The most anticipated upgrade for Ethereum is on its way

Image source: pixabay

The first release of Ethereum's Casper, the Friendly Finality Gadget (FFG) was released on the 8th May 2018 in their Github page. The existing Ethereum network will use PoW for block creation, while smart contracts will be layered on top using Casper's PoS protocol. This will be Ethereum's transition into a hybrid PoW/PoS Consensus Model. The Ethereum Improvement Proposal (EIP) #1011: introduced Hybrid Casper FFG with the purpose of creating a hybrid system of consensus that seeks to push the network away from issues associated with cryptocurrency mining (source: Cointelegraph - Ana Alexendre).

Casper FFG solves problems such as "Nothing at Stake" and "Long Range Attacks" through requiring validators to post slashable deposits and through defining economic finality.
Source: Ethereum Github - EIP

Image source: pixabay - LauraTara

Improvements made to the Ethereum network
As discussed on Cointelegraph's article by Julia Magas, the current Ethereum network faces scalability issues involving low transaction speeds as well as high energy costs. Casper is intended to resolve limitations to the PoW algorithm with PoS that is equivalent to the amount of ETH held by the validator. This is also to fight mining problems arising from ASICs mining that is creating a centralized mining environment. While ASICs mining is more efficient, Ethereum's goal is to achieve a decentralized network.

To mitigate problems with transaction speeds, a new concept named 'sharding' describes a decentralized network of nodes work independently and dependently on one another. Rather than duplicating the blockchain repeatedly over nodes, the redundancy could be reduced with the introduction of shards. This creates parallel processing that increases transaction speeds and scales up Ethereum's network bandwidth.

Rewards for miners will be reduced from 3 ETH to 0.6 ETH, while Validators will only gain 0.82 ETH per block. When Ethereum runs completely on PoS, validators are expected to receive 0.22 ETH per block.
Source: Cointelegraph - Julia Magas

Image source: pixabay - WorldSpectrum

More details from the Casper Paper
The Casper Paper published on Arxiv authored by Vitalik Buterin and Virgil Griffith describes the PoS based finality system in detail.

Validators will get a penalty if the rules are violated. The validator's deposit that represents the 'stake' would be penalized - similar to paying a fine. The minimum deposit would be 1500 ETH and the validator would earn a 5 percent interest. This is a stiffer penalty but also better accountability than the current PoW mining. In order to finalize new checkpoints, validators would have to abide by the slashing conditions.

Casper will continue to be fine-tuned with user-activated soft forks so that the blockchain remains secured from attacks.

-tysler