Category Archives: Politics and Economics

Ethereum Mystery Transactions

Maybe they were buying Crypto Tulips?

In the land of Nakamoto, “the code is the law”, and everything that happens is, by definition, what should have happened.

Until it isn’t.


This month saw some peculiar behavior on the Ethereum blockchain. Even more peculiar than usual.

As Paddy Baker and Wolfie Zhao report, “someone” executed a transfer of 0.55 ETH (~$133) and for some reason paid over 10,000 Ether as a fee—over $2 million [1].  The fee was received by a lucky mining pool and quickly convereted into other assets. This has happened twice.

Cool!

Was this an accident?  It’s hard to see any rational reason for paying such fees.  It isn’t even much of a covert channel or way to channel funds, since it is both public and the destination cannot be controlled (it goes to the first miner to claim it).

Welcome to the wonderful world of Nakamoto!

This is the future of money?

This has got to be in the running for the Crypto Tulip of the Year.


  1. Paddy Baker and Wolfie Zhao (2020) ETH Whale Pays $5.2M in Fees for 2 Mysterious Transfers Totaling $82K [Updated]. Condesk, https://www.coindesk.com/whale-sent-130-ether-transaction-fee

 

Cryptocurrency Thursday

Blockchain for Book Publishing

Yet another perennial use case for blockchain is publishing, i.e., delivering content from author to consumer.  The main potential contributions of a blockchain are rights management and payments, especially micro payments.  Variations of this concept have been mooted for “art works” and “journalism”.

Blockchain technology is, of course, peer-to-peer at heart.  It is designed to let a writer sell a story directly to a reader.  No publisher needed, at least for this transaction.

So the question is, what, if anything, do we need a publisher/newspaper/journal/etc for?

In the conventional, legacy world, “publishers” perform a number of roles beyond the distribution of cash.  One of the important functions is quality control and the concomitant reputation and trust.  And reputation is translated into visibility and sales.  In short, there has been a role for a gatekeeper, or rather, many gatekeepers.

Blockchain is specifically designed to eliminate gatekeepers.  So, what should we do?

I dunno.

But I was interested by the headline, “Blockchain to the rescue of small publishers” [2].

At first glance, it wasn’t clear how relevant this project is to the overall question.  Mostly, it’s about rights management and micropayments.  I understand why a publishing company would like to get a slice of the action, but why do creators or consumers need a publishing organization to do either of those things?

A closer look shows that this group has thought quite a bit about ways that a third party publisher can add value and harvest revenue from that value [1]. They use the blockchain as part of an overall system that implements novel services, beyond the catalog of finished products.

First, they capture artifacts that are not published in conventional systems, such as “drafting and editing process”.  These are made available for monetization, perhaps as training materials.

“[The project] seeks to make visible and make valuable these processes of drafting, editing, and illustrating” ([1], p. 2)

Second, they provide a micropayment system to deliver royalties to “all creative professionals involved in the publishing process–namely, the author, editor, publisher and illustrator.”  This “disrupts” the for-fee model, and, they hope, “values co-creation”.

In short, this project doesn’t necessarily rethink what a publisher does, but looks at how to squeeze money out of everything a publisher does.  They also are leaning toward a bit more equitable (and efficient) distribution of the revenue.

Naturally, the system also reaps the benefits of digital rights management as well, enabling finer grained distribution and integration with digital media. You don’t necessarily need blockchain for this, but blockchains are well suited for DRM.

So.

This all looks good, if not completely novel.  In this world, a publishing house is expert at, and provides infrastructure for, things like:

“1. Readership and Audience Engagement

2. Distribution

3. Rights Management

4. Royalty Tracking and Payments

5. Authorship Verification and Co-creation” ([1],  p.14)

The traditional gatekeeping (tagged “readership and audience engagement”) is built on top of rights and revenue and, importantly, management of the co-creation process.

So, yeah, I kind of get it.

Is this enough to “rescue” anyone?  I’m not sure.

In my own experience, if a product doesn’t sell a lot, then there isn’t any “value” to distribute no matter how you do it. Any percentage of nothing is nothing, you need a lot of micropayments to make a living wage. This project slices the pie in a lot more ways, but that doesn’t make the pie any bigger.

What it does do, though, is maybe make possible ways to try to drive up interest and sales.  So, to the degree that a “publisher” gets good at that, then there is a potential win for everyone.

Which, IMO, is the one thing that a publisher really is needed for.

One thing that this project seems to do is put the tools in the hands of the workers:  this technology has the potential to be very cheap and easy to use. If this can improve the game (and revenue) for small publishers, that could have the beneficial effect of keeping publishing diverse.

We’ll have to see how this works.


  1. Mark Ryan, Phoebe Macrossan, Michael Adams, and Cameron Cliff, No point in stopping white paper: A publisher-centred blockchain model for the book publishing industry. 2020, QUT Digital Media Research Centre: Australia. https://eprints.qut.edu.au/199865/
  2. Amanda Weaver, Blockchain to the rescue of small publishers in Queensland University of Technology – News, June 2, 2020. https://www.qut.edu.au/news?id=164218

 

Cryptocurrency Thursday

 

Abuse of the Lightning Network

One of the more successful efforts to reengineer Bitcoin to make it more scalable has been the Lightning Network.   This approach deals with the bottleneck of the single global ledger by—wait for it—adding another layer of indirection!  In cryptoland, this is called a “sidechain”.

The basic idea is for parties to establish a private channel for, a ledger for two, so to speak, where they can post transactions.  This channel is authenticated by registering (and ultimately deregistering) on the Bitcoin blockchain using multisignature cryptography.  Once set up, the participants can put whatever transactions they want on the side channel without any transactions on the main blockchain.

The point is that these side transactions are much faster, since they are a more direct move between the two parties, and don’t require confirmation (or fees) from the gigantic Bitcoin network.  When business is complete, the sidechain is terminated, and whatever balances are transferred via regular blockchain transactions.

Notably, once closed, there is no record of any of the side transactions, so there is an additional level of concealment/privacy for the parties.

Of course, the downside is that this is a separate network and protocol, rooted in Bitcoin but not really protected or supported by the strength of the Bitcoin network.  There is also a certain amount of complexity in the additional layer of protocol.

But, yeah.  This is certainly one way to get better latency and lower the costs of the main Bitcoin network.  After all, the Nakamotoan notion that every transaction, everywhere, for all time; should be on one ledger is, well, insane.  There obviously should be and will be side channels.


This spring researchers at Florida International University report that these LN side channels are, in fact, side channels that can be used for nefarious purposes [2].

Specifically, they show how to command and control (C&C) a botnet via the LN.  Bitcoin and other cryptocurrencies have been a favorite method for the payment of ransoms to botnets, but public blockchains are not ideal for C&C due to latency and the permanent record left behind. The Lightning Network is designed pretty much to solve these problems for financial transactions, so it isn’t terribly surprising to learn that it is well suited to covert C&C of botnets.

The basic design is to organize the botnet as a collection of small botnets, each receiving commands from a LN wallet.  The commands are sent as part of transactions.  If I understand correctly, the message is encoded in the numerical amount of the cryptocurrency.  I.e., a transfer of ‘7 sataoshi’ is read as ‘7’ in a codebook.

This method bleeds cryptocurrency, of course, but the transactions can be looped back to recycle most of the funds.  So, contrary to some naive arguments, the fee structure is no deterrent to misuse of the network.

Cool!

This messaging is fast (compared to Bitcoin), scales to very large numbers of bots, and with recycling, it is really cheap to set up and operate.

Finally, when the botnet is torn down, the LN channels are closed the funds are recovered and all record of the transactions is gone.   So the history of the activity is concealed.

This kind of botnet is difficult to disable, because the Bitcoin and LN are very robust and “censorship proof”.  The researchers discuss the difficulty of identifying the location of the botmaster, due to the strong privacy of the LN.

One interesting point is that the C&C network is a completely normal and legitimate use of LN.  The botnet pays its dues, and follows the rules.

To me, this means that any users of the LN and Bitcoin are indirectly supporting the criminal activities, probably with little way for other users to know what is happening.  That’s kind of annoying, and also kinda makes using the LN a criminal activity.


  1. Diana Hernandez-Alende, Researchers find Bitcoin’s Lightning network susceptible to cyberattacks in FIU News, May 11, 2020. https://news.fiu.edu/2020/how-bitcoins-lightning-network-can-be-susceptible-to-cyber-attacks
  2. Ahmet Kurt, Enes Erdin, Mumin Cebe, Kemal Akkaya, and A. Selcuk Uluagac, LNBot: A Covert Hybrid Botnet on Bitcoin Lightning Network for Fun and Profit. arXiv arXiv:1912.10617, 2020. https://arxiv.org/abs/1912.10617

 

Cryptocurrency Thursday

Crypto Token Sales: At Long Last, Lawsuits

Over the past few years there has been an upwelling of various blockchain based, “decentralized” token sales.  Blockchains are very flexible, loosely regulated, and the transactions happen in milliseconds.  So there are a lot of variations on the theme.  But mostly, these activities are digital versions of age-old operations to borrow and lend, buy and sell—abstracted, virtualized, and blazing fast.

This has been controversial from the beginning, since many of these shows look a lot like conventional securities, yet are operating outside financial regulation.  In fact, regulators have regularly (a) refused to approve them, (b) ruled that these are securities and therefore are subject to the rules, and (c) shut down dubious scammy activities.

But these are so simple to do that there are new ones every day, many of them coming from “offshore”, and a lot of companies are making money serving them up.  And, I assume, no end of sheep begging to be shorn.

I think this isn’t so much “cryptocurrency is censorship proof”, it’s more of a script-kiddie, “any idiot can do it” thing.

Daniel Palmer reports this month (possibly timed to meet a statute of limitations), lawsuits have started to rain down [1].  The lawsuits were filed in New York, but the activities occurred all over the world in various crypto friendly havens.

The basic complaint is that these tokens walk like a duck, quack like a duck, and in fact, are unregistered securities under US law.  Since these “tokens” were sold without the legally required framework, they would potentially be a form of fraud, and certainly investors did not have full information about them.

Part of the case appears to be specifically about tokens that were presented as decentralized tokens (which is sort of legal), but were really created and controlled by a single entity—which makes them securities.  This would be a form of fraud.

This will be an interesting and hard fought suit.  Both sides are well funded, and there are going to be obscure technical arguments, deep philosophical claims, and the discovery will bring out some really interesting data.

The CryptoTulip of the Year judges (me) will be watching this lawsuit very closely.


  1. Daniel Palmer (2020) Major Crypto Firms Including Binance, Civic, Tron Targeted in Flood of Lawsuits. Coindesk, https://www.coindesk.com/top-crypto-firms-including-binance-civic-tron-targeted-in-flood-of-lawsuits

 

Cryptocurrency Thursday

MakerDAO makes a play for CryptoTulip of the Year

As financial markets crashed this month, the new cryptocurrency based “DeFi” platforms were stressed in the same ways as other, “legacy” platforms.  It was an awful mess everywhere, but MakerDAO stood out for some well documented, unique melt downs.

Cathy Barrera describes this as “a Textbook Case of Governance Failure” [1].  What she means is “is the set of mechanisms by which the stakeholders collectively make choices regarding changes or updates to a platform’s operational rules, and to make decisions regarding events that the operational rules do not address.

This is not about APIs or network protocols, or even “incentive” systems.  It’s about decision making, and it’s about humans in the loop.

Barrera gives a succinct summary of MakerDAO’s problems, which involve a lot of automated systems that, when forced to work far outside expected situations, had dramatically bad effects.  Users were called for more collateral, but the system was too loaded for them to respond, resulting in big losses. (Essentially, the robots confiscated their stuff because they couldn’t log in.)

Most interesting was the failure of their automated trading, which features agents (with the spooky name “Keepers”).  Under absurd levels of traffic, there weren’t enough Keepers to keep up, and in at least one case a Keeper encountering opportunities to be the sole bidder, bid “zero”, and sucked up zillions.  This has resulted in a huge “negative system surplus”, i.e., multi-millions of debt.

Cool!

This was all a rare, catastrophic event, for sure.  But, in contrast to the “legacy” world, MakeDAO had no mechanisms to stop the disaster, or to decide what to do to fix the damage.  The MakerDAO community is discussing what to do—after the fact, and with no agreed framework.

With this adventure, MakerDAO certainly must be considered a strong competitor for the 2020 CryptoTulip of the Year!  The term “negative system surplus” alone, is a classic!


  1. Cathy Barrera (2020) MakerDAO’s Problems Are a Textbook Case of Governance Failure. Coindesk, https://www.coindesk.com/makerdaos-problems-are-a-textbook-case-of-governance-failure

 

Cryptocurrency Thursday

Ethereum Vies For Repeat of CryptoTulip Recognition

Frankly, I’ve lost track of Ethererum’s “engineering” process, but it’s definitely “interesting”!

For a couple of years now we’ve been waiting for “Ethereum 2.0”, which includes a dramatic–and not really orthodox Nakamotoan–change to “Proof of Stake” consensus.  This massive and not backward compatible change is taking some time to get here, which is a good sign that the developers are being responsible.

But this month I read that another proposal, called ProgPOW is being pushed. <<link, cite>>  This is a different, dramatic, non orthodox Nakamotoan change to the consensus process. This proposal has been around for more than a year (i.e., code exists that could be folded in to the main code).  But it is extremely controversial.

Huh?  I thought this was dead last year.  But apparently not.

As William Foxley reports, the continuing discussions are not so much technical, but “political” [1].

Generally speaking, Ethereum 2.0 is the path advocated by Vitalik Buterin, first among equals in the Ethereum community, and the overall goal is to dramatically reduce the Carbon footprint of Ethereum consensus.

The ProgPOW proposal comes from mining companies, and aims to reduce the use of custom ASIC accelerators, which distort the Nakamotoan vision of a flat, “democratic” network.

So Ethereum is blessed with not one, but at least two possible hard forks.  (Note that neither of these would make any different to ordinary “retail” users, except in case of disastrous goof up.)

(See also this, this, this, this.)

Ethereum now has a recognized “hard fork coordinator”, and he confirms that ProgPOW is not on any schedule for future forks at this time.  It is difficult to stress how innovative this “coordinator” is, for the cryptocurrency community!

The meeting itself was the usual yackfest, with no strong conclusion. In other cryptocurrency communities, this could easily lead to different parties claiming victory, and possibly competing versions of the code.  But Ethereum has an official roadmap, for better or worse, and a shepherd keeping track of what is on that roadmap.

It’s hard to know what’s going to happen with Ethereum. The community has a culture unlike most cryptocurrencies, with a benevolent patriarch not interested in personal profit and a semi-professional software development organization apparently concerned with good engineering.

This is not you father’s cryptocurrency!   It also is less and less Nakamotoan, no matter what the rhetoric says.

Interesting, from so many angles.


  1. William Foxley (2020) Ethereum’s ProgPoW Call Features Frustration but Little Progress. Coindesk, https://www.coindesk.com/ethereums-progpow-call-features-frustration-but-little-progress

 

Cryptocurrency Thursday

How Digital Technology Enables Freelancing [repost]

[This was posted earlier here.]

For the past twenty five years or so, many people point out how digital technology, especially digital networks, enable remote working, including freelancing, coworking, and general digital nomadism.

My own view is that the technology is necessary but not sufficient, it enables but does not really drive these trends in work.  (See the book!)

This winter Anna Medina reiterates this case, explainingwhat the cloud means for freelance workers” [2].  Writing in the Freelancers Union blog, she declares cloud technology to be “a game-changer”.

Cloud-based technology has been a significant game-changer responsible for propelling the growth of the freelance industry.” (From [2])

Now, to me, “cloud technology” is as much a business model as a technology.  The stuff in the cloud is pretty much what we had all along in large organizations (and which I helped pioneer).  The new thing is who owns it, and the fact that you basically rent your critical infrastructure rather than try to run it yourself.

I think Medina’s basic point is that this approach (renting form the cloud) is especially beneficial for freelancers.  I would say that it levels the playing field, making it possible for an independent worker to have the same high-quality infrastructure as a member of a large organization.

She lists the kinds of tools available, including Communication, Sharing, and Payments.

I think Medina is completely correct that a lot of contemporary freelancing and coworking would be infeasible without access to these cloud services.  Technologically, the array of services cited would be “the easy ones”, services well perfected long before “the cloud”.  She doesn’t even mention virtual machines specifically, which make possible a variety of “on demand” computing, including software development, simulation, large computations, and lots more.

From my point of view, cloud computing makes a kind of “average” infrastructure available at low cost to even an individual worker.  “Average” isn’t perfect or ideal, but it definitely places a solid floor on the quality of infrastructure, raising all boats.  Only the wealthiest organization could afford the quality that you or anyone can get in the cloud.  That’s good, for sure.

Now, the cloud does not provide everything you need.  For one thing, you need a physical place to work, and most people need other people.  That’s what coworking spaces are for.

But even technologically, cloud users have to “bring your own” stuff: computer and networks, and users have to take care to use the cloud well.

For example, earlier in February in the same blog, Samuel Bocetta discussedHow to secure client data when you work remotely” [1]. The essential point is that, no matter how great and how “secure” cloud services may be, you, the worker, must still take responsibility for protecting you clients and your own information.

Obviously, using well designed cloud services is a good foundation.  But, as Bocetta outlines, you still need to operate defensively and practice safe computing:  passwords, cryptography, and policies.   You’ve heard it before, and you’ll hear it again.

The good news is that the steps he outlines are little different from any Internet user.  The bad news is that they aren’t any more fool proof than general Internet security.  So watch out.

To me, one of the scary parts of freelancing is that, as an independent freelance worker, you are on your own, both responsible and liable for protecting you clients.  One of the great benefits of belonging to a large organization is when you are helped by and at least partly shielded by the larger group.  A big company or university has lawyers on retainer, and also has experts who work hard to defend your systems.  You are not alone.

Yes, cloud computing is certainly a good thing for freelancers.  My own view is that it is an enabler, but not exactly “responsible for propelling the growth of the freelance industry.”  It also is hardly the whole picture.  Freelancers are still “on their own” in many ways.  This is why coworking spaces and communities are so important and valuable for freelancers:  so you aren’t all alone.


  1. Samuel Bocetta, How to secure client data when you work remotely, in Freelancers Union Blog, February 18, 2020. https://blog.freelancersunion.org/2020/02/18/how-to-secure-client-data-when-you-work-remotely/
  2. Anna Medina, What the cloud means for freelance workers, in Freelancers Union Blog, February 28, 2020. https://blog.freelancersunion.org/2020/02/28/what-the-cloud-means-for-freelance-workers/

Samuel Bocetta, How to secure client data when you work remotely, Anna Medina, What the cloud means for freelance workers,

(For much more on the Future of Work, see the book “What is Coworking?”)

What is Coworking?

Continue reading How Digital Technology Enables Freelancing [repost]

bTz: Crypto Ooopsie of the Month

One of the “features” of Nakamotoa’s Alternative Universe is that it replicates all the features of conventional systems, without adult supervision.  For true believers, this is not only a good thing, it is nearly the only thing.

So, the Nakmaotoan Alternative Universe has electronic trading, which looks the same as conventional trading. This is called “Distributed Finance”, and goes by the terrifying tack DeFi. But inside, the systems are unregulated (or “self-regulated”).  Caveat Emptor.   You are on your own.

And with the genius of the Internet (which I certainly helped boot up), the systems are all talking to each other, and generally “the system” is actually a bunch of independent components working together to do your biz.  At light speed.  Without guardrails or seat belts.

What could possibly go wrong?

(If you actually worry about such questions, you probably spend time studying the history of financial systems and regulations.  But who’s got time for all that.  Move fast, break things, apologize later.)

This winter the Ethereum community was treated to a wonderful demonstration of life in the Nakmotoan Alternative Universe of DeFi.

In a particularly embarrassing incident, a decentralized finance project reassuringly named “bZx” was showing off their stuff at a hackathon in Denver.  During this strut session, they were hacked, and the attackers walked off with hundreds of thousands of dollars worth of digital assets [1].  Ooops.

As William Foxley  reports that the attack was somewhat complicated.  The attackers borrowed over 2 million dollars in a “flash loan” (which I assume means no collateral and no diligence, due or otherwise).   Then they bought a million dollars worth of short contracts on one exchange, and dumped the shares on another.

The sell off was targeted and succeeded in manipulating the “oracle” that sets prices for bZt, and they were able to exploit the swing to make big money off the short.

I don’t have precise information about the timing (see this perhaps), but I’m pretty sure this all happened in a few seconds, bing-bang-boom.

As Foxley put it, this attack “Reveal[ed the] Experimental Nature of Decentralized Finance.”

One of the problems seems to be the use of “oracles”, which are, well, systems that you have to trust.  It isn’t clear, but the experimental system may have had only one such oracle, which was exploited by the attack.  In any case, the fact that no one  knows for sure what oracle or oracles might ahve been involved indicates the opacity of the system.

Here’s the good news:  the system worked almost exactly how it was supposed to.  There was one bug that should have stopped the trade, maybe.

These transactions were done with “smart contracts” without need for human intervention.  No pesky paperwork, and “the man” was nowhere to be seen.  So the brakes were all software.  (What could possibly go wrong.)

Here’s more good news:  this was probably legal.  “DefFi” is unregulated, so who knows what, if any, legal framework applies.

So, congratulations bZx, on a successful demonstration of “Decentralized Finance”.


  1. William Foxley (2020) Exploit During ETHDenver Reveals Experimental Nature of Decentralized Finance. Coindesk, https://www.coindesk.com/exploit-during-ethdenver-reveals-experimental-nature-of-decentralized-finance

 

 

Cryptocurrency Thursday

“Broad City” Portrays Freelance Life? [repost]

[This was posted earlier here]

For the record, following a post wondering “Where are all the freelance characters on TV?”, the Freelancers Union* posted an earlier item that tells us that one place to look is the TV show, Broad City [1].  The article, signed by “Trupo” (which is an insurance company partly owned by the FU), discusses the fictional life of the characters.  (Caveat:  I haven’t watched more than a few minutes of this show myself.)

“The characters don’t explicitly say they are freelancers, but they continue to work side jobs throughout the shows five seasons.”

These two working women live the real life of a freelancer: many gigs, mostly very short term. Intermittent income, no benefits, little security.

The show plays these challenges for comedy, of course.  The point is that this is slice-of-life comedy, representing the real experience of a lot of workers living in New York City.

The FU concludes, “hopefully this is just the beginning of a more accurate representation of the growing norm of non-traditional work.”

I don’t know how “normative” or “non-traditional” gig working is, will, or should be. But it’s certainly good to see some realistic fiction about working lives.

As I commented earlier, why not a fictional life set in a coworking space?  I have described coworking (and by implication freelancing) as “participatory theater”, in which workers create their own story of the Future of Work.  That sounds like a decent scenario for scripted theater.


  1. Trupo, What Broad City got right about financial insecurity and episodic income, in Freelancers Union Blog, January 31, 2020. https://blog.freelancersunion.org/2020/01/31/what-the-show-broad-city-got-right-about-episodic-income/

*Note:  I am a proud member of the FU.


(For much more on the Future of Work, see the book “What is Coworking?”)

What is Coworking?

Study of Tezos Proof of Stake

Nakamotoan cryptocurrencies are generally faith-based technologies.  As an old programmer taught me a long time ago, “the fun thing about writing software is finding out what it does”.  In the case of cryptocurrencies, the software encompasses economic theories as well as data processing. And it has been fun to see how they work.

Emperor Nakamoto described a new protocol, now called “Proof of Work”.  This process is a bruit force solution to the problem of synchronizing time stamps without a central server.  The bruit force is partly based on hand-wavy economics and wishful thinking about how networks work.  It seems to work most of the time, but is grievously wasteful and has catastrophically low performance ceilings.

Could we have known about these shortcomings before implementing the system and getting a million users?  Of course we could, but who has the time or patience to actually study a problem?  You don’t “disrupt money” by wasting time trying to figure out how your magic new digital money works!  Just do it!

In the last few years, there have been many proposals for replacements to classical Nakamotoan Proof of Work protocol.  Ethereum is moving to replace its original PoW with a “Proof of Stake” protocol, which essentially is a more direct form of “one dollar one vote”.  (It cuts out the indirect step, “waste electricity to prove how much money you have”, and just makes you pony up money.)

How well does PoS work?  Well I dunno, and I’m pretty sure no one else knows either.  But that won’t stop Ethereum from deploy it Real Soon Now.


This winter researchers at Harvard report a study of one such PoS protocol, recently implemented in Tezos [2].  (They note that the implementers of the software publish a blog post presenting results—sans details—of a study of the protocol.)

The Harvard study investigated the recent version of the Tezos software, testing the vulnerability to a previously hypothesized attack.   The details are arcane, but the basic finding is that the current protocol has a loophole that makes it (slightly) profitable to cheat.  (The cheating is possible in the entirely possible event that someone accumulates a large fraction of the stakes for a given time.)

Honestly, I don’t know whether this particular finding makes or breaks Tezos.  As far as I know there is neither theory nor empirical research to really assess the potential impact.

It goes to show how little we know about PoS mechanisms, let alone one in a working environment,” Wilson Withiam, quoted in [1]

I must say that I tend to worry about the complexity and apparent lack of foundation for this and similar protocols.  For instance, the revised protocol includes a delay function, in seconds, (based on “priority”, and number of “endorsers”:

D(p,e) = 60 + 40·p+ 8·max(24−e,0)

This complex function has several arbitrary constants which were set, as far as I can tell, on the basis of intuitions.  They definitely are not based on peer reviewed theory or experimentation.

This particular mystical equation interacts with a couple of other similarly arcane formulae. Magic times magic to the magic power.

Gee, what could possibly go wrong?

(Answer:  no one actually knows what could possibly go wrong!)


  1. William Foxley (2020) Why Harvard Research on a Low-Profit Tezos Attack Matters for Proof-of-Stake. Coindesk, https://www.coindesk.com/why-harvard-research-on-a-low-profit-tezos-attack-matters-for-proof-of-stake
  2. Michael Neuder, Daniel J. Moroz, Rithvik Rao, and David C. Parkes, Selfish Behavior in the Tezos Proof-of-Stake Protocol. arXiv, 2019. https://arxiv.org/abs/1912.02954

 

Cryptocurrency Thursday