- Ethereum (ETH) mining pool Ethermine has introduced a MEV beta program with an estimated 10% increase in earnings.
- 80% of the profits collected by Ethermine will be distributed to its miners with block rewards.
In recent weeks, a revolt has been brewing among Ethereum miners. They are publicly vocal about their displeasure with the impending activation of EIP-1559 in July. However, the mining pool Ethermine has now implemented MEV software that aims to minimize the loss of profits and calm the tempers about the Ethereum fee model changes.
Ethermine is one of the largest ETH mining pools in the world with an approximate 20% of the network hashrate or 88.9 TH/ and 195,370 active miners and an hourly production of 57.71 blocks. Via Twitter, the pool announced the introduction of the MEV beta program with 80% of the proceeds distributed with block mining rewards, 5% to support the Ethereum ecosystem with Gitcoin scholarships, and the remainder to develop further MEV strategies.
Maximal Extracted Value (MEV) refers to the “conventional” or “unconventional” profits that are taken from the reordering of transactions produced by miners. The Flashbots organization, proponents of a transparent MEV ecosystem, describes it as follows:
MEV can be misleading as one would assume it is miners who are extracting this value. In reality, the MEV present on Ethereum today is predominantly captured by DeFi traders through structural arbitrage trading strategies; miners indirectly profit from these traders’ transaction fees.
By using these strategies to maximize profits, Ethermine estimates that they will be able to increase profits by about 10%. A similar strategy has been studied by mining group f2pool, as they stated in a call with Ethereum core developers in late February.
The struggles of Ethereum miners
Thus, Ethermine and f2pool have taken a more “positive” approach when it comes to EIP-1559. While the former pool has expressed concerns about how the new model will affect the security of the blockchain, they have made it clear that they “never endorse nor participate in any kind of hostilities by miners against the network.”
The mining pool believes that the strategies adopted with MEV and the introduction of second-layer scaling solutions will be enough to continue in the Ethereum ecosystem. However, as a survey conducted in mid-January, this year revealed, 60.8% of its miners apparently disagree. The new MEV program aims to provide them with a solution and calm the waters.
What is your opinion on the controversial EIP-1559 which is supposed to improve UX & burn a majority of the transaction fee instead of giving it to miners for securing the network ⛏️?#Ethermine is an open pool and will, as always, represent the opinion of its individual miners!
— Bitfly (@etherchain_org) January 15, 2021
As reported by CNF, EIP-1559 will change Ethereum’s fee model by implementing a base fee to be sent by the user. This fee will be burned and another fee so-called “tip” will go to the miners. The latter’s profits are expected to be reduced by 30%.
Miners have accused Ethereum developers of being unresponsive to their concerns. To show their displeasure, a group of them have announced a 51-hour redirection of their hashing power to Ethermine on April 1. Others have gone so far as to consider a blockchain fork. With the introduction of MEV, the most viable option for this sector seems the search for alternatives to maximize their profits.