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Vitalik responds to a Bitcoin supporter who asserts that PoS payouts aren’t “yields”


However, Wertheimer was quick to point out the disparities. In response to criticism, Buterin said that mining rewards for PoW-based systems are not much different from those for PoS systems.

Udi Wertheimer, an independent developer and supporter of Bitcoin, generated a lot of excitement earlier on Monday on Crypto Twitter when he asserted that a proof-of-stake (PoS) based yield reward scheme for staking is more of a punishment for non-stakers.

The well-known Ethereum critic Wertheimer thinks that the PoS staking reward structure doesn’t really function as a yield reward. Users who participate in PoS staking are unable to utilize their staked ETH for any other purpose, while those who do not stake their tokens and take part in other network activities are not rewarded.

The assault on the PoS system didn’t really sit well with the Ethereum community, including co-founder Vitalik Buterin, with the Ethereum Merge only a few days away.

Proof-of-stake (PoS) staking, according to Buterin’s response to Wertheimer’s critique, is similar to Bitcoin mining in that it “penalizes anyone who has a smaller percentage of hash power than their percentage of the currency supply.”

Buterin was quickly reminded by Wertheimer that the PoW environment has two distinct groups—miners and holders—that do not always overlap, in contrast to the PoS ecosystem. He continued by saying that because to the fault in the incentive scheme, one could anticipate holders and stakers to overlap with liquid staking.

Another user claimed that the gas charge that the user pays to execute transactions is where the yield originates from. Wertheimer was quick to respond that the average fee each block only accounts for 1% of the overall yield incentives.

Because of this, the remaining yield reward must come from another source. Many people think that source may be the printing of additional ETH, which would devalue and inflate the value of already existing ETH.

The Merge, which is scheduled to take place between September 13 and 15, will see Ethereum switch from its current PoW mining consensus to a PoS one. The move, according to Ethereum developers and supporters, would make the network more environmentally friendly and scalable. However, detractors have drawn attention to the Merge’s centralization features and how those changes may render the Ethereum network more susceptible to security threats.

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