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The last core developer meeting was focused on various proposals to improve the Ethereum to reduce or maintain block premiums distributed to miners. ETHNews tries to clean up the mud surrounding the discussion.
On Friday, August 24th, core developers of Ethereum and other stakeholders within the community gathered for the 45th meeting. Excluding updates related to tests, customers and research, the crew he discussed the imminent fixed fork of Constantinople and the issue of reducing emissions (ie reducing premiums on miners' blocks).
Emanation of block awards, though an apparently nebulous evergreen issue in the Ethereum space, was at the center of the meeting. Important for this topic is the difficulty bomb, or the gradual increase in mining difficulties up to the point where an "ice age" of Ethereum (or lack of extraction) will occur. It works so that when the hashrate of the network increases, the difficulty increases. This bomb was originally put in place to incentivize the transition to the pole test, but since the transfer to Casper continues to be rejected, the community must decide what to do in the meantime. Apparently, simply delaying the difficulty bomb will create a sudden increase in block premiums, leading to inflation. To counter this, developers are proposing an EIP number to reduce blocking premiums.
According to the discussion last Friday, there are three competing emission EIPs to be included with the Constantinople hard fork. Each EIP tries to delay the inevitable bomb rather than defuse it, but the proposed reward amounts vary: EIP 858 would reduce the premium to 1 ETH per block, EIP 1234 would reduce it to 2 ETH per block, and EIP 1295 would keep the 3 ETH reward. In addition to supporting several EIPs, those present spoke about the nuances and complexities present in the debate on emission reduction.
On the basis of the meeting, however, the two prevailing proposals appear to be EIP 1234 and EIP 1295. Eric Conner, a representative of the investor community, supports EIP 1234 because he believes the reduction in mining remuneration to 2 ETH would be better align the value of the Bitcoin and Ethereum networks.
According to Conner, Ethereum is paying the miners to maintain his safety. The Ethereum network is 34% of Bitcoin's market capitalization, yet the miners of Ethereum are paid "at a rate of 80% compared to Bitcoin". He argues that, theoretically, the relationship between market capitalization and payment rate "should be close to 1", but this number is currently around 2.5.
In addition, Conner argues that in the case of another delay in the implementation of Casper, it is now safer to reduce the rate of inflation of ETH. Ether's inflation rate is close to 7.4%, but Bitcoin "is around 4.25%".
Blockchain specialist Danny Ryan intervened and said that switching from 3 ETH to 2 ETH seemed "like a reasonable compromise" for him. Matthew Light, who created the EIP to initially reduce the block premium from the 5th ETH to the 3rd ETH (which was finally included in the fork of Metropolis), also supports EIP 1234, stating that this proposal "looks like the most prudent". Apparently, according to Afri Schoedon of Parity Technologies, a reduction would help to maintain a "stable issue" of rewards.
However, Brian Venturo, CTO of the US GPU extraction organization Atlantic Crypto, believes a decrease from 3 ETH to 2 ETH "would force GPU miners to leave the grid". According to Venturo, this reduction would leave only the ASIC mining platforms in the game, which require less energy and have higher hash rates. The debate between GPU and ASIC is another can of worms per se.
Venturo and its organization have instead proposed EIP 1295 to address another problem they see with the Ethereum network: the misalignment of incentives. He claims that the extraction system is set "to get the maximum possible", thus increasing the emission rate of ETH.
To give a context, an uncle block arises when two miners generate a lock simultaneously; This happens when mining pools are not synchronized, which happens in part because Ethereum has such a high blocking rate. Uncle is the block that is eventually rejected by the mainchain. In the Ethereum network, uncles production is rewarded and incentivized.
Venturo's proposal seeks to combat high rates of ether creation through a reduced uncle reward structure that would reduce the ETH emission rate by 11.4%. This change, in turn, would stimulate "investment and optimization of the ETH network nodes" infrastructure, because "we should not reward the subpar infrastructure", he elaborated. Moreover, and perhaps less controversial, EIP 1295 offers an alternative to addressing Ether's inflation problem: instead of reducing premiums for miners of canonical blocs, premiums are reduced for uncles. The overall effect of the emission reduction is maintained
Moreover, according to Venturo, the EIP 1295 issuance program is close to that of Casper's proposal.
A handful of stakeholders continued to show their support for the EIP. Alex Thorn, director of blockchain research at Fidelity Investments, said that he and his team in general prefer the EIP 1295, even if "they are not yet ready to take a firm stand". Xin Xu, CEO of the mining pool SparkPool, also prefers this proposal among the three. In fact, Xu believes that a reduction could have a negative impact on network security.
And Jean M. Cyr, developer of Ethminer, indicated their preference for EIP 1295 and its "slight reduction on uncles".
The last option for the debate, EIP 858, was discussed less. In short, blockchain developer Marius Van Der Wijden explained that reducing the reward of this proposal to 1 ETH per block would help alleviate the environmental costs associated with mining operations.
Despite the deep influx of participants in the reduction of the reward, there was no consensus by the end of the meeting. Many on the call were agreed, however, that a decision had to be made and that the matter had to be investigated further. With a complex subject such as reducing emissions, perhaps the best conclusion is that more research is needed.
Daniel Putney is a full-time writer for ETHNews. He holds a degree in English at the University of Nevada, in Reno, where he also studied journalism and queer theory. In his spare time, he writes poetry, plays the piano and dances on fictional characters. He lives with his partner, three dogs and two cats in the middle of nowhere, Nevada.
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