If you been around Ethereum, the 2nd biggest cryptocurrency with its market value. You might know about its working and foundation a little bit.
Of course is not hard to understand how these ICO working on ERC20 works — They work on the foundation of ethernet blockchain.
The current ethereum combine of the POW & POS system called as a hybrid blockchain model. Where miners are entertained to mine the block to confirm the transaction.
And thus Ethereum going to utter with the milestone named as Ethereum Casper, moving the existing POW to POS consensus.
Problems facing by current ethereum blockchain:
- Scalability issue.
- Works on hybrid POW & POS.
- Transaction gets stucks with more no. of transactions goes into the system.
- Can easily be controlled by large groups like pool or exchange.
- Miner eats up more and more energy to keep the network live.
A protocol which the Ethereum has opted to go along with is what commonly known as Casper. A POS(Proof-of-Stake) protocol which is designed for mining Ethereum, commonly associated with bitcoin.
Though the whole group was engaged in designing the same, Vlad Zamfir is often termed to be the ‘Face of Casper’. By providing tools to the researchers to build decentralized applications, they are making trading and voting more active.
What is Proof of stake?
Proof of stake will make the entire mining process virtual and replace miners with validators. These validators then confirm the transaction on the network and keep the network alive.
- The validators will have to lock up some of their coins at stake.
- After that, they will start validating the blocks. Meaning, when they discover a block which they think can be added to the chain, they will validate it by placing a bet on it.
- If the block gets appended, then the validators will get a reward proportionate to their bets.
You might think that Casper and Proof of Stake Protocol (POS) are same.
However, this perception doesn’t hold as Casper is not considered to be a particular project rather it is an incorporation. A total of 2 research projects that have been recently taken over by none other than Ethereum developer’s team.
Here is what the two main projects of Casper include:
- Casper the friendly ghost: In CBC Protocol, an individual appropriately yet incompletely specify the protocol. Plus, he/she is required to describe properties that a protocol should state.All in all, CBC that stands for Casper the friendly ghost evaluates and spells out the entire future failures that are possible to take place.
- Casper the friendly finality gadget: In the common terms, Finality refers to the fact that once a specific operation has been performed, it gets engraved in history and nothing has the capability to relapse the same.Now you might be wondering how Casper FFG gives finality?Casper has definitely proven to be comparatively effective enough than that of the proof-of-work in terms of finality. Since validators generally place the maximum odd stake to settle their blocks, the probability of attacking the network for them diminishes to a great extent.
Hence, there is less or almost no chance for a validator to act maliciously as it might lose him a lot of money.
Why do we need Ethereum Casper?
Well, I must say to you that the current POW model is not that efficient enough for the large scale. Miners though requires energy, which is nothing but the electricity to keep the network breathing. Also, Mining Hardware needs to be upgraded regularly to resonate with the current level of difficulty that the ethereum network urge.
Apart from its amazing benefits, Casper is designed to tackle some of the risks that can arise in POS protocol. They are broadly listed below-
- Usually, the validators gamble a certain part of their Ethers as stake and post this, they begin authenticating the blocks. In short, while they explore a block that as per their thinking is capable to be integrated into the chain, they authenticate the same by placing a stake on it.
- If the blocks chosen by the validators get added, the validators become entitled to receive a reward in proportion to their stake. On the other hand, if the validator follows nasty and malicious technique to do “nothing at bet”, they instantly get chastised with their entire bet getting slashed.
- Hence, the validators are required to be careful enough while betting as their inactiveness and lethargy behaviour might result in the loss of their stake.
As its very clear from the above-mentioned facts that Casper has been developed to ensure the safety and fair stake of the validators. Any party that tries to act in Byzantine manner is straight away penalized by slashing off their bet.