31 August, 2018
Developers of the Ethereum platform are trying to achieve a balance in a tug-of-war between the miner and developer community with regards to the upcoming changes.
Last month in July, CoinSpeaker reported that Ethereum developers have been working on a system-wide upgrade for its blockchain network. The upcoming hard-fork of Constantinople is poised to solve issues of network efficiency and scalability. However, implementing a system-wide upgrade is certainly not a cake-walk as developers have to overcome important issues of coordination difficulties and to ensure a smooth working of the newly implemented code.
As the Constantinople hard fork is expected to arrive by October 2018, developers are facing a major challenge of achieving a balance among different stakeholders of the network. Another major challenge in front of the Ethereum developers is the tickling “difficulty bomb” which is set to reactivate in early 2019.
The “difficulty bomb” was originally added to the Ethereum network to bring a shift in the consensus among participant of the Ethereum blockchain, from a proof-of-work algorithm to a proof-of-stake algorithm. Any sort of neglection on addressing the “difficulty bomb” could push the mining difficulty to such high levels wherein the transactions can’t be processed ultimately pushing the Ethereum network into oblivion. The Ethereum network is currently under pressure to upgrade its code before the bomb hits.
Currently, four Ethereum Improvement Protocols (EIPs) are under consideration. Many are discussing that the Constantinople upgrade shall reduce the miner rewards in delaying the difficulty bomb. On the other hand, miners have cautioned that a considerable cut in the reward structure can also impact the network security as more number of miners would shift their focus to other digital currencies.
Which set of EIPs to be included in the upcoming Constantinople hard fork shall be discussed by developers in today’s developer meeting.
Balancing the Act to Preserve Ethereum Network Sanctity
Three of the four EIPs – EIP 145, EIP 1014, and EIP 1052 – are absolutely non-controversial and seek to achieve improvements in terms of scalability, flexibility, and speed of contract verification. However, its the EIP 1295 protocol that has stirred debate among the network’s key stakeholders.
Brian Venturo, CTO of a mining startup named Atlantic Crypto, recently stated that “the security of the Ethereum network is not something to compromise over.” He supported EIP 1295 as the only protocol that doesn’t lower network security. EIP 1295 proposal doesn’t reduce issuance but instead cuts the amount of Ether rewarded to miners.
In a word with CoinDesk, Venturo said: “If you reduce the block reward you’re going to price out a large proportion of hardware,” that might become easily available for attacks in case the rewards for malicious services go higher. However, Venturo’s comments were disapproved by fund-manager Spencer Noon who tweeted:
I'm completely unsupportive of EIP 1295 and I question the motive of its author (Atlantic Crypto Corp).
ACC is a mining company run by former hedge funders. This has nothing to do with "network security" - a block reward reduction would hurt their bottom line.
While miners are rejecting the proposal for issuance reduction, traders, on the other hand, are pointing to the drastically falling prices of Ether tokens thereby requesting some specific measures to preserve its value by limiting issuance.
Eric Conner, an Ethereum trader drew a comparison between the existing Bitcoin issuance rate and the Ethereum issuance rate. Conner said that if Ethereum issuance reduction is cut down to 2 ETH tokens, it is still above the Bitcoin’s existing issuance rate. Conner said that this is necessary to preserve the network value. Taking a jibe at the miner demands, Conner recently tweeted:
Taking a quick look at the ETH:BTC market cap ratio vs. ETH:BTC daily miner incentive ratio (blocks+uncles+fees), we see that Ethereum has historically overpaid when compared to Bitcoin. We can also compare those ratios directly to see the current overpayment range is 1.5x-2x. pic.twitter.com/gp3mlUnuvm
This isn't a shock given ETH's high inflation rate of ~7.5%. Due to delays in Proof of Stake, this has pushed Ethereum's total supply well over 100,000,000 and needs to be addressed immediately.
Casper developer Danny Ryan, recently supported Conner’s views during a developer meeting while stating that 2 ETH reduction in issuance is like a “reasonable compromise” while balancing the interests of both – trader and miner community. He also further went to state that considering the fact that GPU miners are facing it difficult to compete with the ASICs, changing the proof-of-work and removing hardware from the platform would be another “reasonable compromise”.
It remains to be seen what will be the outcome of today’s meeting and how developers will push the progress of Constantinople hard fork further.
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