Ethereum Casper 101
jon choi

Hi! My question relates, maybe, to “The rich get richer” and cryptoeconomics. From economics perspective, doesn’t POS make currency even more deflationary? I mean, as I understand:

  1. honest validators have pretty no risk of loosing their stakes
  2. all currency issuance goes to them, making validating very profitable for a near zero risk investment. Much more attractive then treasury bonds (also near zero risk).
  3. this could kill any incentives to actually spend ETH (why should I pay you in ETH, knowing that if I’ll stake it, I’ll get more tomorrow). And this leads to cryptoeconimics freeze and, later, complete disappointment.

It looks like that in POW it’s more like if you make a POS stake (invest in hardware) that you’ll be never able to retrieve (because of low liquidity and amortization), but since you made it, assuming your good behavior, you can get risk-free interest. But you should put lot’s of money beforehand which you maybe will never see again. It’s more like investing in busyness — too many variables. And this balances the incentive to invest in POW mining.

And in POS it’s more like investing in treasury bond but with the same interest. Doesn’t this could lead to transition all money supply to stakes? Maybe it would be better to never be able to retrieve full stake in POS? Thanks.