Ethereum’s “EIP 1559” fee market review green-lit for July
A large majority of Ethereum miners are against the proposal. But that hasn’t stopped developers from scheduling the update for July.
One of the most significant and controversial alterations to the Ethereum blockchain in recent memory is now scheduled for inclusion in its codebase.
The Ethereum Upgrade Proposal (EIP) 1559 will be packaged with the London hard fork next July, regardless of the mining industry’s dissatisfaction with the proposal, according to the All Core Developers call on Friday. At least five other EIPs are likely to join EIP 1559 in London.
EIP 1559 reverses a typical blockchain transaction to fix numerous Ethereum user experience issues. Traditionally, a user sends a gas fee to a miner so that a transaction is included in a block. That gas fee will now be sent to the network itself as a kind of “burn” called a base fee with only an optional tip paid to miners. The burned fee is also set algorithmically, which apparently makes it easier for users to pay a fair fee.
The proposal has garnered the most support to date from both Ethereum app creators and users, given the current difficulty of selecting a correct transaction fee. Miners and mining groups, on the other hand, have been rallying in opposition to the proposal as it progressed towards the main network.
Gold mining rush
In fact, mining Ethereum has been a particularly lucrative business lately. Total mining revenue topped a record $ 1.3 billion in February, and about 50% came from fees alone, according to Coin Metrics. An increase in both the price of ether and transaction fees has introduced a wave of new hashing power to the network, which is more than double what it was a year ago.
Minority mining group Flexpool launched a marketing campaign against the EIP. Several minority groups joined, followed by the majority groups Ethermine and SparkPool. More than 60% of the hash power of the Ethereum network is now against the proposal. F2Pool is the largest group in favor of the EIP, with a hash power of 10%.
On the call, the Ethereum developers decided to pair EIP 1559 with a delay in the difficulty bomb. Also called the “Ice Age”, the bomb gradually increases the difficulty of mining on the Ethereum network. Geth team leader Péter Szilágyi said that pairing the EIP 1559 with the lag helped ensure that no one forked with Ethereum at the time without going through some technical hurdles.
MEV to the rescue
Mining pools have only a few options to stop EIP 1559 now that it is included, and most of these would be considered actively hostile against the network. The biggest danger would be a 51% attack on Ethereum, which would censor transactions using the EIP framework. However, it remains unlikely, given the various economic incentives, not to attack the network.
For example, successfully using a 51% attack against Ethereum would likely decrease the value of ether in the short term. (Or maybe not, as three 51% attacks on Ethereum Classic have shown.)
In addition, a new revenue replacement is quickly available for mining networks. The miners, referred to as miners-mined value (MEV), can take advantage of their place as arbitrators in the way blocks are packaged for profitable “first-hand” operations. MEV is currently popular with decentralized finance (DeFi) traders who raise gas prices to secure their place on the block. Many Ethereum mining pools are implementing MEV software to gather this untapped revenue stream.
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