Unpopular Opinion: PoS isn’t all that great

Let me get started by saying that I love the idea of passive income. That’s the dream, after all, to earn money by doing nothing. No one became rich by putting their money in a savings account.

However, I have two big problems: one is that most, if not all, PoS protocols are inherently more beneficial to those with large pockets of cash. Compared to PoW protocols, which requires a relatively minor investment to receive a large return (specifically Ethereum.) A non-LHR RTX 3080 will run you ~$1,500 and will net you ~$2,700 after a year of mining, less electricity cost. That’s an annualized return of 180%.

Let’s compare that to Cardano: with the same investment and timeframe, you are looking at ~$69 (nice!) of delegation rewards. That’s an annualized return of 4.6%

Now, naturally, a bigger pocket means more rewards, so let’s see what would be equal to our PoW rewards.

To return the same monetary value, you would need about $33,660, or approx. the yearly income of the average American citizen. Unless you have Elongate Muskyman’s checkbook, you won’t be rich on PoS algos within your lifetime.

This also requires the market to be stable, staking conditions to remain the same, and price of the staked token to remain the same, or increase. The last of which is just hyperbole, and not guaranteed. In fact, you probably will experience impermanent loss.

Additionally, PoS protocols require third party validation by their very nature. A mineable blockchain is provably accurate and requires no third party delegation or validation.

Another argument that I see often is the “green” aspect of PoS algos. This simply isn’t that big of a deal. If mining ceased to exist, the top 100 companies would still produce 70% of all annual carbon emissions.

That being said, I’m not swinging at PoS protocols, because I believe they have their place in crypto, and in-fact own Algorand and Cardano. However, I also believe that it is highly hyped, and we should take a step back and actually look at why we like it in the first place.