An important point is there is no “correct” level of security as any increase of BR leads to marginally higher security. It is therefore critical to do sufficient modelling to prove that the increased costs to Ethereum are worth the increased protection. On top of this, a rented hashrate attack would not destroy Ethereum, it’s again a question of how much the Ethereum community is willing to pay to reduce the risk. For some context, the proposed 1 ETH BR increase represents ~$11M / day at current prices ($1750).
“If rentable hashrate is a viable threat under 1559, other proposals make more sense than paying miners more in what amounts to extortion. Fast merge to ETH2, hard fork to an ASIC friendly algo of a lower cap coin, etc.”
This is effectively the claim and the risk. There are models where I believe this does become a risk.
Fast Merge to ETH2 is substantial more risk if not fully tested, overnight ETH could sack its own network from a desync of consensus/finality ; This is not ready, the integration tech specification was rushed to post yesterday. Non-starter before July
Hard Fork to ASIC Friendly Aglo? What? PROGPOW went through 2 completely separate funded deep dive technical analysis, was greenlit and shelved because of scrutiny by ASIC makers and a few Defi folks. ASICs take time to tap out, Testing, Audit … I hear you but leaning into a single manufacture and investors would pull you into a lot more politics then a loosely organized group of GPU enthusiast miners.
Miners do come and go and the market ebbs and flows, 100% agree, This is how eth was fine during the 2017 ATH to 2020 Lows of 89.xx; Mining retracted quite a bit, but benifited from the Bitmain E3 sunsetting due to DAG file decrease. Nearly 20+ TH fell off during that time, mainly E3’s, which kept the force projection of GPUs at the time 110+ TH able to participate. We are taking 410+ TH and by July with the current growth thrend possibly 600+ TH. That will wholesale rely on average BR 2 + 2 Trans fee and 1500-1800 Eth Price. That drops to 2 flat or just over 2 from MEV ; the numbers can be up to 20% HR drop. If we are looking at 800 Eth price in July for whatever reason but BR 2 + 2-5 Trans fee that will go away due to 1559, now we move from 600+ TH to 300-350TH sustainable.
That 200-300TH will find homes or turn off. This is the time a would be attacker places a buy order on brokers. And before you tell me someone would pay if they had the chance to take down Eth, we live in a reality a NFT goes for 69m dollars, of which a Eth competitor TRX casually threw a bid on. Not saying Justin would attack, but I dont want to take the risk.
This notion of paying a cartel or compromising with miners is an unfortunate mindset. As a advocate for mining since 2013, putting over 7000+ hours of content out there teaching people how to participate on networks, of which 4k+ on ethereum alone resulting in nearly 5.5 million views we are considered a shitshow. I would argue to say the engagement, involvement and value add as a Miner I have brought hundreds of million of value to this ecosystem of participants. I didn’t have to do that and I don’t need your thanks for it, but the misguidance that the mining participant is your enemy is misplaced.
Lastly and in closing. The previous show of force may have been partially short sighted, I agree and mentioned such on YouTube today in front of 900+ live viewers in a 1.5h discussion. But the threat has not been seriously considered with a bunch of people not providing a lick of data and just standing behind the past that ethereum is safe. I see the existential threat to Ethereum and I have no doubt others willing to harm it do to. This is not a time to take a ‘minimal security model’ mindset. It’s short sighted and borderline high risk if I was an outsider looking in right now seeing two sides of this argument. “We want to pay the min. for security”, said nobody ever besides a CTO, reporting to a CFO, that both get fired the next year after the hack.
Made an account here just to post for this (I support this EIP with 1559)
Does Fee burn put Ethereum on the SEC’s radar? Commodities dont decrease their supply… (More fleshed out argument at https://coingeek.com/ethereum-2-0-is-an-unexploded-regulatory-bomb/ + https://medium.com/@craig_10243/proof-of-unregistered-security-798f4df2fbb9 ) (would this EIP solve this because supply would not be decreasing if BR was increased? should net out?) (I disagree slightly with the author, POS isnt the main threat that would get eth classified as a security, its deflation… commodities dont reduce the # in circulation…) (for example, 51% attack under POS, you destroy their eth with a hardfork, and you run afoul of U.S. securities laws immediately and yep, Ethereum isnt registered either…) Reasonable minds can agree to disagree on whether the government would do this, but based on what ive seen, most governments are looking to shut down or restrict crypto heavily/regulate it. They would probably jump at the opportunity. Not sure how we could prove this is a threat though until its too late, so this a minor point against implementing deflation.
I believe the risk is large with EIP1559, im most concerned about the nicehash attack scenario which this EIP3368 would help prevent, if revenue to miners decreases significantly, so does the upfront cost to initiate an attack. Once the price becomes low enough for someone to begin an attack, it becomes self sustaining since any rational 51% attacker would censor the other 49%, and they can double spend / make off-chain bets to make back any upfront cost+profit. (once the 49% is censored, it becomes rational to join the attackers) (miners can centralize on nicehash faster than devs can release the merge and respond…) Hence, best to not allow a chance of that happening.
While i believe in the policy of minimum viable issuance, i dont believe in waiting for an attack to occur before you acknowledge it as a possibility. The nicehash scenario is a real threat given the anticipated revenue drops for miners, even ignoring difficulty. Although eth’s price could rise to match, theres no guarantee it will. Hence, in my view, this is a necessary BR increase to compensate for the immediate drop off in revenue that 1559 will cause for miners. A sudden drop in revenue(1559 without 3368) is a strong motivation to attack the network, since other coins will have no time to attempt to fill the space (no other options), most miners will see dropping gpu resale prices and refuse to get out (in hopes they can recoup their investment), and that leaves us with a massive amount of hashrate looking for another home, all at the same time. (thats how you end up with a nicehash attack) This EIP would instead spread that time spent looking for another home through a year+, as the less power efficient cards would be dropped off the network first, while the rest remain profitable… gradually dropping off and finding new homes. This seems like a much smaller risk, especially since gradually dropping hashrate will cause difficulty to adjust accordingly.
GPU miners have less incentive to attack the network before the merge, their hardware remains with atleast some value after the merge. We can disagree over how much value, but it is some atleast. ASICS retain zero value after the merge, that provides a much stronger incentive to attack the network before the merge. Personally im concerned ASICS will continue to proliferate before the merge, if we decrease eth mining profits to such a point that GPUs are priced out, we end up with ASICs dominating, and much more difficulty and risk with a 2.0 merge.
It has not been lost on me that ASICS have largely been quiet or lightly supportive on EIP-1559, it isnt a threat to them, its an opportunity to push out gpu mining hash. (and thus gain more control and profits) GPU miners can threaten, but it is much more difficult for them to coordinate an attack than it would be if ASICs dominated the chain. (as ASICS have a good shot of getting atleast 50% of hashrate before the merge already imo, without any changes, pushing out the gpu miners should be regarded as a real threat, ideally we have both groups continue hashing)
Im of the opposite opinion of others in this thread, this BR increase is necessary to ensure profits remain high enough for miners until the merge is ready that attacks remain prohibitively expensive. Without it, the upfront attack cost drops drastically. (and once an attack is ongoing, it can be self-perpetuating) It also ensures we dont end up with an ASIC-only chain anytime soon. (without a BR increase, less efficient setups will drop off in mass, entirely GPUs dropping off, no ASIC will be inefficient enough to be brought down by EIP-1559, but the revenue drop combined with difficulty increase will likely push out massive amounts of GPU hashrate, resulting in ASIC centralization) Best case scenario in my book is to implement this change and rush to POS ASAP, hopefully complete the merge before ASICS represent a majority of hash.
I also disagree that this would set a precedent for arbitrary changes based on social pressure, this EIP3368 isnt about social pressure and thats not the reasoning put forth for it, the goal is to deal with the network security issue that exists due to a sudden drop off in profits that will occur with EIP1559, smoothing this drop off out over a longer time period than 1 block is very beneficial for the security of the network, and it happens to be beneficial for miners aswell.
Its worth noting, 3eth block reward would just about match current revenues with post EIP-1559 revenues, disregarding difficulty of course. A decrease from that 3BR point is still an overall decrease in miner profits (when factoring in lost fee revenues), its just this EIP would spread the gradual drop in miner profits out over a longer time period, and EIP1559 would cause the drop immediately in a single block. Hence, it deals with a legitimate security issue contained within EIP 1559, no one can predict how the majority of hashrate will respond to a sudden 40% drop in revenue (thus, initial attack cost dropping 40%) so it doesnt make sense to play a game of chicken with them! Miners can attack and cause significant damage faster than devs can release the merge in response. Users think that the miners knowing devs will rush POS will stop an attack before it starts, but when hashrate becomes unprofitable, they no longer care about the “theyll kill me sooner” threat… they’re already dead at that point…
It makes sense to not risk it, based on the calculations ive seen, the drop off in revenues is a serious threat with EIP-1559 alone, couple in the difficulty rise, and we have a real security threat that needs addressing
If POS is ready and able for an emergency merge, it should be done ASAP, if not, it shouldnt be used as a talking point as to why we dont need to give miners concessions. Clearly, if our other option is not ready, we must give concessions, or were playing a game of chicken with a $200bn network.
My vote is 1559+3368+969(whenever someone proposes 969 again?) in the same hardfork
1559 for the predictable fees, 3368 to deal with the short term security risks posed by 1559, and 969 to atleast make future asic centralization more difficult (more might be needed prior to the merge to address this, personally i think people are drastically underestimating the progress ASICs are making currently due to a lack of hard proof)
Edit to expound on the last point about ASICs: (I could also get behind 1057, but i understand thats a non-starter.) I simply do not believe that the recent hashrate increases weve seen could have been entirely gpus based on inventory numbers…, given the magnitude of the rise, my person opinion is ASICS are probably 10%<x<20% of the network already. Ive heard their main downfall currently is the chip shortages, but this wont last, and shouldnt be bet on continuing. I’d like to see more proposed EIPs dealing with ASIC resistance. The break-glass moment (1057 becoming a necessity due to ASIC 40-51%) has a high liklihood of occuring before the merge can be completed in my opinion even if we pass 1559+3368+969. (simply due to the market forces, theres a massive amount of capital funding ASIC development and manufacturing currently, and they know they need to do this ASAP) (this has to do with EIP3368 because 3368 addresses the short term security issues of 1599, one of those security issues is that EIP1559 would further the domination of ASICs over GPUs by decreasing rewards to a level potentially unsustainable for GPUs, but entirely sustainable for ASICs.)
I have, and needed to output it to the EIP. This will be added to the EIP. The source data: https://docs.google.com/spreadsheets/d/138M4R1-_zS-OLBsl2VJeN_anfTSCRCFc6EguYUVG-yA/edit#gid=1954833572
Horrible idea. Force a hard fork and let the users decide. This is really simple. Do you want your chain secured by a diverse group of miners or not? Miners getting paid 3 ETH for 10,000 transactions in a stretched block during congestion does nothing for compensation or security. Read the code and understand the issue. Utterly naïve proposition.
At a technical level, this does not require 1559. EIPs are technical change proposals, not a governance system.
Another piece of evidence against this proposal is that the main limiting factor for hashrate is the GPU shortage, not the profitability. ETH mining is ridiculously profitable right now, and it’s profitable for me despite my electricity costs being 25 cents/kWh. It’ll be profitable even if miner fees get cut in half, which is not happening. EIP1559 will likely not even decrease the hashrate more than a couple percent, since most miners will still be way in profit mining, meaning they will keep their miners on.
I have a lot of money invested in Defi. I am hearing 1559 is going to jeopardize network security in exchange for short term gains due to deflation and the burning of gas fees. Can someone please help clear this up and explain how this will affect long term holders of Defi tokens. My understanding is as risk goes up from a network security attack, yields will come down. If this is the case I am against 1559 without some kind of network security assurance. This EIP seems like it could be the solution as it will work to reduce risk.
If BR decayed to 1 before the merge was ready, that could cause massive centralization issues with ASICS. I dont believe calculations have been done as to whether any gpu could even break even with power cost at a BR of 1… but it seems unlikely they would, especially after EIP1559 and the difficulty rises in the future. The best case would be to complete the merge asap along with this change, it still decreases overall issuance the sooner the merge is completed, even if BR is increased.
If it decays to an unsustainable level before the merge is ready, then an emergency hardfork and another BR increase becomes necessary. (taking time and effort, and potentially causing danger if the foresight isnt there to do this before it becomes a large problem)
at a BR of 1, id question whether anything but ASICs remain viable, and that not only increases the ASIC centralization threat, but increases the attack threat from all the sidelined gpus who cant make enough mining “regularly” now.
If the timelines too long and overestimates the length until the merge, then theres little loss, the BR would have decayed mildly faster, but the merge came early anyways, and that means less total issuance (less time spent paying miners). (the BR is still decaying, and will likely get below 2 by the time any merge happens, meaning its got a good chance of actually being less total issuance, id love to see someone do a calculation on this to see what would be necessary to make the total issuance the same through the two scenarios)
If the timelines too short and underestimates the length until the merge, then it either A. requires an emergency hardfork, and a BR increase (or some other solution that pays miners more so they break even on power and keep mining) or B. results in centralization of GPU miners on nicehash and other attack vectors (or sold/turned off), and centralizes ASIC control of the main chain as they’ll still make enough at a BR of 1 likely. edit: +(part of the security issue created by 1559 that 3368 attempts to solve)
If this change is implemented, and the hard fork goes without a hitch, theres no reason the tapering rate couldnt be increased, or BR straight up lowered, its much better to do that, using the benefit of our knowledge then, rather than attempting to figure out a perfect timeline now. (imo)
How does it encourage further investment? A decrease in rewards down to an unprofitable level is a legitimate warning, not a sign to invest further. Especially coupled with the reality that the 2.0 merge will happen whenever its ready, doesnt have to follow this timeline.
I’d urge you to reconsider, gpus becoming unprofitable is a huge security threat to the chain. If your ok with an ASIC only chain, i suppose not. ASICS wont support a 2.0 merge. But they will support/not-oppose a fee drop that pushes out less efficient miners. (EIP-1559)
I suppose if people are okay with an ASIC-only chain, so be it. EIP-1559 +DIfficulty rise will make almost all gpu’s unprofitable by august-September… even assuming only a mild increase in difficulty, when in reality ASIC production will further boost this difficulty rise, pushing out even more gpu miners. Centralizing your hash more and more.
This violates pre-established norms of minimum viable issuance. EIP1559 has been informed to miners almost half a year in advance, so has the plan to merge with the beacon chain. The only reason to give in to these condtions would be a credible threat posed by miners - by mining empty blocks, censoring transactions or else disrupting infrastructure. A hard fork is not a credible threat if it coexists with the current network, as most users are not interested in a fork not approved by EF.
Some points for consideration:
- It is too early to conclude whether miners will enter the war of attrition which is mining empty blocks or censoring the network. It is war of attrition because it involves miners taking short-term losses in return for perceived long-term gains.
- Whether these long-term gains exist is debatable too. ETH price will likely drop, and ethereum’s reputation will be tarnished. This harms miner revenues.
- There is yet to be any statement from miners saying they will be peaceful once this EIP is accepted. Nor is there a way to hold them accountable to any such statement they might make.
- Accepting this EIP is effectively admitting miner authority over PoW consensus, which means miners get unlimited authority to propose even more brazen changes in the near future. Unlimited authority includes but is not limited to arbitrary increases in block rewards or block size (gas limit). Miners will then be rationally interested in ensuring the merge never happens as per the PoW consensus, it’ll have to happen in a centralised fashion outside of the proof of work chain
- Giving miners the authority to change block rewards sets a bad precedent for all PoW chains including bitcoin. A similar attack occurring on other chains like bitcoin would further tarnish the reputation and prices of both ethereum and cryptocurrencies as a whole. The facts that we are merging to proof of stake or that EIP1559 is being implemented are not relevant to the fact that giving into miners demands sets a precedent for all proof of work chains. Namely that miners can arbitrarily change block rewards at any point in time if they are sufficiently coordinated.
Following pre-established norms? I thought POW mining has always paid miners transaction fees from BTC to Ethereum. What is the purpose of burning the fees instead of giving them to the miners like it has always been done by your “pre-established norms”? I am a long term investor and I could care less about the games that are being played to try and prop up the price in the short term by creating a market frenzy about Ethereum becoming deflationary at the risk of compromising network security.
Let’s work on solid founded principals and honor what all POW coins have done traditionally in the past and pay the miners the fees for transactions. Price should not be dictated by arbitrary manipulaition of the supply. This will only create short term gains and longer term declines in market confidence. Monitary policy in crypto was designed to be hands off and it seems the new influx of wallstreet investors thinks this is Fed2.0 and can manipulate supply to get what they want out of price. We already screwed up in the beginning with the DAO hack resulting in ETC chain split. Let’s not repeat history again and make the wrong manipulated decision. This time history may not be so kind.
If we want to burn fees then it should be done after the merge in POS. POW has always rewarded txn fees to the miners. 1559 is a mistake with the fees being burned and the miners reaction to it is admirable as they have the best intentions of the network to maintain security. They are doing their job as the arbitors of security. It is the ones trying to change monitary policy before switching to POS and kicking the miners in the balls just because they can are the ones to blame, not the miners.
“Minimum viable issuance” supercedes “pay all transaction fees to miners”
Minimum viable issuance has always been ethereum’s policy
I am a smaller Miner and am for this EIP 3368.
Only 119 MH 24/7.
The Devs never said tx fees will go down for end users with EIP-1559. Like you said more even.
I hear everyone saying that ethereum operates on “minimal viable issuance,” and do generally agree with that. However, the fight over eip-1559 is breeding major toxicity within the ethereum community - the worst in years. People are picking sides, leaving for competitive blockchains, ethereum’s reputation is taking a hit, and there is a serious chance that network hashrate and security could fall off in a dangerous way before POS is ready. This influences my perception of what is minimally viable, as having a healthy community is very much worth paying for.
We should not play with fire here. There is no need to throw miners under the bus for (potential) increase in eth price. The reward is not worth the risk. Mining needs to remain profitable and attractive until the POS shift is ready (and I mean ready, not rushed through without essential features) and this is one of the only viable ways achieve that.
Eip-1559 is a subsidy from miners to users, this balances that out.
As far as I know the merge is looking to be 1 to 2 years away.
Isn’t that a bit hypocritical. So block reward can’t be changed, but fee structure can? Cutting revenue from miners with brute force and without even trying to really talk it out with them?
You cannot simply change the plane direction in mid flish as you please without a broad consensus. This just show the lack of decentralization in ETH in my opinion. If some simply have the power to change things on a whim without broad consensus then ETH is just a glorified centralized database that is super slow and super expensive.
Also what I find really disturbing is the blatant missinformation being streamed and written about everywhere. Blogs, youtube etc… Most of that is spreading a lot of wrong info:
- Miners will try to 51% attack ETH. Completely wrong. Miners cannot attack the network only the pool with 51% can. And it was clearly stated multiple times its just a show that 51% can be mustered not that any actual attack will happen
- EIP-1559 will reduce the fees. Obviously this is wrong
- EIP-1559 will make ETH deflationary. It might, but there is 0 guarantee that this will actually happen. If you really understand the fee structure and economics of ETH its very unlikely it will become deflationary.
My biggest gripe with all this is that there is tons of people not really understandting the PoW or the ETH project in general at the technical level. They simply dream of short term pumps and gains disregarding the important things. I do hope this will not backfire back badly.
I seriously doubt ETH will go PoS sooner then in 2 years. You can multiply everything in ETH development cycle x4 and get a realistic target date. If I remember correctly ETH should be PoS in 2017. We are in 2021 if noone noticed. So I think its safe to not assume anything here.