What are the impacts if EIP-1559 is achieved after or before this proposal?
As a GPU miner I am not in favor of a reduction in Block Rewards unless it includes an algo change to remove ASICs from the network. ASICs are highly profitable compared to GPUs. Any reduction in block rewards without an algo change will remove the rest of the GPUs from the network resulting in ASICs totally controlling the network. You can’t just ignore this problem and hope it goes away. The time has come to remove ASICs before they interfere with Ethereum’s long term progress moving to POS.
Sorry EIP1559 was proposed AFTER ASIC removal. Defi is not calling the shots at every fork insisting their proposals are put in. EIP1559 needs to wait until the ASIC issue is resolved and including any reduction in rewards.
It seems like Bitcoin’s inflation rate should be one of the parameters in determining the target block reward but far from the only one. The biggest consideration, in my opinion, should be the security of the network (i.e. how do we ensure the likelihood of 51% attacks remains low, how do we keep a diverse set of miners on the network, etc.). I think a section describing this in details would help with your rationale.
My hunch is this is much too dramatic of a change, given we’ve gone from 5 to 3 (-40%), then 3 to 2 (-33%), now you are going from 2 to 0.5 (-75%). What justifies increasing the rate at which block rewards get diminished vs. decreasing it (for example, to -25% which gives us 2 -> 1.5)? Again, I would personally like to see some security analysis that supports the numbers.
How would the calculations or expectations set in this EIP change if we were to adopt EIP 1559?
I am surprised to see this, especially this large of a % cut. This is a pretty big shock to GPU miners who expected a slow roll down of block rewards over a multiple year period. I have been mining since the genesis block and this will be the third and largest overnight hit to block rewards we would have experienced since launch. It is correct, there is precedent for reducing the block reward, but it has never been 75% cut. GPU miners also just took a big hit with ProgPoW being blocked by other community groups, so I feel this EIP must be contextualized from a miners’ perspective. I must admit, it feels really bad to be treated as a necessary evil to be paid out the minimum possible to incentivize us to keep our lights on just long enough to make the transition to 2.0 work.
With that all being said, I really would like to understand why we are aiming to match the inflation rate of Bitcoin, which is much older than Ethereum, at a different stage in its development, and is trying to achieve different goals than Ethereum. It makes sense that Ethereum would have a higher inflation rate at this point in its history; it is 5 years younger than Bitcoin. I believe blockstream just made fun of Ethereum because we keep changing our inflation rate.
Furthermore, this is feels like simply a shift of revenue from miners to protect the wealth already created by the system. The miners have grown, supported, and built businesses around this network for the past 5 years. Most mining companies barely made it through this crypto winter, and this EIP strips away the incentive we had for powering through stripped away at the first sign of recovery. We worked through the valley because we believed in the project, and we thought there were better days ahead. This EIP puts walls up around the Ethereum garden. We should still be at the phase where we are encouraging new users to participate in any fashion.
The note on the block reward through transaction fees is already wrong by .5 Ether, just one short day after this was published. The current block reward is only comprised of 1.3 ETH worth of tx fees, so we can’t assume transaction fees can consistently make up lost revenue from such a large reduction in inflation, and to make changes based on this assumption is reckless.
I believe it makes far more sense to change PoW rewards (commensurate with past precedent) after PoS is live, as it makes sense to ensure the house we’re moving into is sturdy before dismantling the old one.
Could not have said said it better myself. I too share the same sentiment. Although I have only been GPU mining for four years I still see this project as the biggest thing in Crypto. Since the ASICs took over the network two years ago we have had to scrape our nickles and dimes together to keep the lights on. Now after three months of things finally getting a little better the OP wants to ensure ASICs are only ones who can mine profitability with 75% reduction. I am real suspectful that this is an attempt to remove GPUs once and for all.
Regarding ASICs and GPUS, the block reward is irrelevant. If ASICs out compete GPUs at 0.5 eth per block they will out compete them at 2 ETH per block, and any other number too, it makes no difference. Given steady state ASICs will continue to be manufactured until it is no longer profitable to do so. The argument could be made this reduction is harmful to ASICs as the initial cost is very high, it may not be worth investing in them again after the dag size wipes out current miners as the pay off at 0.5 between now and phase 1.5 may not be worth it.
Let’s screw up miners and completely fuck up the network security and decentralization with EIP-2878 and EIP-1559 that seems to be designed around pumping the price of ETH at the cost of its Network security… this will blow off on your faces so badly.
By the end of the year network will have huge hashrate drop. I am already used to get screwed by this network as a miner. Reducing reward to ensure value increasing, stop the bullshit about inflation. This eip is just proposed because of recent network fees increase and price increased, i believe if crypto stayed in bear trend nothing of this will not even be mentioned or proposed, stupid. I am a miner, and i am here to profit of course, i choose eth project to invest but so far always had a feeling like i am a bad guy here.
What a terrible idea…
What if the majority of miners won’t support the hardfork?
BTW, why only 0.5 ETH? Let’s reduce it to 0.1 ETH, or let’s go even to 0 ETH? Ah, 0 ETH block rewards + EIP-1559… sounds like someone is intentionally trying to destroy the network…
Seems needlessly risky for little gain, especially with PoS coming quite soon. Additionally, I would argue that the fact that fees are so high makes it more risky to push rewards down, because fee-dominant blockchains have security issues that block reward-dominant blockchains do not. This includes the sister-mining issues that have been warned about for years but also more subtle things; for example, miners would purchase hardware based on average fee levels, but there will be periods where fee levels are low, and during those periods there would be a lot of idle hardware, which could be rented out for attacks…
Hence it seems better to lay off on more decreases for the moment and instead put our efforts toward EIP 1559, which alongside its many other benefits burns fees, reducing the security budget at times when it’s needlessly high, and minimizes any known and unknown risks that arise from the blockchain becoming fee-dominant.
Even better, force miners to pay if they want to mine. I think it’s proposal coming from ASIC miners, because they couldn’t be able to mine after few month, let pump the price and screw the gpu miners as bonus.
Thank you Vitalik for putting this EIP to rest, I have a great deal of respect and admiration for you. Looking forward to the implementation of the new ASIC resitant algo in light of ASICs almost at 51%. Do you still believe what you wrote in the yellow paper “ASICs are a plague”?
I think the point is there will be a large reduction in overall miners if the rewards are reduced in this fashion. That said, GPU miners can change what they’re mining easily, whereas ASICs can only switch to ETC. Therefore, it’s likely a much higher ratio of ASICs will stay mining ETH rather than switch to ETC or stop mining. This is because stopping altogether is a gamble of abandoning ROI at a time when ETH’s value has been rising.
I disagree wholeheartedly with this EIP.
It will absolutely devistate the network security and centralize things to high hell at the same time.
Like someone else said, why stop at .5ETH? Why not zero? As you said this is purely an economic play.
Reducing block subsidies incentivizes miner-induced chain reorganizations, since the risk/reward of looking backward in the chain to republish recent expensive transactions to steal their high network fees starts to become more favorable than looking strictly forward to the mempool for legitimate operation.
Furthermore, mining related EIPs have been systematically deprioritized for a few years so that developers can focus on strategic PoS tasks, so this EIP should also be similarly deprioritized. If adopted, this EIP should be pushed after the existing mining related needs, like fixing known Ethash vulnerabilities (details of which are documented in the various ProgPoW analyses).
Ridiculous proposal at the end of PoW.
Dishonest to say mining will not be affected or security either.
Why should we compare inflation rates to BTC?
What is the problems for miners to profit if the whole chain integrity rellies on them?
We won’t be worrying about inflation if DeFi craze combined with lower processing power in the chain start making bottlenecks.
It’s time to have the best version of ETH 1.0, and not jeopardize it just before the giant leap ETH 2.0 will mean.
This EIP is at least irresponsible.
- If EIP-1559 is achieved before this proposal, AND IF the fee-burning is of a non-trivial amount that will reduce inflation to below 0.5ETH, then there will be no urgent need to activate this EIP.
We do not think this is likely to occur in the short or medium term. 1559 will not be activated on the next hard fork, so it is as least 6-12 months away. Then after it is activated, 1559 requires end user wallets to update their fee handling. Then, after both of those things, the fee burning needs to be large enough to reduce the inflation to a sufficient amount.
We do not believe any of these things are likely to occur in the short or medium term, and therefore we would move forward with this EIP to reduce inflation and to reduce over-paying for security.
- If EIP-1559 is achieved after this proposal, nothing would change from a technical perspective, there would simply be less deflation of the money supply by 1.5ETH per block on average. We prefer this to scenario #1 (which we feel is unlikely to occur any time soon), but would happily accept both.