EIP 1559 is a substantial change to the handling of gas fees on the network. In addition to making gas fees be 2 parts (base and "priority" fees), this includes a provision for "burning" the base fee, reducing the overall ETH supply. From the code itself:
# miner only receives the priority fee; note that the base fee is not given to anyone (it is burned)
Models i have seen suggest this will not make ETH deflationary, as the expected burn rates are outpaced by expected mining rates, but the proposal does specifically make note of this[1].
One really underrated component of EIP-1559 is how much more usable it makes the system. The complexity and uncertainty of how to set gas fees, stuck transactions, and the like is a major turnoff for new users.
Experienced users tend to gloss over this, because they've already taken the time to mentally model all the complexities related to the gas market. I predict that post-London, we'll see a huge wave of new users into a wide variety of applications in the ecosystem. I wouldn't be surprised if we see another order of magnitude increase in DeFi volume.
Not quite: under typical Ethereum chain conditions, you can include a small constant-sized priority fee to encourage miners to include your transaction. (This is really simple, and can be a default which most users are never even aware of.)
This priority fee is free money for the miner; the only reason they would not include your tx is because it would make their block slightly larger, which would make it propagate over the network slightly more slowly, and slightly increases the chance that the race is won by a different miner who discovered a block nearly simultaneously. So, the priority fee just needs to be big enough to make up for this tiny extra risk.
No. The main reason they would reject a transaction is to raise the demand for priority fees. I will repeat: there is zero incentive to include a zero-fee transaction.
In fact, the incentive is negative for two reasons. Firstly because it helps the miners to set a price floor. Secondly, because the empty blocks reduce the burn fee, which opens up more of the demand elasticity to be captured by the priority fee.
I know there are all these armchair geniuses like Vlad and Roughgarden that are convinced it will work out a certain way. Sorry, but they don’t know squat until there’s real money on the line.
You can almost guarantee that zero-fee txs will be ignored, and the bigger the pools get, the more they can collude to set a price floor.
So please tell me again how this is any different at all from the current fee structure in the miner perspective.
Interesting that, of all the many possible simple solutions to this massive problem with the protocol, they chose to ignore it in favor of something that solves… wait, what is the problem exactly that this upgrade solves?
The loss of coins means it will likely be massively deflationary over time. I don't have the numbers for ETH but off hand I believe 20% of all BTC has been lost already, since just 2009. That's an annualized 1.55% effective supply deflation rate during a period where new supply was quickly generated.
Basically every random walk down the timeline leads to 100% of coins lost in the course of time.
This is of course separate from the decrease in rate of supply creation.
I think it evens out though because of a lot of early people with lots of bitcoin just lost interest and lost the wallet. This was sadly the case for me as well as a few other people i know.
By time eth came out though everyone was much better about backing up wallets you thought would be worth nothing.
> Basically every random walk down the timeline leads to 100% of coins lost in the course of time.
Rather, I believe it will result in the remaining 20% being held by a few exchanges, whose endgame will be to still charge the fees but just balance them internally without actually costing anything.
> loss of coins means it will likely be massively deflationary
Friendly note that money supply is only correlated to whether a currency is inflationary or deflationary. Over the past weeks, for instance, Bitcoin has been inflationary--its purchasing power dropped.
Thank you for calling that out, I agree, which is why I mentioned "supply inflation" and "supply deflation." To your point, that's only 'inflation' in the Austrian sense which I personally couldn't disagree with more. After all the M2 supply grew 15X since the 1970s but inflation only decreased the buying power to 1/7th so the fact they're equal seems trivially disprovable.
Bitcoin proponents argue that bitcoin is deflationary based on a misinterpretation of the Quantity Theory of Money. At any rate, QTM is a theory of money, and as such it only applies to money. It doesn't apply to random assets, such as bitcoin. And, no, the fact that bitcoin has been declared "legal tender" in this or that country doesn't mean bitcoin is money in the context of QTM.
Dogecoin, on the other hand, has a static issue rate in the reward schedule. I believe it was totally accidental and not at all by design, but it is plausible that it will reach an equilibrium with coin loss in the next few years.
The answer is easy and has always been the same: The amount will be what we have all collectively decided is the right amount to keep the system alive and secure. Minimum Viable Issuance.
The only certainty in life is change. Saying "we will have x amount on date y" isn't helpful for developing coordination tools that will actually last into the future. Isn't it much better to have a system where we can say "this is how issuance will respond to these different possible futures".
A condescending answer that totally ignores everything else that is in the comment you are replying to.
You have with no word said why one would want a predictable supply curve. Ethereum's supply curve is lower than it was promised in the ICO.
Just because Bitcoin has now a "perfectly predictable supply curve" that is no guarantee that it will be in the future? In a few years the block reward will be so small that the security of the chain will be reliant on the fees. A fee market has lots of negative implications, one of the worst is that you can pay miners directly to include transactions without using Bitcoin for the fees.
Bitcoin supply curve is a lie because security from fees is too low and unstable. Bitcoin only had $548k in fees yesterday, and the trend is downwards. A fundamentally insecure chain has a negative feedback loop: no reason to pay any fees to use it, which makes it even more insecure.
Bitcoin in the future is going to either be forced to introduce tail inflation in a hard fork, or start depending on secure external consensus (most likely ethereum) in a soft fork. Either option completely destroys any narrative bitcoin ever had.
And that's it. geth will start syncing mainnet and will likely finish in under 12 hours (depending on your Internet connection, of course).
Note: the initial sync is intensive in both network and disk IO, you'll need an SSD. Also, running a full node long-term (without pruning) currently eats quite a bit of disk space:
$ du -sh ~/.ethereum/geth
598G /home/user/.ethereum/geth
Sometime in 2017/18 it has been found that one of the biggest bottlenecks for the network were propagation speeds and that those were largely weighed down by disk writes. Thus pretty much the whole network switched to SSDs and things improved tremendously. Some other networks have implemented stateless clients and Ethereum has been working on going in that direction for a while with a lot of effort being dedicated to it this year specifically.
Doesn't make sense. Most people have faster spinning rust write speeds than they do internet bandwidth. Unless the client is generating a lot of data client side, how can writes ever be a problem? Just buffer appropriately
It's read as well as write IOPS and seek time. The Ethereum state database uses hashes as keys and is larger than anyone's reasonable amount of RAM. So most accesses are all over the database in terms of physical location, and it can't be cached in RAM effectively.
There is various work to improve this, but the basic architecture does depend on random access storage to a great extent.
It needs low latency. There is a huge amount of inherently sequential lookups in the state (~9 leveldb lookups per 1 state acess in a smart contract) and you can't store the state in RAM on most consumer hardware.
I think this may no longer be true with the Snap sync protocol (introduced in Geth this year). Even though transactions are very random access, Snap iterates sequentially over storage to transfer it all from one node to another, which is HDD friendly.
However I'm not confident it will be able to stay in sync afterwards using HDD.
The new fork of geth, called erigon (formerly turbogeth) supposedly can do a full archive sync on a spinning disk drive and is much more space efficient.
It's a great idea. It just doesn't work. HDDs don't have the right performance characteristics, unfortunately.
You can do about 300 random access per second on a good HDD, which isn't enough to keep up with Ethereum's transaction rate, and each transaction needs quite a few of those each.
You can do about 300,000 per second on NVMe. 1000 times faster. That's plenty.
December 2021 or Q1 2022 at the latest. The difficulty bomb is scheduled to activate in December so a fork of some kind will be needed to reset it so everyone is working diligently towards December as the ship date.
The difficulty bomb was supposed to first activate 4 years ago. It has been pushed back numerous times, about 6 times IIRC. I wouldn't be surprised if come December they push it back one more time.
I'm running multiple mainnet ETH2 validators at home, in good company with nearly 200_000 validators worldwide (see https://beaconcha.in).
The teams behind the ETH1 and ETH2 node software (the latter has multiple independent implementations, while for ETH1 go-ethereum dominates the scene) are working hard to make "the merge" (PoS for mainnet) viable ASAP.
Disclosure: I work for status.im, but I'm not on the team responsible for nimbus-eth2/1.
Fake transactions take more than a 50% attack to execute. Because the transactions simply do not come with the required signatures.
For rolling back transactions, a 50% attack actually convinces the remaining honest nodes. For invalid transactions, even if you have 90% of the network, the remaining 10% of honest nodes will not follow the wrong chain.
This means anyone could detect this happening. At which point faith in eth will plummet, and so will prizes.
Yup. The penalty is not kept by anyone though, it’s burned. Once your balance drops to 16 ETH, you’re removed from the validator pool. This happens slowly and depends on many factors of the current network.
It depends. In addition to the impact of effective balance there are two important scenarios to be aware of:
Being offline while a supermajority (2/3) of validators is still online leads to relatively small penalties as there are still enough validators online for the chain to finalize. This is the expected scenario.
Being offline at the same time as more than 1/3 of the total number of validators leads to harsher penalties, since blocks do not finalize anymore. This scenario is very extreme and unlikely to happen.
Note that in the second (unlikely) scenario, you stand to progressively lose up to 50% (16 ETH) of your stake over 21 days. After 21 days you are ejected out of the validator pool. This ensures that blocks start finalizing again at some point.
If your validator isn't online and/or not able to "do its job" in the allowed for time-period, then it will be penalized.
The penalty for missing one validation is small; the penalty for missing a block proposal is also not huge, but bigger than the penalty for missing a validation. Penalties would pile up over time if a validator is offline for an extended period.
Long story short: if you intend to run an ETH2 validator, you should be reasonably sure it will be able to run well-connected to the Internet for extended periods of time. Intermittent and brief periods of downtime would not have a substantial economic impact on your validator, but extended periods of downtime would be bad.
One question I had but was not answered by the FAQ is whether the London Mainnet updates will require updates to Beacon / validator implementations. Apologies if the answer is obvious to everyone else, but is is not obvious to me.
I understand some of the upgrades going into the London fork, including EIP-1559, but I don't understand "the merge". Does it mean that some kind of sharding will be in place, and the currently useless PoS chain will be able to communicate with the PoW chain?
Basically, at the point of the merge, nodes stop paying attention to what the PoW calculations are saying about the head of the execution chain, and start to pay attention to what the beacon chain (PoS chain) is saying about the head of the execution chain.
Because the two chains become inextricably linked together at that point, with the execution chain becoming entirely dependent on the beacon chain, we call that point the "merge".
So from that point on, new blocks on the execution chain - full of general Ethereum transactions - will be considered "confirmed" not because they include a difficult PoW calculation, but because the beacon chain has given that block its blessing (because stakers voted on it).
I dunno, remember Parity (who were very big players and leading devs in eth at the time) wanting a fork to recover contract funds and it was plainly rejected by the rest of the community.
That said im also not really sure what you would be asking for as a change to the process? Anyone is welcome to join the discussions, propose changes, defend them, code them.
What would make it "grown up" and mature in your eyes? Also what "one party" are you talking about, a person? organisation? There are multiple eth client teams, and London has been one of the most discussed hard-forks there has been, 1559 has been in discussion and development for a few years now.
Im genuinely interested what would have to happen for you to see it as democratic? is it a question of sybil resistance? funding for teams?
I think the project founders would need to distance themselves from the project (or at least announce they would no longer be decision makers), and have a bunch of different people try to take the project in different technical and idealistic directions, with some failing and some succeeding.
If the project survives that, you can have a lot more confidence the project can resolve disputes with no key members being vital to the process.
I think that is democracy, you're just pointing out a flaw in it.
If it's not majority rule, what would you suggest (for alt-coins, not for politics, I mean; though answering both is fine).
Politics-wise we can mitigate some of the effect by having proportional representation, but I'm not sure what the crypto-currency equivalent of that would be, nor really if it works as a concept.
Politicians are weird. When it comes to peaceful activity they are going to turn over every single penny When it comes to war they do the exact opposite. The broken window fallacy is therefore not an answer to broken capitalism but rather broken politics.
It's probably because laws accumulate and don't expire. Getting rid of counterproductive laws is an action. Revolution is just an instantaneous loss of power. Maybe we should have a system with a continuous loss of power, the same way we have a money system with a continuous loss of purchasing power to prevent an abrupt loss of purchasing power.
I just watched a 5 minute video explaining how this impacts miner fees etc.
Extremely convoluted and complicated.
To me nano and the other 'fee-less', instant transfer coins represent the future of crytos. I missed the train on ETH and BTC and now I feel like there's too much to catch up to, but also feel there are much simpler and usable coins (in the real world) are coming.
I compiled and run an ethereum beaconnode on a raspberry 4.
How much is this helping the ecosystem ? Why is running a beaconnode which helps validators to find the next transaction faster not being supported by fees (however tiny they may be). There seems to be no incentive to run this at all ... or am I missing something ?
You would need to "activate" your validator by depositing 32 ETH, and it takes a bit of time after the deposit is made before it will transition from pending to active.
Also, at the present time, it's a good idea to run an ETH1 node locally, with your activated validator set to check it for blocks added to mainnet. You could instead use a free or paid Infura endpoint, but the extra latency may prove problematic.
Once activated, your validator would begin to earn rewards for making attestations and block proposals, etc. The APR is currently around 6% - 10%, depending on your validator's performance. Here are some stats for a validator I chose at random:
Will the miners accept 1559? It’s an optional space, miners are free to maintain the old chain and split. Of course this would be catastrophic. I know my history, this isn’t anything like the other times.
Not quite. They would need to coordinate a new hard fork before Mid-End August because of the incoming ice age which intentionally slows the chain to a stop unless a hard fork happens.
Simply saying "No I don't want to do that" isn't enough, you need to get together people to form at least one suitable alternative.
That's why the ethereum devs could maintain control of the chain and the Bitcoins couldn't.
Consequently the Bitcoin chain is not able to incorperate any innovations that would ever so slightly hurt mining profit in the short term even if it would be great for the ecosystem as a whole
So it's not up to the miners and the consensus to decide what's best for the network? The leadership can decide the rules of a new fork unless everyone else coordinate to oppose it?
Edit: What prohibits the leadership to do an arbitrary fork? How do cryptographic protocols factor the fact that leadership can just say 'no' and do the opposite and the chain will follow. Especially the word 'secure' in every coin looses it's meaning isn't it?
It is up to the consensus. If enough people opposed a release and were able to coordinate their own fork then they are still free to do so.
> The leadership can decide the rules of a new fork unless everyone else coordinate to oppose it?
You are 100% free to not install the latest upgrade on your node(s). Unless you have enough people who agree with you and coordinate their refusal to upgrade you will be a network of one that goes entirely unused. This is exactly how decentralization is supposed to work. You have to obtain some level of consensus to get anything done. This isn't a situation where "everyone" has too coordinate to oppose something, just "enough" people to form a fork that has enough hashpower/security to attract users. Even if a large enough minority of miners were able to coordinate a new chain, fork the code, make the necessary code changes and start their own version of Ethereum they still have to get people to use their network.
In think there's a subtle difference. A side effect of Bitcoin's rules is that people with more hashing power have a disproportionate amount of weight in deciding the future of the protocol. Eth solves this by putting a hard deadline on some replacement being chosen. This can be the current maintainer's updated fork, or it can be a fork someone made that's identical to eth today with the date pushed back a few more years.
I believe he means 95% of miners and my memory tells me something similar.
At a certain point it was only blockstream and their reddit who really opposed bigger blocks, and it turns out that is sufficient to stifle Bitcoin progress.
How did you expect a decentralized, consensus-driven network to operate without some level of consensus? You think 1 node forks should be as viable as 10,000 node forks?
Why the hell should I trust the miners more than the leadership? You say this like the leadership is this big, scary, shadowy group. The Ethereum leadership is one of the main reasons I invested in the coin. I love the leadership, and I trust them to make good decisions for the ecosystem.
'Ethereum leadership' did a rollback once, so there is zero reasons to believe they won't do this again if this will be in their interests. You see, 'code is a contract', but then it isn't.
Besides miners and developers, exchanges are a major stakeholder. If exchanges declare that a particular chain is Bitcoin or Ethereum, others tend to agree.
At this point you realize that value is fundamentally a human creation, dependent on the belief and action of other humans, and there's nothing crypto or burning a power station's worth of electricity can do to change that.
The only thing prohibiting arbitrary forks is the risk of loss of trust in the leadership. And there's no guarantee of their long-term trustworthiness; what does succession planning look like among the dev team? What will you do when they retire?
I wonder why do people spend their time (and money) on this?
Real-world crypto is 'solved' by nano, with its feeless and instant transactions. I'm very new to the crypto world but ETH (especially BTC) seem way, way too complex, expensive and slow for any real world application. No wonder why there isn't any.
That’s why you are new. Nano ain’t anything special. It’s another PoS shitcoin that scammers promote to sell their bags. When you don’t actually do any work, it’s cheap to transit garbage
Nano does have PoW, but only on the client side as spam protection. It's quite clever actually, if someone is trying to spam the network your wallet can just include a higher difficulty PoW to get your transaction processed ahead of all the spam.
Because of the existence of stablecoins, forking Ethereum is essentially infeasible. Only crypto assets, namely BTC, exist on the Bitcoin chain. Crypto assets can be forked, but real assets cannot. Whatever chain USDT/USDC recognize automatically becomes the "true chain" regardless of how much hash power the miners throw behind the fork.
But the custodians have to choose just one chain because they only have enough assets to back one copy. They don't want a situation where there's, say, 50B USDCA and 50B USDCB backed by only $50B in assets. So if there's a fork, a custodian will decide that the USDC on one chain is redeemable and the USDC on all other chains is not redeemable (i.e. worth zero), then other DeFi assets on the losing chain will go to zero as well, and it snowballs.
Wouldn't a custodian have a potential conflict of interest here, picking a chain whose rules, say, give the custodian a recurring "management fee" to support their important role?
In theory perhaps. In practice, their primary incentive is to pick the most popular fork, because otherwise people will move away from that stable coin.
Yeah, I think in the case where one tries to fork the chain state and expects the assets on the new chain automatically be redeemable for something doesn't really work out.
Though this may happen in reality because of bridges (centralized/decentralized + permission/less): one asset is locked in a smart contract (or many smart contracts) on one chain, then minted in equivalent amounts on another, people will trade as if holds the equivalent value modulo liquidity for the bridged asset (as long as the locking/minting assumptions with the bridges hold true).
That implies that USDCblah is actually backed by traceable assets, 1:1. Have any of the so-called stable coins actually passed a complete third-party asset?
That's largely an orthogonal point. You may be suspicious of USDT or USDC's claim. But the point is that at least some fraction of the market is not, which is why USDT trades at $1.00.
Now that may turn out in the future to be revealed to be a sham, and the market will lose faith. But right now USDT only has market value because some segment of people believe in the promises made by the Tether Corporation. If I fork the chain, and I'm running a clone of USDT, and the Tether Corp says "there are no promises behind that token", then very clearly forked-USDT will be worth zero.
not quite. stablecoins do not get stability from belief in the backing assets. they get stability merely from a shared agreement to pretend the coin is stable, so as not to lose whatever stake they have put in.
Shared agreement is not quite enough, that’s why algorithmic stablecoins fail. You can say that’s due to lack of agreement but it all comes down to incentives.
The only reason stablecoins work is because they have a mechanism where you can quickly 1. mint a new coin and sell it for slightly more than $1 for it 2. buy a coin for less than $1 and redeem it for $1 in value
I don't think "pretend" is enough. I've certainly used USDT as a medium of exchange for a few minutes because it has a stable exchange rate, but I wouldn't hold it for an extended period.
Frax, USDT, and TrueUSD allow people to deposit into bank accounts and mint on eth mainnet or avalanche c-chain now (note: not mint on both places at the same time), neither make the claim that they are 1:1 backed (except for TrueUSD), but they make the claim that if you wanted to at any time (if you meet the criteria) you can withdraw from eth mainnet or avalanche c-chain to your bank account.
None of this is related to the minting/burning across multiple chains or their cross chain redeemability (or lack thereof) but here are their respective claims:
USDT claim (“Every Tether token is always 100% backed by our reserves, which include traditional currency and cash equivalents and, from time to time, may include other assets and receivables from loans made by Tether to third parties, which may include affiliated entities (collectively, “reserves”).”) [1]
TrueUSD claim ("We work with independent third-party financial institutions to provide cash management for the underlying reserves backing TUSD tokens so that each TUSD token is backed by an equivalent amount of dollar deposits, cash equivalents, short-term government treasuries, or liquid investments. To achieve this, a portion of the dollar deposits backing TUSD are held in one or more depository accounts at our Banking Partners whose deposits may not be insured by the Federal Deposit Insurance Corporation (“FDIC”). [2]
Frax claim ("FRAX stablecoins can be minted by placing the appropriate amount of its constituent parts into the system. At genesis, FRAX is 100% collateralized, meaning that minting FRAX only requires placing collateral into the minting contract. During the fractional phase, minting FRAX requires placing the appropriate ratio of collateral and burning the ratio of Frax Shares (FXS). While the protocol is designed to accept any type of cryptocurrency as collateral, this implementation of the Frax Protocol will mainly accept on-chain stablecoins as collateral to smoothen out volatility in the collateral so that FRAX can transition to more algorithmic ratios smoothly. As the velocity of the system increases, it becomes easier and safer to include volatile cryptocurrency such as ETH and wrapped BTC into future pools with governance. ")[3]
Because anyone can create a fork of a chain the forks have to be authorized. The easiest way to authorize a chain would be to let the custodian (is that the right word?) of USDT decide which chains are authorized for USDT. If the custodian authorizes overlapping USDT then it is equivalent to creating an empty chain and creating USDT out of nothing to fill the newly created chain. In other words it would dilute the value of USDT.
This is an interesting problem because it shows a fundamental flaw in blockchains. They only have authority over themselves. No wonder cryptocurrencies and their advocates are so self centered. Because nothing that exists outside their chain (even other cryptocurrencies) is graspable!
It's not trustless because the trust (in the algorithm) is still there, the difference is that they minimized the need for trust to the absolute minimum. It's no longer about how much you trust but about what you trust.
It does. But the majority of people who follow Ethereum closely view non-algorithmic stablecoins as generally an evil. Ideology means little to most people yet I think the decentralization ideology around Ethereum has had and does have an impact on enough people to sway the network in a certain direction. It's early. Fingers crossed.
We'll see. Stablecoins are a workaround for the current price fluctuations, if the cryptos stabilize they might replace the stablecoins at some point in the future.
People keep bringing this up, and the question you need to ask is why would anyone other than miners choose the non-fork chain? The fork will happen as long as one person is willing to mine it.
Difficulty bomb ensures that forking is incredibly difficult.
The code change to defeat the code change is easy to make (just delete a section of code) but you have to distribute clients that ship with the difficulty bomb removed on top of EIP 1559 not being implemented, on top of people actually downloading the changed version.
Good luck trying to convince the Geth or other client teams to ship that version.
in reality, this is irrelevant in this case. all of the on/off ramps, applications, wallets, etc will point to the consensus chain. in the case where miner rewards are completely removed (ie the switch to PoS), then there are definitely some issues, and those issues are being worked on.
I never understood why people like Ethereum. It's one of the worst cryptocurrencies in existence.
They've been working on staking and sharding for years and have shown no results on those fronts. This update is insignificant. This is not normal. There is something seriously wrong with the development process. IMO, they have been infiltrated by saboteurs and their project has become corrupted.
Unfortunately, this is not something which can be fixed.
The corruption exists at every level of the project; all their developers and miners are happy to have an inefficient blockchain as it allows miners to collect high fees. The leaders of the project want to stretch out development as long as possible so that they can drain the Ethereum Foundation's coffers at a rate which won't attract the attention of regulators. The top developers are corrupt and just want to increase their salaries and get promotions by collecting dirt and using extortion instead of delivering results. They hire new people who they believe can be corrupted to join their side... As someone who works in the blockchain industry, I can say that it's a total mess in there. The more valuable the project, the more corrupt it is.
Power corrupts, absolute power corrupts absolutely. Money is power. Ethereum is money. QED.
They will never deliver anything meaningful. Never.
I said meaningful. Unscalable DeFi scams don't count.
All these ERC20 projects force their community to pay between $10 to $20 per transaction to Ethereum miners who add no real value to their project/token. No real project based on real underlying value would force their users to pay such extortionate fees to some set of third-party validators who have nothing to do with their project aside from wedging themselves as middlemen between their tokens and their users.
The project is only 6 years old... This entire industry is still very young, lol. We've got smart contracts, that's an amazing idea and it works, the next step is to solve scalability issues. But it's not an easy task and needs time.
1: https://eips.ethereum.org/EIPS/eip-1559#eth-burn-precludes-f...