The Baking Sheet - Issue #41

Welcome to this week’s issue of The Baking Sheet! 

Quorum has been successfully reached for the exploration period of Florence! Equally as important, we’re continuing to see more growth within network usage, DeFi, NFT’s, and much more. 

In light of the growing CleanNFT movement, this week’s issue glosses over Proof-of-Stake as a more environmentally cleaner and security-focused consensus as opposed to novel consensus variants such as Proof of Work used within Bitcoin and Ethereum, namely.

The aforementioned quote, while brutally blunt - paints an interesting metric pervading the cryptocurrency space. We hear it all the time, “Why isn’t X performing as well as Y which has more stronger fundamentals and actual usage”. It’s a particular argument and metric which is anything but new in this space but is worth some further dissection. 

To understand this better, let’s dissect the reality today within Tezos and understand why vision is just that, a vision. 

Let’s look at Tezos today, what is the reality? 

The reality today is that Tezos is a fundamentally sound Proof-of-Stake (Liquid Proof-of-Stake) blockchain network that has a tested (5 successful upgrades ported onto the protocol seamlessly and autonomously) and well-defined governance process. It is one of the most decentralized Proof-of-Stake protocols in market existence with over 400 bakers securing the network. Network participation within baking is roughly 80%. 

Apart from this, contract calls (an undeniable metric based on immutable data from the blockchain) have grown tremendously in the past few months, aligning with the introduction of many DeFi applications released and NFT platforms that have sprung up.

Like low-cost and environmentally sound NFT’s? You have a place now. Like cheap fees with a focus on sustainability and security? You have a place now. Want to conduct your STO and not succumb to a potentially massive financial loss based on a bad contract? You have a place now. 

These items described are a reality, these are facts which do not care about your feelings. Items described here exist now, they’re not “coming soon”, “a few months away”, and vice versa. 

Get the gist? 

Great, now lets circle towards “the vision”. 

Merriam Webster defines the word vision as; “a manifestation to the senses of something immaterial”. 

When we look across the board, the Proof-of-Stake space is still quite nascent and does not account for a significant majority of the entire cryptocurrency space. The space is primarily dominated by Proof-of-Work, which Bitcoin and Ethereum count for the underlying majority of capitalization as PoW-based networks. 

So, how exactly do these two differentiate from each other? 

Proof-of-Work relies on electricity usage (power), that is a specific type of hardware in most instances that outputs processing power derived from electricity consumption to secure and validate new transactions on the network. Namely, this is present within Bitcoin and Ethereum today. 

Proof-of-Stake however, relies on network participants’ number of coins/tokens (stake) to secure and validate new transactions on the network. This model is present within Tezos, Cosmos, and Avalanche namely. For the comparison on energy consumption as opposed to PoW, be sure to read this post.

This model also poses greater security measures after the fact against malicious actors attempting to attack the network as opposed to PoW. Within a 51% attack on a PoW-based system, an entire hashing algorithm has to be rewritten and renders existing specific hardware worthless, financially hurting “good” participants at the cost of the bad ones. Within PoS, the codebase can be forked and essentially eradicate the attacker’s coins. 

Now, let’s revolve to consider a network wishing to transition towards the PoS model as opposed to PoW. We can loop this back to the previous definition provided earlier on, it represents a vision. It’s something that is not materially existent today, therefore it’s not our present day reality. 

What the underlying reality is, PoS encompasses a much more environmentally friendly and secure solution to attackers with the sole interest of disrupting a network in the form of an attack.

If you’re wanting an environmentally sound, low-cost, and security-focused network today that offers these benefits and others towards DeFi, NFT’s, STO’s and more - it exists within Tezos today. It’s not expected “soon”, it’s merely reality and here now.