I think there are layer two solutions such as Optimism that are supposed to do that that will be rolling out even before EIP1559. I’m quite new to this so just trying to learn as I go
Avg Block reward is currently 4ETH, 3ETH is still a 25% immediate cut, with a tapering cut after that down to 1. Oh yeah, its totally a subsidy of miners to drop their rewards 25% immediately, and 75% over time. /s lol
EIP1559 with 100% burn would be a nearly 50% immediate drop in revenues
There are less security issues with a 25% immediate cut, and a gradual drop off beyond that, than there are with a 50% immediate cut.
Namely, the ability to watch and respond to see if their hardware is actually absorbed by the market! Only the naive would believe that miners will sell their cards while gpu resale prices are dropping. They will hold them once they see resale prices drop. Then, you have a significant portion of gpu hash offline/on nicehash… (ASIC centralization threat, gpu attack threat)
EIP1559 is a 40-50% Drop in revenues, on top of a possible 50% difficulty rise between now and then,
I doubt eth has any chance of remaining the most profitable after this. Even EIP1559 alone would drop revenues enough that some hashrate would begin switching out to other coins and nicehash, and that ignores the difficulty rise, which will only increase as ASICs proliferate between now and then.
“no such thing as risk free business” Miners are well aware of this, when their Ethereum opportunity ends, (when a gpu becomes unprofitable to mine with), they are either sold, used for attack, or their other purposes.
The users seem to not realize that their business isnt risk free either… decentralized mining and eth remaining #1 in profitability reduces the users risk from an attack on the network they use substantially, if eth is no longer #1 profitable for miners, users will learn quickly why they need to be…
Difficulty rise alone through July threatens to make a significant portion of GPU hashrate unprofitable, couple in EIP1559, and you have an existential threat to GPU miners on your network. If you want to keep a majority of hash in GPU’s, and you want EIP1559, 3368 is a good start along with 969, but 3368 still doesnt remove the risk, merely reduces the risks created by 1559 by about half. (25% drop vs 50%)
I urge you to reconsider if you want any significant % of your hash to be GPUs. If your fine with ASICs controlling 51% By august, by all means, stay the course and do 1559 without any compromises.
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As a long time Ethereum investor, I hope this proposal, or one like it, will mitigate the unfounded risks being proposed by EIP-1559 and the recently proposed “break the glass” proposals. This recklessness with our network security is unprecedented. PoS has taken years because we have decided we need to make this transition in a SAFE manner. Now, if we cannot get proposals in place without alienating the people providing our security, we are going to forego this and “damn the torpedoes, full speed ahead”? This is nonsense.
I appreciate the increase in value 1559 is likely to bring to my balance in the short-term, but that will not be realized if the security of the network is sacrificed.
“Our governance is inherently social, people who are more connected in the community have more power, a kind of soft power.” -Vlad Zamfir, Ethereum core developer
I am hopeful of the promise of PoS, but as of today, our network runs on top of the miners. You literally do not get any more “connected” to it. Stop proposing sudden changes that threaten the network’s security.
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Hmm, from the whitepaper:
" Otherwise, refund the fees for all remaining gas to the sender, and send the fees paid for gas consumed to the miner."
Do you have a reference for Ethereum’s philosophy that predates the whitepaper?
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Took the post down. Intentions was not to create heat or hostility. I’m in the wrong place.
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How is it speculation? EIP 1559 will immediately drop revenues 50% (Current Rewards near 4ETH with both BR and fees) and difficulty rise by then will likely be another 50% hit to revenues at least due to the ASIC proliferation. Without action to stop the ASICs and keep GPU’s profitable, unprofitable GPU’s will turn off…
Not a hit to profits, a hit to revenues as whole, twice over… both large hits…
By August many gpu’s will unprofitable just due to difficulty rise alone, say nothing about EIP1559. (with no change)
’
The consequences are known and calculable, no need to wait till after the harm occurs, and those calculations show most GPU’s negative with power costs by July-August…
Miners can organize on nicehash faster than devs can release a hardfork/merge… Why would they? Simple. Nicehash offers +1 over eth… If eth isnt profitable enough anymore… and they cant even break even on power, why would they keep mining normally and losing money?
Worse, difficulty rise will occur until EIP1559, then EIP1559 will implement another 30-50% drop immediately, in a single block
no time to “see what happens” if the harm gets done in a single block hardfork, if a good chunk of GPU’s get made unprofitable by EIP1559, they’ll switch immediately to something paying more, like nicehash, who offers +1.
So, hardly speculation, the risk is there.
Thats not even saying anything about the ASIC centralization threat i posted about, even if the GPUs go peacefully and dont attack, do you want them to given it leaves you with a majority ASIC chain by August?
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EIP-1559 is not designed to reduce fees, nor is there any concrete reason to expect that it will.
There is a global silicon shortage that is causing the gpu supply to be limited, also work from home and gaming exploded in 2020 which increased the demand. I get that you are frustrated, but scapegoating the miners isn’t correct or helpful.
oh I see, you are just in this because number-go-up, you don’t really care about the underlying health or functions of the network.
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While I was pretty against EIP 3143, I’m fine with this one.
I don’t know if there is time for it, but I’d love to see a 100 blocks range variable decay (min-max) bounded to MEV fees rather than a pure constant.
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If the authors of this EIP was sincere about their concerns about the potential decrease of security of the network the EIP would be more in line with 1559 itself so that a short transition period (100 days - 576000 blocks) will be modeled such as: (after EIP1559 lands)
Block 0 : %100 of the fees goes to the miners
Block 288000: %50 of the fees goes to miners, %50 burned
Block 576000: %100 of fees burned
100 days is arbitrary, I think could be even as low as 30 days.
This way all the concerns of the original EIP will be addressed. I still think and hope that EIP-1559 will go as it is. I’m also very happy to see that this whole debate brought us closer to POS as I believe environmental impact of the network should be priority #1.
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I am a miner and ethereum user. I appreciate the idea as a miner but I think this is not a good solution to increase the miners incomes like this. I would rather prefer to keep EIP 1559 as it is without a single change and to avoid the asics or any specific hardware to mine. The only risk with EIP 1559 is to get too many small miners going to other cryptos due to the reduced profitability of ETH and getting them replaced by ASICS which are owned mostly by companies in China which will have the negative effect to centralize the hashrate. This could be a problem when moving to pos and merging eth 1 to eth 2. An EIP 3372 is being proposed for that and it is i think a better solution as it won’t go against the deflationnist strategy.
Eip 1559 was original proposed without fee burn. That had support and would have significantly lowered fees. The eip has changed to burn fees. So it does not accomplish it original goal. There is no other reason to burn fees instead of lowering them except the devs artificially inflating the price. That as I stated earlier benefit the devs with large holding.
Now the devs are just being disingenuous stating they could speed up eth 2.0. If eth 2 was ready it would be implemented.
An eip to eliminate mev is already proposed.
Anyone who is in support of 1559 has not done their research.
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“oh I see, you are just in this because number-go-up, you don’t really care about the underlying health or functions of the network.”
I shared my opinion.
I care more about Ethereum and the network that You might imagine.
So no I am not in here just here because the numbers go up.
I deleted the post.
I wrote an opinion if it creates hostility like this, it means I am in the wrong place. lol
20% lower a month ago because the network grew 20% with new miners coming online. it was not a drop in hash 20%.
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1559 does not reduce the gas fee you currently pay for any transactions. it only makes the fees more predictable. fees are based on network congestion. if the network is less due to less miners securing the network and there is still the volume currently from DeFi and such your fees will likely rise
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the focus for end user was never there… millions in pre-mine to devs and investors has been and is now the entire focus
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I am in favor of this EIP or something similar being included with EIP 1559 (assuming there are no technical issues… Unlike Ameen, I am not a core dev)
There seems to be a lot of good ideas in this thread about other mitigations that could be included, i hope there can be a simple fix to address this issue:
Current average block reward to miners is ~ 4ETH, and who knows it might even go up from here. After EIP 1559, miners will get 2 ETH. A sudden ~50% drop in mining rewards sounds like an unnecessary risk.
A sudden change in this complex network can have many unintended consequences. One potential consequence in suddenly dropping the mining rewards is mentioned here… but there are likely others that we are not predicting.
There has never been a drop in mining rewards this large. the first reduction was 40%, from 5 ETH to 3 ETH, then 2 years ago there was a drop in mining rewards of 33% 3 ETH to 2 ETH… there have been no issues… but also this is a ~50% drop and there was a lot less at stake in the past and there was a less of a complex network of hashrate markets.
Why take such a risk?
I don’t want to pretend to be an expert on either side, but there has got to be a way to include EIP 1559 while also reducing the miner rewards in a more gradual way than just a 50% drop and we hope nothing goes wrong. This seems like a solid simple solution.
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Emotions are running high regarding 1559 and it does come out in peoples’ responses. It can seem personal when the person posting says “you” when question a statement you made. Anyway…
Regarding your comment about if the the price doesn’t go up, you will reconsider, there are still scenarios where the network would be in jeopardy even if the price goes up. BBT has these examples in the model he has created.
Also, the EIP is a technical proposal. BBT has publicly stated that his proposal is only needed under certain conditions. If those conditions aren’t met, then there is no need to implement. Not being a developer, I don’t know when the final decision for inclusion would need to take place. Given what has happened with EIP 2315, it seems the deadline would be about a month prior to the fork.
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Hello everyone. I am a rather large Ethereum miner - currently mining at about 150 Gigahashes mining ETH. I have mined Ethereum since genesis block. I built a business around mining and have personally brought millions of dollars into the ETH blockchain itself through my hosting company. During the last 6 years in the industry, I have followed the GPU mining market very closely and have watched a number of projects lose their footing to 51% attacks. On the other hand, I also am a major ETH HODLer and I believe in the project long term. I participate in DeFi and am learning more about NFT’s. I have my feet in multiple “camps” of the Ethereum community, but my expertise lies in the mining ecosystem.
That all being said, major upheavals in the mining economy of Ethereum do not happen in a vacuum. Ethereum has enjoyed being the “best in class” for mining since its inception and has not had to worry about a lot of security problems that many other PoW chains are forced to address. And as a result, I believe that has contributed to a large degree of hubris over the last year or so. Reading ETH twitter confirms this hubris to me on a daily basis. This kind of hubris looks to be playing a large role in downplaying miners’ concern and misrepresenting their concerns as “greedy.”
As a result of talking past each other and seeing each camp as having nefarious intentions, communication seems to have broken down completely.I am reading many tweets about how miners are purposefully trying to stop Ethereum development. I have seen tweets arguing to reject 969 simply because miners attempted to show that a 51% attack is possible NOW, which means it is far more possible after revenue is cut in half. And this perhaps misguided move was attempted only after Bitsbetrippin has built models around the risks that appeared to have been ignored. I’ve seen tweets that miners tried to 51% attack the network. The only party who could have 51% attacked the network IF that threshold was reached was Ethermine and they weren’t even a party to the “collusion” effort. So this claim is nonsense, and it demonstrates to me that a lot of the influencers are overreacting to the miners looking to prove a point.
Miners have no intention of stopping development on the network, as some people claim. Miners know PoS was on the roadmap, and we have accepted reduction in block rewards multiple times (that were meant to increase price but didn’t). We understand fees are high and we want DeFi and NFT’s to grow. There was obviously miner opposition to EIP1559, but miners have coalesced behind BBT, who is not proposing we remove EIP1559 at all. What are we stopping exactly? In fact, there have been a few miner-backed proposals that did not get accepted. No one is saying devs are trying to stifle development on the network as a result of these EIP’s not getting accepted. I got in this space for its long term utility, and to support in a way I understood how, not to leach on to the work of others. I support layer 2 solutions, PoS, and once it was accepted by ACD, EIP1559.
Miners are seen as a carbon-creating evil that must be stopped at all costs. Every single miner I know mines green, including my business. Those that don’t usually wise up and send a green mining co their equipment. We get all carbon neutral power. And that is the norm because power is cheaper when it is renewable. Smart miners set up their shops in renewable, asymmetrical energy production sites where supply varies wildly, and we can capture the difference in supply and demand. You are seeing this daily with wind, and seasonally with solar and hydro.
Miners lately have been characterized as not ETH HODLers, which is untrue. I peruse various forums and groups all the time and miners are so excited about their mining rewards and plan to hold. I personally am holding as much ETH as I can. I have purchased 0. That is mind boggling to be able to participate in crypto finance by just providing a service to the network.
Furthermore, miners are characterized as bad because they have overhead v. stakers which do not. I advise to all of my clients to grow their ETH as much as possible, and pay their hosting fees to me from more outside investment. Almost all of my clients have not sold a single ETH. Furthermore, my business is able to HODL all our ETH by sustaining our existing and bringing on more clients. We have not sold a single ETH since June of last year. Mining businesses can never sell their ETH by intelligently designing their business models.
Now that I’ve addressed many of the ad hominem or general attacks against miners, I hope I can address the miner concerns as they relate to ETH which are as follows:
- The change in rewards is too stark, too quickly. Here the local utility raised the rates of crypto miners, but they did so over the course of four years in order to give crypto miners the chance to adjust their business models. While I wish the increase wasn’t as steep, the truth is the utility was able to retain much of the revenue from those businesses as they did not go under. One county over, their utility raised rates overnight 500% and it killed a number of jobs there in one day. The utility has since reached out asking why the miners are now offline. They thought they could simply absorb the cost differential, and now the utility gets 0 revenue from those businesses. The point is, in multi-billion dollar industry, change is designed to be incremental so we can see the effects of policy play out. EIP1559 as its written does not allow devs the time to react if there was a miscalculation.
- The risk for 51% attack is real, and Ethereum has a lot of enemies right now. The truth is there have been over a half a dozen 51% attacks and all of them were during that unstable transition between GPU miners and ASIC’s, or not best “in class” mining hashrate. VTC had Lyra ASIC’s, ZEN had Equihash ASIC’s, ETC was not best in class. Ethereum may find itself in BOTH situations where ASIC’s are proliferating on their network, centralizing hashrate, AND RVN can compete for GPU hash due to its high emission rate relative to Ethereum. RVN does not need as a high of a price because its emission schedule is so much higher. Profitability falling off a cliff during a bull market leaves a lot of hashes on Nicehash wondering where to go. It’s kind of a perfect storm.
- Raising the BR to 3 and tapering is still in line with minimum viable issuance policy (MVP). I have seen some disingenuous arguments made saying we cannot raise the BR as its an increase in issuance. This is not the case. Miners would still experience a net loss in effective revenue the day when EIP1559 launches. And through the burn mechanism, it woud be a net issuance decrease as well. And miners would likely accept (I would) a tapering schedule that would be a net loss in Ether over x period. The point we’re trying to make is that the shock in the mining economics causes a risk. We are not fighting for more Ether in the long run. The timetable to 2.0 is the main driver for that.
- Some stakeholders are just saying they’re going to rush 2.0. This is dangerous also, and anyone who argues it is not is taking an emotional stance. It is absolutely dangerous to rush a massive security consensus change on the 2nd largest blockchain in the world because of political reasons. ETH should be focused on scaling, not politics.
Anyway, I hope this is a level-headed post in a heated discussion around EIP1559 and Bitsbetrippin’s EIP 3368. I think its important to retain a sense of community. Miners have been getting beat up lately, and it’s actually kind of emotional to some of us to steer our entire career towards protecting a network silently in the background, only to have the entire segments of the community seem to switch gear and beat up on you. No matter what the outcome, I wish ETH success. I will be HODLing.
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Really good arguments, you almost make me changed my mind about this EIP.
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I am so happy that the discussion has moved to a forum instead of twitter. In any conversation, it is important that we assume positive intent, and having this discussion in long form makes it easierto assume positive intent than in twitter.
Miners have a very relevant and informed perspective, but because of the existence of a monetary incentive, they are being assumed to have negative intent. This is incredibly short sighted. I’m really happy BitsBeTrippin is beginning to be heard, and am confident that these VERY VALID CONCERNS will be heard by the risk adverse core devs in charge of these sorts of major upgrades.
Full Disclosure:
I have a very small mining operation (about .08 ETH a day, which PALES in comparison to my ETH holdings as a very early adopter), it was an educational experiment… I bought my rig from someone who was mining on NiceHash so i continued to use NiceHash, as selling my hash rate looked to be giving better returns than just mining directly from a pool.
I am confident my rig was used to 51% attack ETC, and this honestly really pissed me off and I still feel guilty about it and I do not use Nicehash any more (In some ways, ETC is my baby, but thats another story 
).
I don’t think anyone can credibly attack my commitment to the success of Ethereum, nor my overall understanding blockchain networks (I have the first masters degree in digital currencies… ever)… This tiny bit of mining perspective, plus a focused study of Token Engineering for the last couple years helps me see how real and unnecessary this risk is. I am much more bias by my ETH holdings than my small mining rig set up, that is really more of a conversation piece in the Giveth home than any thing else.
Please, so many people have so much riding on the continued trust of the Ethereum network’s security, let’s assume positive intent and listen to our well informed mining friends about this valid concern, and address it before adding EIP1559 to the network.
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