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PoS rewards aren't "income"? Vitalik Buterin responds to criticism from Bitcoin advocates



 Independent developer and Bitcoin advocate Udi Wertheimer caused a stir in the community on Twitter Monday when he claimed that a PoS (Proof-of-Stake) return reward system for staking is more of a penalty for non-stakers.


Wertheimer is a well-known Ethereum critic and believes the PoS staking reward system is not really a return reward. With PoS staking, a user cannot do anything with their staked ETH and those who do not stake their tokens and participate in other network activities are not rewarded.


The Ethereum merge is only a few days away, so criticism of the PoS system was not well received by the Ethereum community. Not even with co-founder Vitalik Buterin.


Buterin responded to Wertheimer's criticism, stating that Bitcoin mining is not significantly different from PoS staking, since proof-of-work (PoW) mining "penalizes anyone who has a smaller share of the coin supply compared to their share hash power percentage".



Wertheimer countered that miners and holders are two distinct groups that don't necessarily overlap in the PoW ecosystem. You can't say that about the PoS system. He also said that with liquid staking, expect holders and stakers to overlap due to the flawed rewards system. 


Another user claimed that the return came from the gas fee paid by the user for transaction processing. However, Wertheimer pointed out that the fee per block accounts for only 1 percent of the total return on average.



So the rest of the return has to come from somewhere else. Many people believe this is done by minting more ETH, causing the current ETH to drop in value and creating inflation.

The merge is scheduled to take place between September 13th and September 15th, depending on network hash performance. In doing so, Ethereum transitions from its proof-of-work to a proof-of-stake. Ethereum developers and proponents claim it will make the network greener and more scalable. However, critics also point to the centralization associated with the merge and claim that this makes the network more vulnerable to attacks .

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