I’m hoping that I am missing something here, and that I can get some help from the forum.
I made this post a while back in concerns to one way adversaries could control of the network via staking pools:
When I first started down the rabbit hole of Ouroboros and Cardano’s decentralized network protocol, I first envisioned a 51% attack requiring a single entity to own 51% of the total supply of ADA. At this point, I realized that in order to accumulate THAT much ADA it would end up driving the price up to such high prices that it just would not be truly feasible on a game theory/incentives basis most likely.
The assumptions I made in this scenario was that each individual would be staking his/her own ADA in order to secure the network. However, with the presence of staking pools this became a little more skewed. From everything Charles has said, it sounds like there will not be a minimum requirement (besides a reasonable arbitrary fee) to register a staking pool. To me this seems like a huge vulnerability. What incentives do these pool operators have to be honest beside future income? What I mean is that as these pool operators are forced to be more and more competitive with one another, their net profit for running their pool will get slimmer and slimmer. Does that not mean that we are paying them less and less to be an honest pool operator? After all, it’s entirely possible that they own little to no ADA themselves. Again, besides future earnings, what “stake” do they have in seeing Cardano succeed? If they are earning $50k/year by running a pool, what happens when Vitalik Buterin knocks on their door and offers them $250k to give up control of their pool to him? (I am not saying that this is in Vitalik’s character profile. I am just using him as an example of a party that may benefit from Cardano being compromised.) Multiply this by 51 pools each owning 1%, and you have ~$13MM USD. That seems like a fairly minimal cost to control the entire network.
Ultimately I look at it as paying security guards minimum wage to guard your house in a valuable manner. Can you expect to pay an individual (or group of individuals) $10/hour to guard $1MM in cash? If none of that cash is owned by the guard(s) himself, I have a hard time seeing how an adversary doesn’t coerce the guard to be dishonest.
I will openly admit that I do not possess the technical expertise to understand technically how a 51% attack would need to be executed (and how coordinated it would need to be) to cause catastrophic damage to the network. It’s possible that the points I am making are entirely mute, however I thought I would try to find someone here who could take the conversation one step further…
EDIT: Grammar and misspelling.