Vitalik Buterin announces new Ethereum switch route: PoS+PoW hybrid implementation

After several years of development, Ethereum has developed a new algorithm upgrade plan that will keep its entire network synchronized.

Ethereum founder Vitalik Buterin recently released a rough outline of the planned implementation, noting that Ethereum network developers will first start with a "hybrid" system - a mixture of Bitcoin-style proof-of-work (PoW) mining and the much-anticipated and experimental proof-of-stake (PoS) system Capsper (created by Buterin).

The plan effectively means that Ethereum will begin alternating between the two systems, PoS and PoW, so that some transaction blocks (1%) are secured by PoS, while the rest remain in PoW.

Buterin and ethereum developer Vlad Zamfir have been working on implementation plans that use different ideas to achieve the same goal. The result is that the ethereum network is choosing the more conservative of the two possible paths forward, according to Karl Floersch, a blockchain engineer at ethereum startup ConsenSys and a programmer who worked with Buterin on Casper.

Floersch told CoinDesk:

"What Vitalik has proposed is a working version that is available, but in theory is probably less revolutionary than Vlad's implementation plan."

Because he believes Buterin’s Casper implementation can enter production faster, it will be used in the first phase of Ethereum’s evolution.

If implemented, this would be the first time PoS has been used in a live Ethereum platform. It would also be a large real-world test of PoS, allowing the cryptocurrency community to determine whether the algorithm is as superior as its proponents claim.

The goal of this potentially revolutionary change to PoS is to reduce the cost of electricity needed by Ethereum and reach agreement on network transactions and contract states. However, given that the PoS switch has been delayed several times, skeptics see this PoS+PoW hybrid implementation as the latest evidence that PoS cannot be fully implemented on Ethereum.

Others believe that the hybrid implementation is a safe bet, given that the Ethereum network has a market cap of nearly $9 billion.

For example, blockchain consultant Ciaran Murray called the move a “precautionary” measure, while Buterin said the hybrid implementation was a “stepping stone” that he expects to happen after ethereum enters its third development phase, “Metropolis.”

Buterin told CoinDesk:

“From a development perspective, this will be our main focus as we move into Metropolis. We are currently working very actively on a prototype using Python.”

Virtualized mining

The big idea behind PoS is to “virtualize” the Ethereum mining process.

In PoW, miners calculate the answers to puzzles at an incredible speed, a process that consumes a lot of equipment and electricity. In PoS, participants also need to invest money in the system, but without electricity and equipment. With Casper, virtual miners, also known as validators, need to submit funds to the system, and if they do not follow the consensus rules, they will lose their deposits.

Recently, as the theory of the algorithm has advanced, Ethereum Foundation formal verification engineer Yoichi Hirai has been running Casper scripts through a mathematical bug detector, a process known as “formal verification.”

According to Hirai’s formal verification work, he is using this mathematical tool on smart contracts and “has not had any surprises since deployment.”

Given that smart contracts cannot be changed after they are deployed, developers are taking extra care, and the same is true for Casper, which is implemented through smart contracts.

Casper Phase 1

In the first phase of Buterin’s plan, PoS would be used as a “checkpoint” every 100 blocks, providing further proof that the block stores the correct transactions (developers call this “finality”).

Floersch is currently writing “fork choice rules” for the Python Ethereum client Pyethereum. He explained that these rules outline how validators determine which Ethereum blockchain to use. Validators see the blockchains in front of them and make a choice based in part on the amount of ETH committed to each chain.
If the validator makes the wrong choice, then they will lose their funds.

Floersch said:

“You can see how it forms consensus, or how it forms a single chain, rather than a bunch of chains.”

Casper developers will publish this smart contract on Ethereum and create an official Casper account into which anyone can deposit ETH as long as they want to participate in this virtual mining.

Once the Pyethereum version is complete, the development team will merge it into the Casper daemon, and eventually this package will run in all Ethereum clients, whether it is Geth or Parity. Then, Phase 2 will deploy this process on a large scale.

Is this a good idea?

The question of whether PoS can work is old news, and opinions have been split among those who previously bought into the cryptocurrency.

But opponents have reason to worry. If the network doesn’t work as planned, it’s possible that transactions won’t be approved as users expect, or that smart contract rules won’t be added. That’s why Ethereum engineers are trying to develop a property called “finality.”
Others have also expressed skepticism about the hybrid approach.

Charles Hoskinson, CEO of blockchain technology company IOHK, said:

“I’m not entirely sure about the wisdom of a phased transition. You either have confidence in your consensus algorithm or you don’t.”

It is worth noting that IOHK is actively involved in the development of Ethereum Classic, a competitor to Ethereum.

He continued:

"Adding an untested or insecure component to your network is a very bad idea. And where is the peer review? What conference did they submit a proper white paper to? What feedback did they get?"

But for some in the new field of “cryptoeconomics,” the back-and-forth is exciting. Floersch mentioned that Casper’s underlying marriage of economics and cryptography could be applicable to other global problems.

“Sure, PoS is a cool problem, that’s great. But I totally think there will be other cryptoeconomic applications, and I think this is a whole new area of ​​mechanisms that use economics to provide desired outcomes.”

He concluded:

"Casper is the first to do that."