Casper incentive manipulation / perverse incentives

[nootropicat]

@cspannos

specifically exploring how bad actors could manipulate them or where there may be perverse incentives

See

Cartel formation incentive in full PoS - interest rates must rise with the total deposit size

In the Casper testnet interest rate is proportional to inverse square root of total deposits. That would be very bad for full PoS. Changes in validator sets are transactions. Bob is a selfish profit-optimizing validator. If Bob’s expected future return on staked eth is expected to drop due to new validators joining he’s not going to include their join transactions. Fee loss is infinitesimal under any significant adoption scenario, as he only loses the difference to the next highest gas priced …