A new Ethereum improvement proposal (EIP) has been met with sharp criticism from miners suggesting those behind the proposal are less interested in the network’s security and more focused on investors’ interests.
EIP-2878 proposes that block rewards be reduced by 75%, from 2 ETH per block down to 0.5 ETH. The rationale behind this EIP is to bring Ethereum’s inflation rate closer into line with Bitcoin’s (BTC) and to preserve ETH’s purchasing power.
Proposed on Aug. 11, ConsenSys Managing Director John Lilic, and Ledger’s Global Head of Client Success Jerome de Tychey, it was shared along with an in-depth explanation on the Ethereum Magicians forum where developers and miners alike can discuss its validity.
Miners, specifically those using GPUs, were quick to call out the EIP as the block reward drop was more than double the percentage of the network’s previous reduction, and said a 51% attack would be a possible result.
Too much, too soon
PegaSys Product Manager Time Beiko believes “this is much too dramatic of a change, given we’ve gone from 5 to 3 (-40%), then 3 to 2 (-33%), now you are going from 2 to 0.5 (-75%).”
“The biggest consideration, in my opinion, should be the security of the network (i.e. how do we ensure the likelihood of 51% attacks remains low, how do we keep a diverse set of miners on the network, etc.).”
Another user responded to the proposal saying, “ASICs are highly profitable compared to GPUs. Any reduction in block rewards without an algo change will remove the rest of the GPUs from the network resulting in ASICs totally controlling the network.”
Bit Capital Group CEO and co-founder Jimmy Thommes explained that Ethereum shouldn’t be trying to ape Bitcoin’s inflation rate as it was an older network that was trying to achieve different things. Not to mention, the proposal made miners feel like they were being used:
“It feels really bad to be treated as a necessary evil to be paid out the minimum possible to incentivize us to keep our lights on just long enough to make the transition to 2.0 work.”
Principle is fine, details are the issue
The majority were not opposed in principle to a block reward drop as Ethereum doesn’t have an in-built halving mechanism like Bitcoin, and thus relies on EIPs to control inflation with proposed reward reductions. But most suggested a drop to 1.5 or 1 ETH was more reasonable. One Reddit user said that although miners were earning plenty in 2017, that shouldn’t influence current earnings:
“Did they let the miners make way too much money in 2017 and 2018? You bet. Does starving them now make that ok? I don’t really think so.”
Another user added that the proposal was ill-timed as Tether’s transition to OMG will “drastically reduce fees paid to miners.”
The proposal is still relatively new and has little community support, according to Ethereum developer Hudson Jameson who suggested the proposal should be considered in light of EIP-1559.