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NewsEthereum 2.0

What We Learned about Proof of Stake at Devconnect

We caught up with Merge devs at Devconnect to discuss how Proof of Stake will make Ethereum’s economic model more durable, its infrastructure more scalable, and its consensus engine more sustainable.
by Clarissa Watson, JT RoseApril 26, 2022
Devs Behind the Merge template

The ConsenSys Protocols and Infura teams recently attended Devconnect in Amsterdam and met with some of the core developers working on Proof of Stake (PoS) to understand what to expect in the lead up to the most consequential upgrade to Ethereum in history, the Merge. 

Check out our conversations from Devconnect with Francesco Andreoli, Developer Community Lead at ConsenSys, Tim Beiko of the Ethereum Foundation who coordinates AllCoreDevs, Matt Nelson, Hyperledger Besu Product Lead, and Chris Anatalio, Platform Evangelist at Infura and the key insights from their discussion below:  

Part 1: How the Merge will change Ethereum. Click the video to see the full conversation.
There are four pillars of Proof of Stake 

“The Merge will change Ethereum in four related ways. [PoS] will make the Ethereum network more diverse and open: more clients and diversity of validators and rich set of L2s, which combined make the network healthier and more scalable. [PoS] will make Ethereum more energy efficient: the Ethereum Foundation’s estimates a 99.95% reduction in the network’s carbon footprint. [PoS] will make it so Ethereum can function as sound and secure money; using new crypto-economic penalties, rewards, and supply constraining mechanisms, Ethereum will become more economically secure for end users and DeFi protocols… the network will make this a seamless transition. Rigorous testing since the Beacon Chain launch and mechanisms like the Engine API work together to ensure seamless developer experience.” 

– Matt Nelson, Hyperledger Besu Product Lead

Proof of Stake migration for Infura developers will be seamless

“For Infura users, the Merge will have little impact on how you use the service… You should expect to keep using our Ethereum API as you are today. The architectural changes from the Merge mean that little will change in terms of the API calls you can make to the JSON-RPC API on our network, and the data you will get as a result. There will be some naming convention changes: what we currently call the Ethereum API will become the Execution Layer API and what we call the Eth2 API will become the Consensus Layer API. We will be updating all our docs to include the changes to methods and parameters that will be as a result of the Merge.” 

– Chris Anatalio, Infura Platform Evangelist 

Client diversity is crucial for network resilience ahead of Proof of Stake

The Merge presents an opportunity to revisit our client architecture and encourage the adoption of minority clients on both the execution and consensus layers. ConsenSys has developed two clients, one for each layer, which we’re managing as open source projects. The ambition here is to have a healthy set of options for individual and institutional users, with each client having 20-25% market share so that, if one has an issue, it doesn’t impact the health of the network. These clients were designed to be interoperable with other client options and we’ve developed a client-agnostic remote signer [Web3Signer] that works with any of the Ethereum clients.” 

– Matt Nelson, Hyperledger Besu Product Lead

The Ethereum Foundation’s Client Incentive Program will reward maintenance of production grade clients, while the Protocol Guild will distribute funding for builders 

“The Protocol Guild is [a] self-organized group of core developers who maintain the protocol. That includes client developers, researchers, and some coordinators. We instrumented a multi-sig on Ethereum to weight each participant’s contributions (to git repos) and make it easy for projects that build on top of the protocol to donate funding that vests over time and can be distributed to the build and maintain the protocol in accordance with their contributions. Some of that funding is in ETH, some of it is in DeFi tokens, so it allows these talented devs to commit themselves to improving the core protocol and still capture some of the upside [from] the projects that are building a top of their work. This will be a journey; governance will emerge over time and we have a lot of design issues to think through: how and when to add members, how to weight contributions, so we’re working through how to codify that logic in smart contracts and this year will be a pilot, which hopefully others can learn from.”  

– Tim Beiko, AllCoreDevs at Ethereum Foundation 

Proof of Stake will dramatically reduce Ethereum’s carbon footprint

“The Merge and the adoption of Proof of Stake [will] dramatically reduce the physical energy required to secure the network, opting instead for a model where the network is secured by validators’ economic stake in the protocol. We expect the move from mining to stake-based validation to reduce the carbon footprint of Ethereum by more than 99%.” 

– Tim Beiko, AllCoreDevs at Ethereum Foundation 

Proof of Stake will make Eth more sound and secure Money

“Mechanically there are two big changes here.

The move to PoS reduces the energy cost of individual validators, reducing the rewards they require. That means fewer tokens will be minted. We expect something like a 90% reduction in new supply. 

The second mechanism is what Tim detailed earlier, known as EIP 1559, which is burning a significant portion of the gas fees collected by the network today. Taken together, what’s happening is that we’re reducing issuance and burning supply at the same time; if that current patterns persist, post-Merge we’ll actually be burning more than we’re minting, which means at the point of the Merge we’ll see the most Eth that will ever exist and it will slowly decrease afterwards. This is expected to have a deflationary effect on Eth. 

Design wise, this was done to improve the network’s economic security. Now many listeners will be interested in that as holders of ETH, but also has profound impacts for DeFi. New DeFi protocols and products will look to build on the network with the highest security. After the Merge, Ethereum’s security comes directly from the value of staked ETH. This is its “economic shield” as the value of staked ETH grows, so too does the cost and feasibility of attacking the network. With over 350,000 validators and over $30 billion in ETH staked just on the Beacon Chain today, Ethereum will be by far the most secure blockchain out there, which makes it an easy choice of platform for DeFi.” 

– Matt Nelson, Hyperledger Besu Product Lead

Test your dapps and infrastructure ahead of the Merge to support a seamless transition

“The Engine API facilitates the interaction between the existing Ethereum clients that many developers work with today [like Geth and Besu] and the new consensus layer clients that have been developed in the last year and half. It makes it so that providers like Infura don’t have to make changes to the developer experience. It also means developers don’t need to migrate infrastructure, change APIs, or update the smart contract or dapp logic. One day there will be a Proof of Work block and then 12 seconds later there will be a Proof of Stake block and developers should not really know the difference.”

– Tim Bieko, AllCoreDevs at Ethereum Foundation 

As the Merge testnets are finalized and we will be in communication with our users about what testnets will be supported post Merge so they can plan accordingly. Our goal is to ensure that all impacts to the end user are minimal, and we will keep in communication with all of our users so they have the confidence that what their dapp, their marketplace, their bots, whatever they are building works without interruption.” 

– Chris Anatalio, Infura Dev Rel

Keep up with Merge and Proof of Stake updates

For regular updates and news on the Merge, visit the ConsenSys Merge Knowledge Base, where you’ll also find Ethereum 2.0 archives with key milestones achieved and other essential resources for developers.