Viewpoint: Ethereum miners will not accept EIP-1559, this is the reason

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Under the background of the popularity of DeFi, the income of miners has risen. Not only are “mining bosses” grabbing graphics cards and laptops, according to CCTV reports, about 20% of Internet cafes in South Korea have begun to close their doors to mine Bitcoin. Recent discussions on the EIP-1559 proposal in the market have pushed discussions about the interests of miners to the forefront, and even spawned calls for Ethereum.

Before reading this article, Lianwen briefly sorted out the current different opinions and voices on the proposal in the market, and also facilitated readers to have a deeper understanding of the EIP-1559 proposal.

Further reading:

“The EIP-1559 proposal will cause Ethereum to fork? In fact, the miners’ motives are not high”
The forking is to prevent EIP-1559 and continue to maintain high fee rewards, but the newly forked chain obviously cannot retain DeFi, so where does the fee come from?

“View: The Ethereum Mining Union accepted the EIP-1559 proposal, why? 》
The reason is simple. Compared with protesting against the long-term loss of their own income caused by the upgrade of EIP-1559, miners are better off cooperating with users to promote its implementation.

“Resources Related to EIP-1559 Discussions”
In these materials, you can understand the main reasons (UX improvement, prevention of account abstraction, better security, and better economic models) put forward by the proponents and the rebuttals put forward by the opponents in these aspects.

“EIP-1559 is not to reduce transaction fees, understand its design goals”
EIP-1559 is to achieve better user experience and network security.

The following is the text of this article

None of the critics of 1559 sincerely hope that Ethereum will fork; those who support 1559, more often talk about the fork, which means “forgive me or dare”.

Original title: “View | Miners will not accept 1559, this is the reason”
Written by: Ethereum lovers

Abstract : The implementation of EIP -1559 has triggered such a prospect: the use of the 1559 chain will not be able to kill the fork that does not implement 1559 with its own success, because its success will not bring higher fee income. Attract miners to migrate permanently. This is also why miners will not accept 1559. This is not only a short-term profit reduction, but a permanent profit deprivation. (Under PoS, the verifier is deprived.)

The debate about EIP-1559 has been heard more or less. If you know more, you also know that I am one of the few people who have always opposed and wrote articles to express their views.

At this point in time, it may no longer be possible to treat EIP-1559 as a policy and discuss it calmly. In all public opinion spaces, the pros and cons are almost in turmoil. However, the reason for this is that everyone did not discuss the policy itself, but first had a prejudice, and then divided the good people and the bad people according to other people’s reactions to this prejudice. Of course, bad people will not be subdued, but “I” On the side of justice, there is always a way, there is always power to make them subdue.

For example, EIP-1559 is an experience of reducing the amount of ETH issuance and even realizing deflation; deflation is of course a good thing, so those who oppose this are naturally bad people; or although the opponent is not a bad person, what is the use of your opposition? History The trend is mighty. Not only is it not good for you to oppose it, but it’s also a bit stupid; Oh, but this proposal will burn the fee income that originally belonged to the miners, so the miners will definitely oppose it. After all, it’s an interest; but you people, I have earned so much, and I don’t want to give up my small family for everyone. It can be seen that they are still not good people; but what can you do? Can you still fork? What’s the use of a fork? With the 1559 chain, with the support of the community, it will definitely be more successful. Then it will be up to you not to talk about it, your body is honest and dishonest.

I just ask a few questions:

(1) Is deflation necessarily a good thing? Are there any conditions?

According to the quantity theory of money, it is true that deflation will lead to an increase in the purchasing power of money. The problem is that how to achieve deflation is not a trivial issue. Like the EIP-1559 proposal, the speed of deflation is not fixed; that is, the issuance rate of ETH itself will become unstable; this instability will bring great obstacles to the operation of the currency market, just as expected External inflation also affects the currency market, causing too much investment and insufficient savings. Unexpected deflation is the opposite effect. In other words, a good monetary policy should be a policy where the issuance rate is as stable as possible. (Of course, rebuttals are welcome)

(2) Will the miners definitely object to the proposal to reduce the income of miners?

I think that if you initiate a proposal to reduce block rewards, it will also reduce the income of miners, but the divergence will certainly not be as big as EIP-1559. There won’t even be any disagreements, and everyone just accepted it. Fundamentalists like me at most will complain about how ETH’s monetary policy is still unstable.

When discussing 1559, one of the most common fallacies was to say, “Isn’t this reducing the income of miners by 50%”, it really isn’t. This is not the same as reducing block rewards at all. The essence of 1559 is through dynamic operation to ensure that when miners provide gas, their income is only related to their own marginal cost; that is to say, even if Ethereum becomes more and more successful, the cost of trading blocks will rise. The income has nothing to do with the miners, all will be burned. This is not just to reduce the income of miners, it is to deprive miners of opportunities to benefit from the success of Ethereum.

Therefore, this is not only a short-term benefit consideration as stated in Yuchi’s public statement. On the contrary, the benefits related to the handling fee are the longest, which is longer than the block reward.

(3) Miners, even if you have the courage, do you have the ability to fork? Can you still mine 1559 ETH?

Oh, you are right this time. Miners will also mine 1559 ETH, yes, but they will fork, they will use machine gun pool.

Let me explain it with an animated picture:

The above picture demonstrates the upward adjustment process of Base Fee. The blue diagonally downward is the demand curve, which represents the highest price that users are willing to pay for each unit of gas. The position of this line also represents the exuberance of market demand. The orange diagonally upward is the supply curve, the miners’ own marginal cost curve, and the minimum price they require for each unit of Gas. When the market demand is relatively strong, and the amount of packages agreed between the user and the miner exceeds the target amount defined by the EIP-1559 mechanism, the Base Fee will be adjusted upwards until the gas consumption of the user willing to send transactions is exactly equal to the target amount.

This picture can explain many things, including what the supporters of EIP-1559 claim, because the continuously adjusted base fee can create half-full blocks, so the price that determines whether a transaction can be entered into the block, except for the base fee Besides, it is the marginal cost of miners, not the bids of other users. The marginal cost of miners is more stable and predictable than the bids of other users, so it can improve the user experience. (I agree with what they call the “half-full block” effect, but I don’t think that the marginal cost of miners is very predictable, that is, I don’t think this method can really provide a qualitative improvement. But how to say it, In fact, many supporters do not understand how this view is justified.)

However, you did not find out. During the entire adjustment process, the price obtained by the miners has always been the lower side (P2P3P4) of the green graph (that is, the amount of ETH burned), and the user is opposed to Gas The evaluation is irrelevant.

In other words, assuming that Ethereum is very successful and users are willing to double the price per unit of Gas, can miners get more fee income? No, because the difference between the user’s estimate and the miner’s marginal cost will be swallowed by the Base Fee.

what does this mean?

This means that if there is another fork chain, 1559 will not be implemented; regardless of the difference in block rewards, miners may get the same fee income when mining the two chains. See below:

Opinion | Miners will not accept 1559, this is the reason

In the case of the bifurcated chain shown on the right, it has no users, so the blue demand curve is very to the left, indicating that users have a low evaluation of the unit Gas. However, the fee income of miners is the same as the income of the graph on the left (the 1559 chain with more demand), which is the triangle below the TIP line and above the marginal cost curve.

In other words, suppose there is now an Ethereum fork chain, the one with 1,559 and more users, will not be able to use its own success to kill this fork chain; because its success has nothing to do with miners. It will bring overwhelming benefits to miners, so miners will not give up this fork chain. Miners will only allocate computing power in near real time based on the value of block rewards on these two chains, which is what we know as the machine gun pool. And every time the users on this fork chain increase by one point, the comparison of the advantages of the two chains will reverse by one point.

I will not deny that it is very likely that this chain with 1559 will have a higher currency price. After all, the cryptocurrency on the fork chain may be smashed.

But, ask yourself, what good is this for Ethereum? A group of people vowed to say that EIP-1559 will bring higher security and can smooth the fluctuation of Ethereum’s mining power. As a result, Ethereum may fall into greater fluctuations in computing power . This is the unexpected result of fatal conceit.

We often say that the income of miners determines the security of a chain, but paradoxically supports a policy that restricts miners to block rewards forever. Similarly, the users of Ethereum are unaware that they are quietly deprived of the right to buy more security by paying a higher price. On a chain that implements 1559, the cost of a user sending a transaction can still determine whether his transaction is forward or backward in the block, but this price cannot buy security.

(“How do I know what you said is right?” “Use your own reason.”)

Finally, will Ethereum fork?

As far as I know, none of the critics of 1559 sincerely hope that Ethereum will fork, no one really thinks that war is a good thing, and no one likes the whole ecology in chaos. On the contrary, those who support 1559 tend to talk about the fork, which means “forgive me or dare”.

From my personal point of view, I don’t know how to eliminate this atmosphere, which permeates the Ethereum community: on the one hand, I believe that miners are a group of immoral people who only want to be happy for themselves, regardless of others’ encounters; on the other, believe The final result of the operation of society is determined purely by strength, so as long as there is a certain person or a certain group strong enough, it can subdue this group of immoral people and force them to yield and give in.

I will not discuss whether miners are responsible for many user experience problems. I discuss the latter: Is the operation of a society really determined by power? In other words, can those with power do whatever they want? Or is it possible that power and wisdom can transform society and make it progress? My answer is no.

From the social sciences, especially economics, the most important lesson we have learned is that we cannot change the social mechanisms of our own minds without causing bad consequences. It is as if the planned economy cannot be implemented, not because everyone’s moral standards are not high enough, but because it lacks enough information to make reasonable decisions.

In a confrontational atmosphere, it is easy for everyone to fall into the pleasure of driving the enemy to the corner, regardless of how much it will cost, but no group or person is the enemy of the wrong policy and eliminates them. It doesn’t make things better; the real enemy of wrong policies is economic laws.

However, these words may be useless. Ethereum may still fall into a fork because people are unwilling to abandon a seemingly good policy, and even less willing to give up their prejudice against another group.

I said this just to let everyone know:

  1. This is not a short-term matter, nor is it only related to benefits; it is about loyalty. If implemented, Ethereum miners will no longer have half loyalty to Ethereum; it is about tolerance, whether you are willing to accept another group of you in society People who do not understand, but provide services to others. I know some people don’t care about this loyalty, but I hope someone cares.

  2. When you discuss policies and show your support, please try to stay awake and take responsibility for yourself and others. None of the tyrants in Athens (the tyrant who undermined the democracy of the city) came to power under the banner of beauty.

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