The income of Ethereum miners hit a record high in January. EIP-1559 is good for depositing coins and sacrificing miners. New entrants need to be cautious
Editor of this issue | Wu said blockchain
Editor of this issue | Wu said blockchain
The implementation is inevitable, and the currency price will rise, which is beneficial to old miners hoarding coins, but not conducive to new miners.
The data shows that due to the sharp rise in currency prices, the income of Ethereum miners (calculated in legal currency) reached a record high in January. According to Beatlenews statistics, the total revenue reached 828 million US dollars, breaking a record high, and the fee income accounted for more than 30%.
The reason why Ethereum has been able to rise sharply in the near future is that in addition to DeFi factors, there is also the deflationary expectation brought about by the proposal EIP-1559, which will allow blocks to temporarily expand and reduce ETH supply by burning base fees. However, ETH holders never thought that such a transaction mechanism that is easier to push up the price of tokens will have huge controversy among Ethereum miners.
A few days ago, the Ethereum mining pool Flexpool publicly issued a document, claiming to firmly oppose EIP-1559, believing that the proposal will reduce the income of miners. Ethereum community user "kladkogex" also believes that the optimization of the auction fee mechanism in EIP-1559 is a huge improvement, but on the other hand, it is not fair for miners to destroy the base fee in transaction fees, because it means with a reduction in revenue share. Although "deflation" may push up the price of tokens, it will only accelerate the "Matthew Effect" of the network, and the giant whales will become richer, while miners will become victims.
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EIP-1559 sparks community debate
The community agrees with EIP-1559 that the income of miners depends more on the price of Ethereum than the amount of mining share. This kind of result may be brought about in the bull market: the increase brought about by the value capture of ETH will far exceed the mining income of Ethereum miners when EIP-1559 is not implemented, and it will be able to make up for the reduction in the income ratio caused by the base fee.
In addition, some community members use the supply curve/consumer surplus/producer surplus theory to analyze the role of EIP-1559, and believe that the base fee is a kind of "tax", and thus conclude that the proposal will affect the negative side of miners' income. in conclusion. Some miners estimate that when the transactions on the chain are booming, the reduction of the gas share ratio will lead to a reduction of more than 30% of the miner's income, and in normal times, the miner's income will also decrease by 10%-20%.
For miners who are accustomed to currency-based pricing, their income may be damaged for a long time. However, if it is denominated in the legal currency standard, then EIP-1559 is still a medium-term benefit for miners. The key lies in: the boom in on-chain transactions triggered by the DeFi boom → transaction fee increases → miners’ ETH income increases → ETH price increases, not A simple linear logic chain, this model cannot estimate changes in a dynamic system, just as the growth rate of computing power in a bull market will be significantly lower than the growth rate of currency prices, the change in the utilization rate of the Ethereum network is related to the rise and fall of ETH prices There is a time window, and the equal sign cannot be directly drawn.
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Reduce the income expectations of new miners, but it is beneficial to the old miners who hoard coins
After the implementation of EIP-1559, if the network usage is hot, but the currency price goes sideways or falls, miners may have to lower their short-term potential rate of return expectations. In the ETH bull market, because EIP-1559 is friendly to currency holders, it will also lower the expectations of new miners, but for those old miners who are used to saving coins, this problem does not exist, which may be king. Pure reason for showing support. From this perspective, whether miners hoard coins and at what point they sell coins has a much greater impact on mining revenue than EIP-1559.
To alleviate the inflation problem, the "sacrifice" of PoW miners is inevitable
According to the official documentation of ETH 2.0, before the PoW chain and the PoS chain are completely merged, the two will inevitably remain active at the same time for a period of time, which means that the ETH rewards on the network will be paid to the Ethereum 2.0 verification at the same time developers and PoW miners. Therefore, the overall inflation rate of these two chains may spike in the short term, but eventually tend to gradually converge to 0-1%.
When the PoS chain is not yet ready, the implementation of EIP-1559 can alleviate future inflation anxiety to a certain extent, and force existing miners to switch to the idea of hoarding coins under the PoS mechanism in advance. Therefore, from the perspective of Ethereum's long-term roadmap, the current "sacrifice" of PoW miners is inevitable.
However, judging from the current situation in the community, opposition voices will not affect the launch of EIP-1559. Tim Beiko, chairman of AllCoreDevs (Ethereum Core Developers Conference), revealed that EIP-1559 is close to completion, and the launch time is likely to be this summer, but the time will be later than the Berlin hard fork. He also mentioned that some miners' disturbing remarks did not slow down the development momentum of EIP-1559. If EIP-1559 meets the needs of most users, then other miners will still have the motivation to mine.
But for the current sales and purchasers of Ethereum mining machines, it may be necessary to re-evaluate the economic model, purchase decision and price. (picture from Reuters)
