What is Ethereum Casper?

Submitted by community user - Author: William M. Peaster

Casper implementation marks Ethereum has transitioned to the Proof of Stake (PoS) blockchain (also known as Ethereum 2.0). Although Ethereum launched as a blockchain as a proof-of-stake of work (PoW) protocol in the summer of 2015, developers had long planned to transition it to a PoS model. After the conversion is completed, mining will no longer be part of the Ethereum network.

So far, there are two jointly developed versions of Casper in the Ethereum ecosystem: Casper CBC and Casper FFG. The CBC version was originally proposed by Ethereum Foundation researcher Vlad Zamfir. Although research on CBC initially focused on PoS protocols for public blockchains, it has grown into a broader research area that includes a range of PoS models.

Casper FFG’s research is led by Vitalik Buterin, co-founder of Ethereum. Initial proposals included a hybrid PoW/PoS system, but implementation is still under discussion and new proposals may eventually replace it with only a PoS model.

It is worth noting that Casper FFG is planning to launch Ethereum 2.0. However, that doesn't mean Casper CBC isn't doing anything. In fact, it may replace Casper FFG in the future.

While both versions were developed for Ethereum, Casper is a PoS model that can also be promoted and used in other blockchain networks.

How Casper works

The transition from Ethereum 1.0 to 2.0 is called "Serenity" upgrade. It consists of three distinct stages. In its initial phase (Phase 0), a new blockchain called Beacon Chain was launched. Casper FFG will formulate rules to promote this new consensus mechanism based on PoS blockchain.

Unlike PoW mining, miners in the PoW protocol need to run expensive and professional equipment to create and verify transaction blocks. With the implementation of Casper, Ethereum will no longer need The process of mining. Verification and confirmation of new transaction blocks will be done by block validators, who will be selected based on their stake.

In other words, each validator’s voting power will be determined by the amount of ETH they hold. For example, a user holding 64 ETH will have twice the voting weight than a user holding only the minimum amount. To become a block validator in the first phase of the Serenity upgrade, users will need to deposit a minimum stake of 32 etether (ETH) into a special smart contract based on the Ethereum blockchain (1.0).

If everything goes well, a random validator will be selected to submit the newly generated block and eventually receive the block reward. Block rewards may only include transaction fees, since there are no block rewards.  

However, it should be noted that each PoS protocol can be implemented differently and divided into different reward models. The Casper model is still under development, and many details are yet to be worked out.

Advantages of Casper

One of the advantages of Casper is that it makes proof of stake possible. It will help Ethereum become more energy efficient and friendly. In terms of power and computing resources, the PoW-based model has high requirements on system hardware. In contrast, the PoS model has very low demand in this area. And when Ethereum eventually implements a full PoS model, miners will no longer be needed to keep the blockchain running, so the resources required will be lower.

Another potential advantage of Casper relates to security. Essentially, Casper will act as a filter, responsible for sorting the blocks in the chain. Basically, it will be the bookkeeper of the Ethereum 2.0 distributed ledger. Therefore, if a validator wants to tamper with data, they will be quickly removed from the network and punished. The penalty rule is to deduct the validator’s stake (ETH), which means that the cost of violation will be very high. However, developers are still discussing the possibility of a 51% attack.

Finally, it was explained that Casper will make Ethereum more decentralized. Currently, those nodes with strong dominance on the network are users with large amounts of mining resources. In the future, any user who can hold an appropriate amount of ETH can help ensure the security of the Ethereum blockchain.

Limitations

There is still a long way to go to finally develop and implement Casper way to go. Currently, its efficiency and safety remain unproven. There are many details that still need to be redefined and adjusted. We won’t be sure of the functionality and performance of the new version until it goes live in Phase 0 of the Serenity upgrade.

Theoretical limitations also remain. If Ethereum's verification system is compromised, Casper will not be able to generate new blocks. Given its current architecture, Caspe is not fully resistant to 51% attacks. Beyond this, a formal specification is needed outlining the fork rules that may be required in response to attacks.

Summary

Ethereum is gradually abandoning mining and choosing to use proof of stake In this way, users can deposit Ethereum (ETH) in the corresponding recharge address to maintain the operation of the blockchain. Casper is a technology used to generate blocks that can facilitate this transformation of Ethereum.

Casper will help create infrastructure based on Ethernet 2.0 upgrades and will make its transition to a PoS model smoother. In addition, the open source nature of the blockchain field also means that Casper's significant advantages can be forked, modified, and reconstructed by other projects.

When Casper is officially launched, it will mark another important milestone in the history of Ethereum. As for when Casper will be released, Ethereum researcher Justin Drake has previously revealed that the first phase of Casper may be released on January 3, 2020 (Bitcoin’s 11th birthday). However, that date remains uncertain. This release may occur at any time in 2020.