DYOR Crypto Wiki
Advertisement

Basics

"However, this algorithm has one important flaw: there is "nothing at stake". In the event of a fork, whether the fork is accidental or a malicious attempt to rewrite history and reverse a transaction, the optimal strategy for any miner is to mine on every chain, so that the miner gets their reward no matter which fork wins. Thus, assuming a large number of economically interested miners, an attacker may be able to send a transaction in exchange for some digital good (usually another cryptocurrency), receive the good, then start a fork of the blockchain from one block behind the transaction and send the money to themselves instead, and even with 1% of the total stake the attacker's fork would win because everyone else is mining on both."

  • In PoW, the incentive to simultaneously mine on multiple chains does not exist. If a miner chooses to split their hash power (computational power) between two chains, it will not improve their chances of mining a block.
  • Here is a cartoon video that explains the attack in 4 minutes.
  • A more in depth explanation can be found here.

Has it happened and what is ETH doing to prevent it

  • From this blog (2018):

"The nothing at stake theory is the assumption that in early versions of PoS, every validator will build on every fork when a fork takes place. After researching for any evidence or even mention of the nothing at stake problem actually occurring, I could not find anything. Either way, Ethereum’s Casper aims to take the potential of the nothing at stake theory seriously. In order to reduce the likelihood that validators builds on all forks, validators will be penalized by losing a portion or all of their security deposit. It seems likely that penalizing validators through security deposits will keep this theory an impossibility."

Advertisement