The core Ethereum developers have finally come to a decision about the imminent gallows of Constantinople, after months of heated debate.
As explained here on CryptoCoin.News last week there were three Ethereum in competition Proposals for improvement (EIP) considered by the development team. You can read all the details here, but as shown on the Github page of the team, the debate has arrived at the following three proposals:
"a) EIP-858 – Delay the bomb and reduce the reward of the block to 1 ETH per block.
b) EIP-1234 – Postpone the bomb and reduce the reward of the block to 2 ETH.
c) EIP-1295 – Delays the bomb, continues to reward the 3 ETHs, changes other factors such as the incentive structure of the POW. "
And the winner is …
EIP-1234 was finally elected winner, as per Ethereum Core Devs Meeting Constantinople Session # 1 livestream hosted on YouTube Friday evening (August 31st). The next hard fork, set for mid-October, is the second of the Metropolis phase. Read more about the development phases of Ethereum here.
This means that when Constantinople will be implemented in October, the ETH block premiums will be reduced by 33% from 3 ETH to 2 ETH per block. Meanwhile, the difficulty bomb – the scale difficulty level that ETH ministers face – will be delayed for the next twelve months.
As per the Github summary of the team:
"Starting from` CNSTNTNPL_FORK_BLKNUM` the client will calculate the difficulty is based on a false block number that suggests to the client that the difficulty bomb is regulating about 5 million blocks later than previously specified with the Homestead fork.In addition, the blocking premiums will be adjusted to a 2 ETH basis, the premiums of uncle and nephew will be adjusted accordingly. "
Inflation Reduction of ETH
At the current rate of 3 ETH per block, Ethereum is stuck in an inflationary model that amounts to 7.4% in the year, or 7.378.402 ETH. With the reduction of the 2-ETH block premiums, this inflation will be reduced by about a third and will fall to 4.7%.
should be good news for the long-term average ETH holder, since the currency should, in theory, retain more if its value. However, many in the mining industry questioned the move, suggesting that it will benefit only large mining basins and effectively exclude small-scale individual ETH miners.
If block premiums are high enough, there is incentive a. But as they are reduced, that incentive disappears, and the only people left in the game are those with large amounts of initial capital.
However, this should be made irrelevant in the next year or so, while Ethereum moves to Proof-of-Stake (PoS), which has always been the long-term goal. When this happens, the dominant position of the ASIC miners and the vast mining areas will generally disappear from the Ethereum blockchain.
Does the ETH price react?
It should be noted that, with the clear goal of moving to Proof-of-Take, this recent decision amounts to little more than a placeholder. All of the major Ethereum forks have been met in the past with rising prices, but with PoS all over the horizon, will Constantinople produce the same result?
When Bitcoin reduced the block premiums from 25 BTC to 12.5 BTC, the price reacted poorly in the short run, but then strengthened in the long run.
When news of Ethereum's devotees' decision began to circulate on Saturday, September 1, Ethereum increased by 7.8% in twenty-four hours and fired temporarily above the $ 300 threshold – the first time he did so in two weeks.
Since then the price has returned back up to the $ 280 range, but keep an eye on October when the hard fork will be published.