On July 10th, Odaily and BlockBeats. The co-hosted StakingCon — Staking Ecological Conference was held in Beijing as scheduled.
F2Pool founder & Cobo co-founder Shenyu delivered a speech on "PoW and PoS Status and Essence". In the speech, Shenyu examined PoW and PoS from the perspective of technology and financial tools, and pointed out two consensuses Mechanism problem.
He believes that the PoW consensus mechanism has two obvious features: it is easy to verify, and it relies heavily on input outside the system. It is essentially a medium-term call option. From another perspective, it is an obvious arbitrage behavior; After 10 years, there are still some problems: chip and energy oligopoly, cyclical risks, and the separation of the three powers of blockchain system governance.
And PoS is the input in the system, which is essentially a low-risk national debt of other countries. It is bound to form a competitive relationship with other open finance, thereby forming an effective interest rate market. The issue of long lock-up periods.
The following is the text of the speech:
The following is the text of the speech:
Hello everyone, I am Shenyu.
We founded the first Bitcoin mining pool in China in 2013. In 2017, we founded Cobo Wallet because we were optimistic about the development of PoS. We have been serving the PoW field a few years ago, and recently we have been doing iterations on the PoS side. It is very coincidental. across these fields. We have always insisted on providing the most important services in the industry, and building some infrastructure for upper-level services.
What I will share with you today is the PoW and PoS consensus. Everyone knows that the blockchain is formed by a series of blocks connected end to end. How to determine the next block? In the PoW consensus mechanism, we constantly calculate and search for random numbers. Once the current difficulty requirement is met, it is a legal block, and we will record it. A blockchain is formed.
PoW has two characteristics: one is that the consensus algorithm is required to be very easy to verify, and if it is not easy to verify, the workload will increase; second, it is an input outside the system, and we need to constantly crack it, which consumes a lot of time. energy.
Looking back on the development process of PoW in the past ten years, from the earliest CPU mining, GPU mining was iterated, and ASIC professional mining chips appeared after 2013. Today, the entire PoW industry has basically evolved from the most upstream In the chip industry, professional ASIC chips are produced by manufacturers such as Samsung, and mining machines are produced by Huaqiangbei, which are transported to low-cost mines and connected to the Internet, and each block is generated through a mining pool. This is a PoW blockchain. .
What is the essence of PoW? First of all, we emphasize that it is very heavily dependent on the input outside the system. From a financial point of view, its essence is a call option for the PoW currency. If once the miners have mining behavior , it will form an asset, which itself is optimistic about the medium-term future of the asset; from another perspective, it is a kind of arbitrage behavior, in fact, it is the profit between the two curves, the first curve is called the system Inside, the second curve is the market price of the currency, because it depends on the input of chips and power resources in the real world. The fluctuation rate of the blockchain industry is very exaggerated.
In the real world, chip production capacity and power resource capacity are far from following the rapid price feedback, which leads to a very exaggerated arbitrage space. To give an example, in early January of 2019, we saw a lot of media news reports on the sale of mining machines at a low price, but at this point in time today, the value of these mining machines has increased by four to five times. Because the price has risen, but the production speed of chips in the real world lags behind seriously and has price fluctuations, and the production cycle of chips has a very long cycle, so from the perspective of arbitrage, it is a kind of non-deterministic arbitrage.
PoW has been successfully operated for ten years and has solved many problems, but we also found some typical problems during the operation: the first problem will essentially form a monopoly effect, we know that the global There are only a handful of chip manufacturers, which is the biggest centralization of the entire blockchain industry. Assuming that once TSMC does not provide chips, this is a big problem. Everyone is pursuing cheap power resources. In the physical world, energy accumulation is limited. Like Xinjiang, these have led to the monopoly of PoW. Because it is uncertainty arbitrage, there is a very strong periodic risk. In the bear market At that time, a large number of mining machines were sold off, causing the mining machines to be at a weak node.
The third is the separation of rights between miners, developers and token holders. In the expansion cycle of the past few years, we found that it is difficult for users to express their voices with such a structure, so this is a problem with PoW. In the current PoW market status, Bitcoin accounts for two-thirds, leaving Ethereum and other public chains to share a small share.
Then we look at the PoS consensus.
The PoS consensus is an evolution based on PoW. It relies on the input in the system and does not rely on any physical resources. At present, it is probably such a status quo. There are more than 80 public chains supporting it, and more than 8 billion US dollars of support have been locked. The average annualized return is 10%, and it is expected to generate $1 billion in new currency.
PoS is an inflationary income. The income we obtain is originally generated on the blockchain, which can be compared with the actual national debt rate. It has a risk point, which is a risk of exchange rate, so we think that PoS is A low-risk government bond of another country has an exchange rate difference.
Since it is an asset of national debt from a financial point of view, it is bound to compete with other financial derivative services, because there is some room for arbitrage, and it is still in a very early stage at present.
There are actually some problems with PoS. The first problem is that the threshold for ordinary investors to participate will be relatively high, which is not friendly to small currency holders. The second problem is that PoS directly controls the private key. The model of the hot wallet of the chain business, such a model has the possibility of being attacked by a large amount, so nodes need to protect the security of assets; thirdly, because the market price of the blockchain fluctuates, and it generally has a lock-up period, resulting in a long-term Coin users have an opportunity cost.
In response to the above problems, our Cobo Wallet is also thinking about how to provide better services.
For the first problem, we split assets, and each user can participate in each Staking currency with a very low threshold; the second is to solve the problem of core asset security, we use hot and cold wallet isolation and encryption At the same time, there is a complete and mature operation method to ensure the security of the nodes; the third problem is the problem of the lock-up period. In fact, we will have a new product online in the future, which can solve the problem of liquidity. sexual risk.
Let's compare PoW and PoS. We use a large number of mining machines to perform violent calculations. Once we find the random number, we submit it to the mining pool. Once the mining pool finds such a legal block, we form a blockchain; in PoS In the field, users cast their voting rights and select some representative nodes, and these nodes form a consensus to generate blocks.
What everyone is concerned about is how we, as an ordinary investor, can participate in the ecology of PoW and PoS. In PoW, if there are very high-quality power resources, it is actually very competitive. If we do not have reliable power resources, we can choose very reliable cloud computing power and hosting platforms. In fact, we also mentioned that the essence of PoW is a medium-term call option, so we may have some financial derivative services in the future to directly allow PoW to meet everyone's investment needs through the most essential options.
In PoS, the simplest thing is that we are optimistic about certain currencies to directly participate in this service and obtain stable inflation returns; now in the early stage of PoS, there are actually a lot of currencies that actually have a series of derivatives using financial tools The way of arbitrage, so that we can try the PoS ecology without suffering currency price fluctuations.
