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Flare CEO Names Main Disadvantages of Ethereum’s Proof-of-Stake


u.today 2020-09-10 01:30
Reading time: ~2 m

In an interview with prolific XRP evangelist Crypto Eri, Flare Networks CEO and founder Hugo Philion shared his take on the proof-of-stake consensus algorithm that will underpin the Ethereum 2.0 blockchain.   

While Philion claims that PoS is “great,” there are some major issues that he thinks have to be addressed.

Capital inefficiency

The initial purpose of Flare is bringing together the value of ecosystems but they also have a more far-reaching goal of scaling Ethereum.

Philion explains that PoS is “extremely inefficient” in terms of capital usage:

“Essentially, it's basing the safety of the network on the value of the staking token. So, when Ethereum moves to proof of stake, the safety of the network will partly be based on the value of Ethereum. That really caps the use cases that it can reliably be used for without a massive expansion of the value ” 

Moreover, he underscores the risk of nefarious actors taking control of the network, which was recently discussed by Vitalik Buterin. 

Flare, on the other hand, is not basing the safety of the whole network on the token’s value:

“So, we're just taking a very different direction on how we reach consensus. We feel that that scales both for a number of transactions per second and also for essentially use cases or what you can do with the network.

“Very decentralized” 

Philion says that the immediate value of Flare is to provide a platform for XRP to be used with smart contracts:

“We’ve defined this quite succinctly, I think with the FXRP system and the Flared paper.”    

The Flare network is “very decentralized” since it is controlled by its nodes, not by its token:   

“If there did become a concentration control say all the nodes were for some reason based in some area that can change very quickly and there's no uh there's nothing that can stop that from changing. Whereas, if you have a token that owns a network that token can stop that from changing. So, that's very important.”


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