The notoriety of proof of stake (PoS) on Hive

josediccus in #hive-146620 • 3 days ago

A few days ago, I was reading a proposal post where two people were arguing. One party accused the other of failing to deliver on the last promise of their previously funded proposal, and they are now attempting to write a new proposal requesting additional funding from the Hive DHF.

The other party defended themselves by claiming that they had delivered on the last proposal and that the accuser was simply hating on them. So the other party provided some proof, some stats pulled from the chain, to prove their point, but they also said a few things to defend themselves.

However, I was expecting them to pull some stats from the chain to prove their point, but they didn't, which proves the other person correct to some extent because they used stats from the Blockchain to make their point. I understand the accuser's point.

I mean, they were probably frustrated that another person was getting their proposal funded despite the fact that they had not provided clear proof that they had completed the last job for which they were paid. I think this is what makes PoS flawed and exploitable.

What Is PoS, like I'm 5?

So, if you clicked and started reading but do not know what PoS is. I would like to break it down. PoS simply means proof of stake, and in a system like Hive, you must own staked Hive to participate in governance and dictate how the reward pool is distributed.

The main reason Hive uses PoS is that it wants to reward longevity and skin in the game. I mean, most functional utility networks find ways to reward retention. It is similar to how we have a government system in which having a stake automatically qualifies you for vetting and determines who gets what and when. Who remains at the top of the list of witnesses, who falls to the bottom, and who is eventually kicked out.

This system actually tries to secure the chain's future and keep it running, making it more appealing and valuable to investors, as well as providing far more potential incentives for choosing to be a part of the system.

This is where PoS defeats PoW (proof of work).

If you look at Hive, you will notice that the system can be destroyed by PoW, particularly when it comes to rewards. Governance is a critical issue, and while it should be accessible to all, Hive believes that putting something on the line to participate in governance protects the network more effectively.

Nonetheless, we are already aware that governance is a dirty game.

People find ways to exploit flaws in the system, which is how PoS is frequently manipulated. When it comes to proposals, most owners try to form or build connections with the most powerful stakeholders; this ensures that their proposal will be funded even if a large portion of the ecosystem disagrees with why they need the money.

However, it can sometimes become a cash cow for those who likely produce nothing of value in order to be paid on a daily basis. Now, it is always difficult to get defunded when they are close to their biggest supporters, and when they are sure they will get funded, they do not care what anyone thinks, which could lead to the system being manipulated by those who understand proper politics.

Politicians Thrives By Owing Themselves Favors

I have seen cases where a powerful stakeholder sees nothing wrong with what another stakeholder is doing because their political relationship blinds them to wrongdoing.

Politicians stay in business by having another thing over another politician. So because they both have something on themselves, it just cancels everything and makes them continue their platonic relationship.

On Hive, this creates a centralized hollow in which major events only occur at the top.

In reality, PoW can be exploited in this way, but that is a topic for another day.

As a result, the most influential stakeholders may make decisions that do not truly reflect the needs of the chain or the general public.

Centralization, Or?

Centralization is what Hive stands for again, and while anyone can choose to mitigate this deficit by purchasing their own Hive off the market, staking it, and attempting to enforce their own voice with their stake, you may need a large stake to make your voice heard.

Conclusion

Personally, I have only voted on a few proposals. I have a small stake in Hive, and it may not matter when the 500k guys come into play. However, I believe it matters to some extent. Small owners can actually band together when it comes to proposals.

Also, each account has 30 witness spots, but I only vote for about 7 or 8 of them, because I do not think it is a good idea to just vote for everyone who sends a memo. Sometimes I believe that a witness' work sells them to the general public.

However, if a witness begins to lose the votes of key stakeholders, it may not be because they are bad at their job; rather, it is likely that they have offended the hierarchy.

Unfortunately, I believe PoW will be far worse for Hive than PoS. The Chain's future is what matters most, and it is often the case that people care the most when they have a lot to lose.

However, I believe that governance needs to improve. The governance aspect is extremely dirty and heavily criticized, and rightfully so. This is why I believe that anyone can have a voice if they choose to.