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Ethereum: EIP-1559 update to change fee model approved for July

  • Change in fee model for Ethereum to be introduced with a difficulty bomb in hard fork “London”.
  • Miners oppose EIP-1559, expert predicts eventual Ethereum fork by this sector.

EIP-1559 has been one of the most controversial updates to Ethereum 1.0 for quite some time, with a time horizon of July and an implementation with the “London” hard fork being discussed until recently. Yesterday, the Ethereum Core developers now managed to reach a consensus.

Originally proposed by Vitalik Buterin, EIP-1559 is intended to modify the Eth 1.0 fee model. To that end, a pricing mechanism will be introduced that will include a fixed network fee for each block. Such a fee will be “burned” and will allow the size of blocks to dynamically expand or decrease. In theory, this will allow congestion on the blockchain to be mitigated.

After the “Berlin” hard fork, “London” is the next update to be deployed on Ethereum’s Proof-of-Work (PoW) based blockchain, followed by a third fork called “Shanghai.” These updates are intended to introduce improvements while advancing the development of the “Beacon Chain”.

httpss://twitter.com/TimBeiko/status/1367858606889037824

End of Ethereum mining?

Some community members are eagerly awaiting the aforementioned proposal. High rates have become a challenge for DeFi users and the update is expected to be a solution. EIP-1559 will be introduced with a difficulty bomb also known as “Ice Age”, as confirmed by developer Tim Beiko.

This bomb makes Ethereum mining more difficult and, as developer Peter Szilágyi commented, coupling it with the introduction of 1559 is also intended to discourage a possible fork of the blockchain. Szilágyi added:

(…) if it is coupled with a refund removal EIP, because refunds can lead to blocks being 2x the gas limit, which 1559 can also do, which would result in a potential max increase of 4x.

As CNF reported, EIP-1559 is facing a strong pushback from a large portion of the mining sector. Journalist Collin Wu has reported on the sentiment among miners in China. While F2pool and other major pools support the proposal, others believe their profits will be significantly reduced. One estimate indicates that miners will lose between 20% and 30% of their income.

According to Wu, a similar proposal to EIP-1559 has been applied to Filecoin. From the experience on that blockchain he concludes the following:

(1) from inflation to deflation, prices will be stimulated; (2) Network congestion will not be relieved; (3) The income of miners will be greatly reduced, more than 20%

Therefore, some Ethereum miners have considered forking the blockchain. On this possibility, researcher Hasu claimed:

Miners will 100% fork Ethereum, but not for EIP-1559. They have one bullet, and they need to save it for the end of PoW mining.

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Reynaldo Marquez has closely followed the growth of Bitcoin and blockchain technology since 2016. He has since worked as a columnist on crypto coins covering advances, falls and rises in the market, bifurcations and developments. He believes that crypto coins and blockchain technology will have a great positive impact on people's lives.

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