EIP-3368 - Block Reward Increase /w Decay for next two years

EIPs
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addressing the statement that the inflation rate would ‘destroy’ ETH’s blossoming “SoV” narrative (it has NO upper bound, wth are you even talking about

This idea that having no upper bound destroys SoV narrative is deeply flawed. An upper bound sounds nice on paper, but in the long term leads to a chain unable to pay for its security as well as instability issues due to fee-dominated rewards. This latter point being one of the arguments for the fee burn in 1559.

A 3-5k Eth price is great for everyone that hodl eth and mines it for sure, but is down right asinine for users or prospective users UNTIL the L2/Sharding can help solve the fees.

This is backwards. Fees are not determined by price. Fees are a result of limited block space interacting with demand for block inclusion. Fees can be correlated with price, but I don’t see the logic in fearing a price increase itself.

It’s on the mining pools now to configure and ensure their miner clients are able to participate in the yield.

Worth highlighting that MEV is not just from the use of things like flashbots. MEV is earned by miners today even in pools doing nothing at all due to on-chain gas auctions. The fees from these auctions will continue to be earned by miners post-1559 via the inclusion fee.

The world is bigger than just Ethereum in the PoW space and other coins have gained some ground on taking hashrate away from Ethereum.

Do you have the latest data on this? I recall someone taking a look recently on the #1559-mining channel and came up with ~95% of GPU PoW rewards being from Ethereum. I will run the numbers myself later if no one has it.

Protect the network at all cost, through PoS transition. Max Security, not “max my pocket book at the risk of the network”

I don’t understand how you can at the same time accuse others of putting their pocketbook first and then argue for “Max Security”? Why not increase the BR to 4? Or 10? Those increases would provide even greater security than 3.

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Think the primary point on this one was L2/Sharding should answer the call on the fee-dominate network as the fees drop significantly and returning the incentive only to the issuance emission. The network contracts accordingly as adoption (which takes time) moving to L2 solutions. What is completely lost it seems here is the burden of loss (burn) isn’t really on the Miner as much as it is on the user. User’s are paying for the inclusion at high fees, not miners, miners are incentivized to order sort highest transaction value first and include with block reward. But the narrative is switched to 'by burning we can drive value to eth’s bottom line" This doesnt promote using ethereum, this promotes hodl ethereum and resting on the backs of people that use ethereum to burn a portion of their contribution for the betterment of everyone else. This seems like a pivot of ideology from ‘using ethereum’ to, if you use ethereum, a portion of that supply will be burned, lets pump that price up!

When paying for fee inclusion it’s predicated on a price from a user perspective. When we use metamask, it offers a spot price with a respective yield. If ETH is 5,000.00 per eth, the cost of gwei goes up. The average transaction value back in August when everything was on fire was 240gwei, it costed me 12.xx to interact with a smart contract at 338.xx eth price. Now at 1800 eth price, that same contract interaction cost me 400+ at 540 gwei pricing. What am I missing here if eth price 5k and nothing is done for scaling? Less people will use Eth, which IMO sucks, unless eth is going to go on a crusade and drive the SoV narrative not usability.

I am adding this to my analysis coming into friday to show full size of pie potential. It is a vital number to understand with any non-protected 51% algorithm and the potential hashpower that could affect it. Targeting by Thursday.

The 3 was calculated from the average total BR+Trans+Inc fee as the average block reward payout (Yield) since last May to current. The average since November has been more around 3.7-4 eth, 2 of which is the emission, the other 1.x to 2 being the fees. An offset was suggested to ensure the yield decrease was not so drastic to cause a significant pullback in hashpower, opening up risk to the network. This number could be adjusted to 2.5 vs 3, halving amount and as long as MEV does in fact make up the difference, it becomes a mute point. If the cut + a price decrease which drops total participation that’s the risk.

Again, as this discussion gets further along I see the narrative of a min. security amount will drive eth’s decision, thus an alternative to 51% risk (MESS / Gravity Well) should be considered if this is not pushed through.

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I want to thank everyone for their perspectives, and add my own in as a new miner and as a result new Ethereum user. I was really surprised when earlier this year that GPU mining at home was still profitable. This was the motivation I needed to finally jump into crypto. Otherwise, I would probably be looking at the sky-high prices of BTC and ETH and think “I’ve already missed that rocket ship.” Now I’m starting to get interested in things like Defi and staking Eth 2.0, and as I complete my CS degree I’m interested in developing on blockchains. I’ve also turned two of my co-workers as well as my cousin onto GPU mining with their gaming rigs, and one of them has also decided to invest more into understanding crypto and mining. EIP 1559 and the resistance to the compromise EIP 3368 are confusing to me. What is the motivation behind burning the fees as part of 1559? Does the Ethereum community want to discourage new miners from joining just so that they can boost the value of their own ETH through deflationary pressure? Please explain to me if the rationale is something other than just to maintain an exclusive clique.

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Now at 1800 eth price, that same contract interaction cost me 400+ at 540 gwei pricing. What am I missing here if eth price 5k and nothing is done for scaling?

An eth 2 dev took the time to write out common misconceptions in the discord with parallel development being a key point. I know you are in that discord. Harping on “nothing being done for scaling” is not helping your argument.

How does eth price and gas price increase beyond usability if no one can afford to use it? The reason ETH price is rising and gas prices are high is because people want to hold and transact ETH. If the price continues to go up, this only means people value transacting. Scalability is desirable and is being worked on, but saying that price escalation is undesirable makes no sense. It is a consequence, not a goal.

lets pump that price up!

unless eth is going to go on a crusade and drive the SoV narrative not usability.

Again, this is not driving your argument. A deflationary environment is a possible consequence of 1559, not the goal. Equate this to increased security for the network being the goal of 3368, not the consequence that miner’s compensation goes up.

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What is completely lost it seems here is the burden of loss (burn) isn’t really on the Miner as much as it is on the user.

1559 and the associated fee burn does not meaningfully affect fees paid by users. This is especially true because of the next point.

The average transaction value back in August when everything was on fire was 240gwei, it costed me 12.xx to interact with a smart contract at 338.xx eth price. Now at 1800 eth price, that same contract interaction cost me 400+ at 540 gwei pricing.

The key thing you are missing is that the increased fees you are paying now are not driven by the price increase in itself, but by the increased demand for block inclusion. These can of course be correlated to some extent in that higher price can attract attention to Ethereum. Importantly, in a world where virtually no goods and services are denominated in ETH, people think about fees in fiat terms (like you just did). This means that given increased price of ETH and constant demand for block inclusion, you would just see fee amounts in ETH lowered and in fiat terms the same.

The last few months lends evidence to this point: increased price has come with increased demand for usage of Ethereum. Of course lower fees are desirable through better scaling, but the idea that price should be a factor when thinking about scaling is not logical.

Personally I think arguing about the merits of the EIP is unproductive until we have more data than the speculation thus far. Considering we are mere days until the ACD call, my intuition is I don’t see how building consensus around such a big change could be done in that time even if the data were available today, let alone Thursday. It’s always possible the data paints a convincing picture the change is needed, but as of now I am unconvinced.

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You’re correct, there is parallel efforts going on in scaling. Not fair to throw that completely out, more of a general statement of proceeding with PoS ahead of scaling ready for prime time is interesting. As a participant that is not tracking the progress on discord or reading our ramblings, just wonder if that transfer of conflagration is going to be worth it to the foundation/acd and dApp makers when less burdened transactions are not a thing upon the merge. Some calculus going on there on patience.

Again another fair counter. Having to write this EIP by design I will be implicated that we are trying to pad our pockets vs network security. ‘Hopefully’ none of it will be needed, but that’s the risk it sounds like folks are willing to take.

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There is an ACD meeting Friday and the miners are trying to increase block rewards from 2 to 3 in the same fork as 1559. The Devs are asking us to take a community poll to see if we have consensus. We need everyone to please take the poll, this is very important. https://www.reddit.com/r/ethereum/comments/m5vvyb/eip3368_increase_block_rewards_to_3_eth_with_2/

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I don’t believe devs are asking for such a poll at all. What’s needed is a compelling data backed argument for why such an increase is necessary. This is not just a popularity vote.

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Tim is definitely not asking for a reddit poll there. The point was to provide a compelling case for this change prior to the ACD call. The comment he’s reiterating is actually mine:

It’s worth noting that the all core devs call aims to be a place to finalise decisions, not a place to present the evidence for them. If the data backing 3368 doesn’t come out soon so it can be analysed ahead of time it has no chance of being accepted on the call. If the data is first presented on the call I’d expect it to be rejected outright.
EIPs get accepted because they build strong community acceptance and work through the issues ahead of time, then go to ACD. ACD is not the start of the process.

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Well it should not hurt to see what the community thinks. Should help answer the question if it is contentious. I am in favor of polls to gauge community support.

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Gauging interest is fine.

But larger community does not really have an understanding of the security aspects at a deep enough level to go either way.

Someone has to make a technical case to the Devs.

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Imagine you are printing money and you switch off the printer. Is not a profit-risk question you can´t go against your actives, miners must ensure the continuation of the blockchain and the eips must ensure also that miners have their needs covered and by making and announcement in wich we can help our miners to prepare the change without changing the final objective, giving some time to prepare new strategies I feel better than changing radically the way we are working. we need time to reorganize the system.

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This post paints a very different picture of what an Ethereum miner looks like and what their incentives are than the one painted by Chun Wang of F2 Pool on the ACD call and is more in line with other miners that I have had interactions with.

I hope that the community is able to block the ill informed noise coming from ‘influencers’ 280 characters at a time and start listening more closely to essential network participants.

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Whether a chain is 51% attackable is not a function of hashrate alone. It is how decentralized that hashrate is. As other commenters have pointed out, 1559 and the new efficient ethash ASIC’s will centralize the hash making the chain more attackable (ASIC hash is just as rentable as GPU).

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And a sudden decrease in hashrate favors a 51% attack from both vectors. 1. Less hashrate securing the network. 2. More decentralized hashrate, as GPU mining become less favorable to ASIC miners who can likely withstand the 1559 fee burn.

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51% due to centralization is not the argument made by the author.

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It is implied whenever security is mentioned.

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Provided some additional perspective and data. Again, this does not wholesale push that this EIP has to go in no matter what, actually states everything by and large will still be ok unless a few scenarios play out. This has been my focus since the start, it isn’t a matter that its a problem now, nor after 1559. It’s a matter of a few more dynamics getting ethereum into an issue; if that were to happen, what’s the answer?

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The 51% attack fear mongering of ASIC hashrate is way overblown given their tether to ethhash, the profitability of Ethereum, and Ether price. It doesn’t make sense to destroy the value of Ether and confidence in Ethereum for a short term gain that will almost certainly assure their destruction and GPU miners’ most likely along with it.

In line with this whole thread. I have got to ask all the miners brigading this thread and proposing this, and the EIP-1559 thread, where were you all when 1559 was proposed almost 2 years ago? Most of the people with strongly head opinions against 1559 and for this proposal have surfaced those opinions in the last month. Hard not to correlate that with greed given 60% of the total hashrate today wasn’t even around when this proposal hit, and 50% of it joined in the last 6 months.

Again, this is not an improvement proposal. It’s an attempt by mostly Johnny-come-latelys to sustain or increase their already exorbitant bottom lines because these fees (largely due to the inefficiencies and gaming of the fee market miners are partaking in that 1559 partially aims to fix) set an unreasonable expectation of payment for service.

I have no problem rolling the dice to see what happens if 30-40% of the hashrate suddenly drops off the network. Considering 50% of it just piled in on FOMO. The Johnny-come-lately GPU hashrate can go mine Raven, Grin, whatever. I have no interest in supporting hashrate that has no interest in supporting Ethereum in bear markets and in bull markets pile in and immediately make demands on a two year old EIP.

I know BBT has been around, but he has largely riled up a following of profit seeking opportunists who should have been aware of 1559, PoS, etc. before making investments or reinvesting in mining on Ethereum.

Stop scapegoating 51% attack via suddenly available hashrate for rent. If Ethereum’s economic incentives at $.11 avg fees, 400 eth per day total tx fees paid, and $168 ETHUSD doesn’t invite GPU/ASIC rented hash attacks (the conditions when EIP-1559 was created) AFTER a 50% ejection of hashrate in a 6mo period from Aug 2018 to Feb 2019 (where miner revenue from fees dropped nearly 80%), and 150k GH/s was made available (> the GH/s securing the network at the time), there is absolutely no reason to think miners will suddenly make all their hashrate available for rent, unless part of a coordinated effort, which is a bigger issue with proof of whatever…

We were paying an avg 170k GH/s of hashrate nearly 2000 ETH in avg fees daily in January 2018 at an average price price of $950 ETHUSD ($1,900,000 avg daily fees paid), basically at the top of the fee and price runs that cycle. 8 mos later in August 2018 we were paying nearly 300k GH/s (yes it went up because hashrate lags price / hype) 750 ETH in avg daily fees at an average price of $300 ETHUSD ($225,000 in avg daily fees paid). That means we were paying nearly 80% MORE hashrate, nearly 88% less in fees… where were the proposals to increase BR then? When the network ejected all of that new hashrate plus 15% more over the next 6 months, why didn’t it convert to rented/auctioned hash and foster attacks against a chain in an even more vulnerable economic state?

Probably because the ability to successfully capture majority hashrate via rented hash has always been a) infeasible with what is ACTUALLY rentable, and b) too costly for profit, even at the most vulnerable points of the last bear cycle.

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