From the experience of Filecoin's application of EIP-1559, look at the future trend of Ethereum
Wu said the author | Colin Wu
Editor of this issue | Colin Wu
Wu said the author | Colin Wu
From the experience of Filecoin, after the upgrade of Ethereum EIP-1559: (1) the overall shift from inflation to deflation will stimulate the price; (2) network congestion will not be alleviated, and the short-term still depends on the progress of Layer 2; (3) As a result, the income of miners will be greatly reduced, estimated at about 20%-35%.
Recently, discussions on the upcoming upgrade of EIP1559 on the Ethereum network have been very heated. Behind the enthusiasm is the controversy and changes in the distribution of benefits brought about by this upgrade. Will burning the huge gas fees of the Ethereum network really solve the current network congestion and high gas fees? As the forerunner of the Filecoin network, what impact has it brought to the Filecoin network after the implementation of EIP1559? Will the gas fee burning proposal with similar content bring different results?
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What is EIP-1559?
Ethereum Improvement Proposal #1559 (referred to as EIP1559) proposes a new on-chain fee pricing mechanism: change the original transaction fee (collectively referred to as Gas fee in the industry) from "auction-style" pricing to "market exchange rate" pricing mechanism , to link the fluctuation of the handling fee with the block capacity, and the Gas fee will be split into a base fee and a miner's fee.
The base fee will be dynamically adjusted according to the current usage of the network and will be directly destroyed. The basic logic is that when the usage rate of the Ethereum network exceeds 50%, the base fee will increase; when the network usage rate is lower than 50%, the base fee will decrease, and the base fee will fluctuate within a small range. In addition, the miner's fee still belongs to the miner who packaged the transaction information, and the pricing mechanism of the miner's fee remains unchanged, and the Gas Price and Gas Used are set by the user.
(1) The destruction of the base fee reduces the circulation of ETH and gives ETH a higher value. With the prosperity of transactions on the Ethereum network, the amount of destruction of the basic fee will be greater than the amount of additional issuance, and ETH will move towards a deflationary mode, increasing the scarcity of ETH, thereby increasing the value of a single ETH.
(3) The transaction cost of the Ethereum network is expected to be greatly reduced.
(3) The transaction cost of the Ethereum network is expected to be greatly reduced.
However, can EIP1559 really solve the problems of network congestion and handling fees as expected? Before implementation, we can only analyze and estimate. However, we can also get a glimpse of the status quo of implementing the transaction fee adjustment mechanism on the Filecoin network, the forerunner of EIP1559.
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The status of Filecoin's implementation of the EIP1559 proposal
Juan, the founder of Filecoin, mentioned in his public speech "EIP1559 in Filecoin": "EIP-1559 has been implemented and exists on the Filecoin main network. Currently, 100,000 to 150,000 FILs are consumed on the Filecoin network every day. EIP-1559 has achieved at least Two key victories..."
However, is this really the case?
Let's take a look at the current Gas fee of the Filecoin network. The figure below shows the changes in the Basefee of the Filecoin network in the last 7 days. From the figure, we can find that the base fee calculated as the Filecoin network gas fee fluctuates between 1-6nanofil. Huge fluctuations in Basefee will bring huge changes in gas fees. Finally, it is reflected on the filecoin network. For every 1T increase in computing power of Filecoin miners, the gas fee expenditure is between 5-12fil.
Changes in Filecoin network gas fee (Source: filfox.io)
Different from the EIP-1559 of the Ethereum network, most of the gas fees paid by the creators of the Filecoin network transactions go to the public destruction address (see f099), and the miners who pack the transactions get a very small amount of gas fees. Taking March 2, 2021 as an example, in the transaction fee shown in the figure below, the proportion of the fee allocated to the miners is infinitely close to 0.
Gas fee consumption of a single transfer transaction on the Filecoin network (Source: filfox.io)
In addition, the Filecoin network has a large difference in gas fees for different types of messages. Taking the Filecoin browser data at 12:00 on March 2, 2021 as an example, the message type is ProveCommit Sector, and the gas fee for on-chain messages is 0.146Fil (worth about 36RMB) The gas fee for PreCommit Sector messages is about 0.118Fil (worth 29RMB), while the gas fee for ordinary transfer messages is about 0.0017Fil (worth 0.4RMB).
24h gas fee statistics of the Filecoin network (image source: filfox.io)
In summary, the performance of EIP1559 running on the filecoin network for several months is as follows: (1) The gas fee can be flexibly adjusted according to demand, but the gas fee has been fluctuating at a high level. (2) Most of the gas fee paid by the transaction creator is destroyed (more than 99.99%), and the miners get very little. (3) EIP1559 does not solve the problem of Filecoin network message congestion, and miners are the ones who pay the huge daily gas fee. (4) Gas fees are destroyed, making the circulation of Fil move towards deflation, giving more value to the Fil in circulation.
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Analysis of the performance difference between EIP-1559 in Filecoin and Ethereum networks
Because the original intention of EIP1559 is to solve network congestion and reduce gas fees, why the performance of the same EIP1559 on the Ethereum and filecoin networks may be quite different (EIP1559 has not been implemented on Ethereum, and it can only be predicted at present) Estimation), here is a simple comparative analysis, for reference only, please correct me if there is any inappropriateness.
Under the EIP-1559 mechanism, the gas fee level is mainly determined by changes in the number of network transaction messages and the willingness of the transaction creator to pay the gas fee.
Let's first look at the number of network transaction messages. Comparing Ethereum and Filecoin, the number of daily transaction messages and sources vary greatly: on March 1, 2021, the number of transactions on the Ethereum network was about 1.2 million, and the Gas fee generated was about 9620 ETH, worth about 14.5 million US dollars. It is mainly composed of on-chain transfers and smart contract calls. If you encounter a popular app, the number of transactions will also increase rapidly.
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Fluctuations in the number of transactions on the Ethereum network (Source: QKL123)
On March 2, 2021, the number of Filecoin network transaction messages was about 1.18 million, and the total number of Fil consumed by Gas fees was 64,900, worth about 2.336 million US dollars. About 97.5% of them are sector on-chain information generated by miners to increase computing power, and real user transfer transaction information and contract call transaction information account for a very small proportion (less than 2.5%). The number of Filecoin network-wide transaction messages fluctuates with the growth rate of computing power. Recently, the growth of Filecoin network computing power tends to be stable, and the number of daily messages fluctuates in a small range.
The number of messages between the two seems to be close, but the sources of these transaction information are very different, and the value of the transaction is also quite different.
Let’s take a look at the gas fee payment willingness behind these transaction information. The transactions on the Ethereum network are mainly the contract calls of many applications and user transfers. The Gas fee consumed here is the user's assets, and the transaction information is exchanged. In comparison, the motivation to drive users to bear huge gas fees does not seem to be sufficient (except for some popular models or Fomo applications)
The news of the Filecoin network comes from the increased computing power of miners. Driven by the income from mining output and the revenue from selling mining machines, Filecoin miners are willing to actively set a higher Basefee, increase the priority of messages, and obtain greater computing power , so as to sell more mining machines and mine more Fil. It can be understood that Filecoin miners choose to pay higher Gas fees in exchange for more income, and have a stronger willingness to pay Gas fees.
From the experience of Filecoin, after the upgrade of Ethereum EIP-1559: (1) the overall shift from inflation to deflation will stimulate the price; (2) network congestion will not be alleviated, and the short-term still depends on the progress of Layer 2; (3) As a result, the income of miners will be greatly reduced, estimated at about 20%-35%.
From the perspective of the difference between the consensus mechanism and the development stage of the network between the Filecoin network and Ethereum, we can understand the difference in the performance of EIP1559 between the two. Next, the upgrade of EIP1559 in the Ethereum network is bound to encounter many obstacles. We expect the Ethereum community to reach a greater consensus after discussions or votes for and against, bringing us a more usable Ethereum. square network.
