disrupt the network in other ways.
How Will Ethereum Prevent Proof of Stake (POS) 51% Percent Attack?
The details are still murky, since Ethereum 2.0 is under development and a lot of details are yet to be revealed. But the current most safeguarded network Dash Cryptocurrency may provide a clue to resolving this problem. Dash isn’t exactly a Proof of Stake (POS) coin, it relies instead on Masternodes (MN). However, for protection against 51% attacks, it relies on a mechanism known as “Chainlocks”. They work by randomly selecting a quorum of 400 Masternodes, generate consensus on the latest valid block and sign it, preventing chain reorganization, by any malicious actor. Perhaps Ethereum could rely on a similar mechanism to thwart 51% attacks, though it remains to be seen as to what exact mechanism will be employed by the Ethereum team.
Ethereum 2.0 – The World’s Computer
The next iteration of the most popular and widely used smart contract blockchain platform, Ethereum 2.0 is slated to properly launch sometime in 2022. The Ethereum 2.0 will be a separate blockchain, developed in phases and will features improvements in speed, execution, security and scalability. It will also introduce a transition from Proof of Work (POW) to Proof of Stake (POS).
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