What you guys think about increasing the block rewards for mining? Cause i’m currently thinking about proposing an EIP to increase the block rewards from the current 2 ETH back to the original 5 ETH when Ethereum first started, but first I would like to get opinions from the community about this to see whether I should either proceed with the EIP or shelve it.
Here are the reasons on why I think the block rewards needs to be increased back to 5 ETH.
- As you all know, the mining rewards that come from tx fees always fluctuates wildly, sometimes almost reaching the same amount as the block reward itself. This has created a situation where miners sometimes decided to point their mining rigs to mine other coins when they are more profitable then mining ETH at that point in time due to low tx fees as most of the miners are always focused on generating the highest profit possible instead of contributing to the long term security of Ethereum. Iirc, EIP-1559 has been proposed to tackle the volatility of transaction fees, however it will run the risk of alienating miners cause the profitability of mining ETH will be reduced by a sizable amount due to reduced tx fees, potentially causing miners to mine other coins, therefore reducing the security of the network. Yes, I know that ETH2.0 is going live in a matter of hours at the time of writing, but it will take a few years more before we transition to a full POS chain (and who knows how many more delays are we going to have since ETH2.0 itself has been delayed by like quite a number of years already), so in the meantime, maintaining security of ETH1.0 is critical until the devs are ready to fully transition to ETH2.0. By increasing the block rewards back to 5 ETH, the tx fees will be limited to a max of around 20% of the block reward assuming the tx fees pattern remains the same. This will incentivize miners to stay on ETH cause they are able to get 2-2.5x more rewards in terms of raw ETH while reducing uncertainty on whether mining ETH is profitable at a particular moment in time.
- By increasing the block rewards, it incentivizes smaller individual miners to hold on to the ETH earned as they will be able to reach the 32ETH required to stake in ETH 2.0 easily in a shorter amount of time. They may be more willing to convert into a validator since they will mostly already have the requisite 32ETH needed, potentially resulting in an increase in the total number of validators. After all, it is better then having to spend to get the remaining ETH needed or 19288 USD to acquire the full 32 ETH needed (at the time of writing). Sure you can deposit your ETH into a pool staking service, but there is a possibility that they might take a chunk of the profits earned or even require a monthly installment as fees which might not be attractive to some people.
DISCLAIMER: This is my first time proposing something like this to the community, so feedback about this (and maybe some tips on how to properly raise an EIP) is appreciated. I have done some research about this to ensure the accuracy of my points although I may have missed out on some details or overlooked a few things that could make this proposal unfeasible (or maybe someone even already suggested this before) so if there is, please point it out to me so I could learn more.