Mechanisms of Design for Casper

Casper is the first in the many steps for the roll-out of a new eco-friendly block mining approach, which promises to incentivize mining for Ethereum. On one hand, his approach is very  powerful  because of the net positive utility to all participants in the ecosystem namely

  1. Miners with little or no effort earn an interest
  2. The eco-system is well off now that everyone has an incentive to participate in the network
  3. The environment because very little power is consumed, and mining is no more an ASIC play
  4. Application developers because they now have high-speed and fractional transaction support
  5. Token exchanges because they can significantly leverage large deposits of users to participate on networks.
  6. Speculators because new supply of tokens will be limited, and fewer tokens will be available to trade in the market. A complete rollout should immediately, remove 10-12% of the supply in this market.

On the other hand, this approach is susceptible to all the effects in an economic system that provides returns; e.g. no stake based supports to hard forks, collusion, erroneous voting, etc… Click here to link to the economic model and the whitepaper of Casper  Therefore, the designers of Casper have created incentive mechanisms  for the adopters that would significantly penalize bad behavior and incentivize good behavior for the miners. The above talk delves into the details of each of the design mechanisms put in place, to prevent different forms of attacks; Though it looks simple, the consequences could have far-ranging impacts, since these mechanisms directly impact behaviors of all participants in the ecosystem.