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Vadym Kurylovych predicts the possible impact of Ether PoS

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Vadym Kurylovych predicts the possible impact of Ether PoS

May 09
03:46 2019
Vadym Kurylovych predicts the possible impact of Ether PoS

Vadym Kurylovych, CEO of STEX, predicts the possible impact of Ether PoS
Vadym Kurylovych, Founder & CEO of Stex and a serial entrepreneur, shares his views on the impacts and benefits of Ethereum’s new proof of stake algorithm. Vadym is a blockchain industry veteran having spent 15+ years building multiple products.

Recap of Proof-of-Work

In order to keep a blockchain running smoothly, it takes a lot of computing power to verify new transactions. Mining is currently used by both Bitcoin and Ethereum to maintain their blockchains.

One of the main issues with mining is the vast amount of electricity that it uses. Vadym Kurylovych, Founder of Stex has estimated that the amount of electricity needed to mine Bitcoin and Ethereum runs up a $1M daily. Another study recently showed that the amount of electricity consumed by the Bitcoin mining network is comparable to the energy used by all of Ireland.

If things continue as-is, cryptos are going to be a big problem for the environment.

Ethereum has a plan to fix that.


Mining fills a big need — providing consensus among network participants regarding the state of the world of historical and current transactions. Because miners solve complicated puzzles using transaction information and cryptography, what they do is referred to as proof-of-work.

There are, however, other methods for getting a group of disparate participants to agree on transactions. The most popular of which is referred to as proof-of-stake.

Explaining PoS Vadym Kurylovych said, The network here can use a pool of miners rather than relying on miners to solve heavy complex puzzles. Validators are people that are willing to stake their cryptocurrency on the blocks of transactions that they claim should be added to the public blockchain.

When someone is selected to validate a block (or, in some cases, propose a set of transactions that should be added together as a new block), they stake some of their cryptos on their proposal. Users would be chosen as the lead to validate a new block on a pseudo-random basis, weighted by the amount of crypto they’re willing to stake.

As blocks get added to the chain, new validators then stake additional crypto on new blocks that are added on top of prior blocks. As chains grow, validators are incentivized to validate the chains that have the most crypto staked in their contained transactions, as well as to validate chains that contain crypto staked on previous blocks that they’ve put crypto up against.

As more and more blocks get validated, these validators get a portion of the transaction fees that are included in each transaction — so in a sense, they’re earning interest on the crypto that they’ve staked. Assuming that they’ve staked crypto on valid transactions, they’ll be able to reclaim their original crypto and their claimed interest after some point in time has passed (or when they remove themselves from the validator pool).

The Implications

Because proof-of-stake doesn’t involve competing to solve heavy duty complications, it eliminates a large part of the energy requirements needed to mine.

Talking about the implications Vadym mentioned – it also introduces a few interesting concepts, such as the idea of staking Ether on new transactions, losing one’s stake if they try to validate a fraudulent or otherwise incorrect transaction, eliminating potential threats such as a 51% attack, while introducing new threats specific to the new protocol.

If and when Proof-of-Stake is implemented, it would be a major shift in the world of cryptos. There’s no telling how the market will react, and it’s likely it would need to be done as a hard-fork, causing a good amount of volatility.

As they have decided now to switch to POS it is very interesting implications for investors in Ether.

Many are suggesting that since there’s no longer a large need to compensate miners with new tokens, the creation of new Ether may be significantly or completely eliminated. In Kurylovych’s view, it could even mean that existing Ether is eliminated when bad transactions aren’t included into the main blockchain.

This could mean that the supply of Ether will significantly decrease, causing a dramatic increase in its value. On top of that, any user can now stake some of their Ether in order to validate blocks, earning interest on their existing stake.

Sharing his scepticism Vadym said, since new Ether will likely no longer be created by mining, it could mean that existing holders of Ethereum will benefit disproportionately from the process of proof-of-stake due to their ability to put their existing Ether to work at a larger and faster stake than newcomers (this mostly applies to retail investors and not institutions with large amounts of capital).

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