The vast majority of Ethereum miners are unlikely to protest EIP-1559, a proposed change to Ethereum’s ‘crazy high’ fee market that would potentially cut a fair share of miners’ revenue, according to popular crypto analyst Hasu and Georgios Konstantopoulos, Research Partner at Paradigm, a cryptoasset investment firm.
EIP-1559 is an Ethereum improvement proposal by ETH co-founder Vitalik Buterin that was first proposed in April 2019. It is supposed to change the rules of how Ethereum users bid for block space in order to get their transactions confirmed. It comes with a new set of rules that are relatively simple but would mean significant changes for users, miners, wallet providers, as well as the overall security of the Ethereum blockchain.
Four main improvements proposed by EIP-1559, as outlined in the Analysis of EIP-1559, are:
- All transactions pay the same fee rate. One of the biggest problems with first-price auctions currently used by Bitcoin and Ethereum is fee estimation. EIP-1559 seeks to improve it by making all transactions pay the same rate as much as possible instead of making individual bids, which would hopefully lead to lower fees and more precise fee estimation.
- Block size slack mechanism. Demand for block space often varies, making miners validate both half-full and highly congested blocks. EIP-1559 slack mechanism would allow some blocks to be larger while other blocks would be smaller. As such, the longer-term average blocksize limit would still be enforced, even though there would be short-term variation between individual blocks.
- Security improvements. EIP-1559 seeks to make the Ethereum blockchain security less reliant on user transaction fees by burning them and instead incentivizing miners with a more reliable perpetual block subsidy.
- Preventing economic abstraction. EIP-1559 will also enforce that transactions burn a specific amount of ETH so that other tokens don’t threaten the reserve status and monetary premium of the native token.
As reported, some miners are unhappy with the proposed changes and have started rallying against the proposal under the hashtag #StopEIP1559.
We do not support EIP-1559! ♂️❌
Hive OS team stands for the interests of our mining community
Let’s hope that the Ethereum developers will take the miners’ opinions into account when working on EIP-1559.
♂️ Don’t let EIP-1559 go live! ⛔️ #STOPEIP1559 #ETH #ETHmining pic.twitter.com/1Pk92sPFSc
— Hive OS (@hiveonofficial) January 19, 2021
One of the leading mining pools opposing the proposal, Flexpool, has even launched a website to keep track of Ethereum mining pools that stand against the proposal. According to some of the pool’s latest tweets, their faction stands against burning transaction fees instead of giving them to ‘’honest miners who invested their savings into the Ethereum security.’’
Raising the block subsidy on the new chain to increase miner compensation. EIP-969 activation, which would remove all ASIC miners from the Ethereum network. Instead of burning the fees, it could be distributed to miners in the next unspecified number of blocks.
Nevertheless, the report concluded that “it is already in the best interests of miners to cooperate with users on the upgrade,’ and the transition is likely to succeed despite the protests of some.
The upcoming EIP-1559 transition will be further discussed at the EIP-1559 roundtable on Friday, February 26, 2021, at 14:00 UTC.
At the time of writing (17:12 UTC), ETH trades at USD 1,562 and is down by almost 10% in a day and 12% in a week, trimming its monthly gains to less than 27%. The price rallied by almost 500% in a year.
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