If they invested $41M in ethereum then yeah Iâd say they would have 1,000X the power to validate transactions.
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Yes but counter groups are forming.
The way I understand it the more you stake the better the chances you will become a validator. Letâs say you stake 10,000 eth and another stakes 32 eth, Well the guy with 10,000 will win out because the theory is the more you are in the less chance you will try to degrade the network. Yes it could happen but it would take alot of stakers to do it.
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Yes there are even odds per stake but if your consortium puts together more stakes your adding up your odds in the numerator as I understand it.
There is more to it. Your hardware plays a role in how fast your machines are working. Your software might play a role but that I have not read about.
Donât forget the other side of that virtual coin. The more you are in, the more incentive you have to degrade the network in your favor.
And if the âstakersâ all have a big stake, they all have the same incentive.
âPeter
This is actually where it shows up in your linked artcle
âAnnualized interest rates and an inverse square root function are used to calculate rewards in ETH 2.0. In laymanâs terms, this means that the lower the overall amount of ETH staked, the lower the incentives for each validator will be.â
You invest less you get paid less.
Right Peter but if you get enough stakers together to take over the network, The Theory is that you will lose more than the network. They are thinking it doesnât pay to spend a dollar to make 80 cents.
Andy
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Youâre still not thinking like a JC.
Collude with the other big stake holders in the network to basically steal from the smaller guys. For example, transactions of less than 0.00001 coins will be dropped. Any account balances less than 0.00001 coins are too small to manage, so they will be forfeited. Things like that.
The risks to small stake holders are real and significant if only large stake holders can make all of the decisions about how the network operates.
âPeter
Have you studied the Ether network Peter? Is that a real risk or is it something that you are suggesting could be a risk?
Andy
Not in detail, no. But at a high level. The management of various crypto networks varies by the specific currency. This particular risk is probably not a risk to all currencies.
Itâs more of a suggestion based on watching history. In an unregulated market, those with the biggest stakes tend to make the rules - and make them in their own favor. There isnât a whole lot of regulation in the crypto market - certainly not when compared to the stock and bond markets.
Getting back to your original comment to which I was replying: the more you stake the bigger your chances to become a validator. Iâm translating that to mean the more you have invested in the specific currency, the better your chances of gaining some control over the policies and procedures of the currency.
Given the relatively small circulation of most cryptos, and the ability of things like hedge funds or sovereign wealth funds to raise tremendous amounts of capital, it is not at all inconceivable that a large entity could corner the market on some particular crypto. And theyâd only do that for their own benefit, not for the benefit of anyone else. That is the nature of these entities. Pretty much sociopathy unchained.
âPeter
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Ok Thanks Peter, what I understand is that the stakers (validators) havenât any control over the policies and procedures. What they get is interest on their stakes. Many of these validators are made up with many investors and the validator pays them an interest, after deducting a fee for their management, for the use of their Ethereum.
Andy
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Not sure the stakeholders make any decisions on how the blockchain operates. That is predetermined. We are only talking payouts to the stakeholders.
This is critical because the more profitable it becomes the sooner things spiral upward.
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I took a couple of minutes (literally just 2 or 3 minutes) to find out what staking is on Etherium. If you have 32 Etherium, you can âstakeâ those and become a validator. A validator just validates things (not very well defined, so I wonât try) on the blockchain. One Etherium is around $1300 at the moment, so itâs something north of $40k. All you need is some kind of a computer (apparently even a smart phone is good enough) connected to the internet 24/7. Then you run a program on it to validate that nebulous âstuffâ.
In exchange, you get ârewardsâ. Those rewards are never specified, but I would hazard a guess itâs more ETH.
Thatâs roughly what I see also.
What I didnât see is what that ârewardâ rate is. Is it like interest on your stake? Is it a payment per validation? Something else?
Hereâs the potential for misuse - thatâs probably OK with ETH in terms of being a validator. If the reward is more like interest - the bigger your stake, the bigger the reward - those rewards dilute the value of the remaining ETH held by non-stake holders. So the biggest stake holders get more ETH added to their accounts, and that makes all ETH worth just a little bit less. (See stock compensation for similar issues)
But hereâs the bigger issue. Do you really think that large ETH holders donât have any sway over policies and procedures? If you do, I have this nice bridge for sale at a great price!
The single largest ETH holder has almost 12% of all ETH outstanding. The next 6 combined have another 11+%. Do you really think these holders donât have any power over policies and procedures? They may not have it on paper, but they can certainly exercise power by threatening to sell or leave.
âPeter
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Think of it as interest. You stake ETH and get a certain APR (in ETH) in return. The interest rate is not fixed and will vary by for example the total amount of ETH being staked to run nodes. The system is designed to reach an equilibrium. Simplified, itâs like a fixed amount of ETH available to issue to nodes for participating and running the network. Fewer validator nodes online means higher APR, which incentives participation up to a point where the the risk/reward gets less attractive.
Rewards have a dilutive effect, but staked ETH reduces the effective available supply. In any case, the net effect applies to everyone.
Note that this has been many years in the making. Proof of Stake ainât no funky thing invented yesterday. Nodes âexecuteâ and validate transactions, and by design each other. A stake is what it sounds it sounds like: you put something (of value) at stake - i.e. that can be lost if you donât behave. You can get penalized for being offline and verifying wrong transactions. You could stake a billion for some kind of attack if you want, but well⌠stakes would be high.
Interesting! What kind of bridge? But donât try to sell me a barge bridge as ânice low profile steel bridgeâ. Already fallen for that one once. Might have sway long term, but think of ETH as algorithms and protocols that requires a lot of research and consensus to be able to change. Policies and procedures defined algorithmically. Thereâs no central âstashâ of ETH to hand out to nodes - the way it works is built-in and nodes need to speak the same language.
By the way, you donât need 32 ETH to stake. Only if you intend to run your own node in your garage or something. Many exchanges offer staking for example - i.e. someone else running is running the nodes and take a piece of the pie in return.
Kinda. Maybe.
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Traditionally, itâs either the London Bridge or the Brooklyn Bridge, depending on which financial center you happen to be in at the moment. 
This particular way of validation of transactions is not hack proof. You say that validators check each other. What if a few validators collude to alter the validation programming to the benefit of the group? Or what if one individual (or small group) sets themselves up as multiple validators and then does the same. The anonymity that crypto prides itself on would make it hard to tell if multiple accounts are held by a single individual or entity.
Thereâs lots of talk about âdecentralizedâ and âalgorithmâ and âbuilt-inâ. People with lots of money and no one looking over their shoulder have historically found a way to tilt the odds in their favor. Right now, there isnât much regulation of crypto currencies. And there probably wonât be until someone takes advantage of the lack of regulation. I donât know if it will be ETH. And I donât know when. But Iâd put the odds significantly over 50% that some crypto will be hacked in some way by some rich group in the next 10 years that will make big headlines and force various federal and state regulators to take some action.
This particular validation process does not inspire a lot of confidence in me.
âPeter
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Oh well that proves your point. Anyone who has a bridge to sell must be worth listening to. 
Andy
A bridge would be between say KOII and Eth. Just saying 
Hmmm⌠How much for the London Bridge? Thing is, I already bought the Brooklyn Bridge and Iâm not happy with it. It came with a guy that simply refuses to leave.
Disclosure: I like Ethereum when seen as a form of distributed computing that can solve real world problems. However, Iâm not very fond of everything being turned into speculative mania with pump-n-dump schemes, leverage, futures, options and whatnot. Iâm not invested in ETH or any other crypto, and happy to watch the sticks and stones factions from a safe distance.
(Thereâs a remote possibility that Iâm invested in an unknown amount of Bitcoin. I read the original white paper and I have faint memory of trying it out when it arrived, but quickly got tired of having something running just for the hope of gaining a buck.)
Nothing is hack proof. Iâm a computer scientist and security expert, and have seen and done a lot funky things since the dawn of internet. Released my first anti-virus tool in 199x, simply because I got so fed up with a virus pestering floppy disks and hard drives that I decided to reverse engineer it myself. I have air gapped computers filled with a minor zoo of nasty stuff, including state actor malware designed to attack critical infrastructure. The state of things are quite depressing when seen from my eyes, and feels like itâs only getting worse.
Anyway, I get what your saying. Thereâs a lot of fancy talk. When I talk about algorithm, built-in and so on, however, itâs me trying to dumb it down. Couldnât find a good explainer that I would vouch for.
In essence, Proof of Work, Proof of Stake and Proof of Space are approaches to address the problem of Consensus to mitigate the Sybil attack threat, i.e. kinda the threat youâre describing.
PoW is inherently easier to describe and define than PoS. The devil is in the details, though. Lots of cryptos have crashed and burned, regardless of type of consensus mechanism.
At the time being, I worry less about the âvalidation processâ for one simple reason: It makes little sense trying to crack the consensus algorithm when there are tons of other means that are trivial in comparison.
Not having a lot of confidence is generally a good idea.
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