- Hudson Jameson
- Tim Beiko
- Chun Wang
- Michael Carter
- Chris from Flexpool
- Roger Mao
- Hasu
- Tomasz Stanczak
- Micah Zoltu
- Aftab / DCinvestor
- Rick Dudley
- Georgios Konstantopoulos
- James Hancock
- Barnabe Monnot
- Pooja Ranjan
- Trent Van Epps
Hudson - Hello everyone and welcome to the Ethereum 1559 community call. I'm going to be your host and moderator Hudson and today we have an awesome set of panelists who are here to discuss 1559. Let me just give everyone kind of a quick rundown of why we're having this call and the guidelines. So this call is organized by the Ethereum Cat Herders which is an organization that deals with note taking for the community and protocol level development, information when it comes to coordination, and kind of filling in the gaps that we see with the lack of organization in the ecosystem - stuff like that. We do Peep an EIP, which is a video series that is run by Pooja, who's on the call.
Today we're going to be having a wide variety of people on here with different viewpoints. The main goal of the call is getting various stakeholders together to talk about concerns and answer questions over 1559. We've invited a variety of people from the mining community as well as people from the research community and dev community to help us understand their viewpoints on 1559. No decisions about whether or not 1559 is going into Ethereum are going to be made today. This call is completely separate from the core developer calls. The way Ethereum governance is set up right now we rely on core developers to listen to concerns and ultimately make decisions on what they code into the software so we're not going to have anything today that's like "oh this is definitely going to happen" or "this definitely isn't going to happen". This is purely a call to just hear out concerns and provide information to the community. So without further ado I'm going to go through and do a really quick one-line intro for all the panelists on the call.
First I'm going to go through each person and give a quick intro. So first we have Aftab who is someone in the community who is an active user, community advocate. Y'all have probably seen him around on twitter. He's here to represent the user base. We have Barnaby who's an Ethereum Foundation researcher. He's done the most simulation work for EIP-1559, actually released a few blog articles as recently as last night I believe. We have Georgios, who's a researcher at Paradigm and has worked with Hasu on publishing several analyses of 1559. We have Hasu who's an independent researcher and worked with Georgios on several analyses of 1559. Rick is an EIP author of EIP-1559 and his company Vulcanized in the first 1559 implementation in Geth. We have James who was previously a project manager for Vulcanize during part of that implementation from a while ago and was an EIP champion during the first phase of implementation a few years ago. Micah is an EIP editor. It also says here he has the most PRs merged on 1559 without being an author as he is an EIP editor. Tomas is a core developer and client implementer for the Ethereum client Nethermind. Trent has worked on gathering community sentiment on EIP-1559 as a kind of community liaison advocate. Tim is a project manager for EIP-1559. He's facilitated some of the 1559 calls and wrote the community updates. Chun Wang is from F2pool which is a major mining pool and part of a group of miners supporting 1559. Bitsby Trippin / Michael - they are one and the same as a miner and host of the Bitsby Trippin youtube channel which is a very popular miner hobbyist channel, and I guess beyond hobbyist actually but just a popular channel on mining, and has some really good videos out there. Chris is from Flexpool and is one of the miners opposed to 1559. And Roger is from Innosilicon which is an ASIC manufacturer.
So we've just run through everybody. The next phase of this is going to be a TL;DR from Tim about what 1559 is and then we're going to go through and structure this, giving miners some time to speak and then give a broader group discussion based on rebuttals from people, and in response to some of the questions that might happen we're also going to have Q and A from chat - we've taken questions from Discord and Reddit over the past week and we also will take Youtube chat questions. Oh my lord, okay the chat is going crazy... if we can take questions from Youtube chat we'll be taking those as well if we have any time. So thanks everyone for joining and without further ado I'll let Tim take it away with a quick intro to 1559.
Tim - I'll try to keep this very short. I guess the first thing I'll say is like this is not the place to learn about 1559. There's a ton of resources for that. I believe some of them are linked in the Youtube description so if you're unfamiliar with the EIP I really recommend just reading those beforehand because it is quite a big change and they would take up half the call to properly go over the nuances. But at a high level what 1559 does is it goes from having gas prices be something that's not part of the protocol - so that's kind of implicit and that we need to estimate - to have them be explicit and be part of the protocol. So we basically add the minimum gas price that the transaction needs to pay as part of the block header. This has a lot of nice benefits, the the biggest of which is that it makes transaction fee estimations much simpler. The reason for that is that you go from having to estimate what everybody else is willing to pay to be included to just looking at what is being proposed in the block header and if you don't want to pay that price then you simply cannot be included. There's a ton of ripple effects from that. In order to have that estimation in the protocol itself we need a way to gauge the demand of block space in the protocol, so we make the blocks much bigger and we aim to only keep them half full. This way when they become more than half full we can raise the minimum price and when they're less than half full we can lower that minimum price. And then because miners could play with that minimum price if they actually got the transaction fees from it, 1559 removes the transaction fees, or a large part of it, from going to miners. This way the design makes miners kind of agnostic to whether the minimum price is high or low. Then the final kbit there is obviously if we pay miners no transaction fees then they have no incentive at all to include transactions or even to run a node that has a transaction pool, so we add this second component to the transaction fees called 'the tip' which earn, I believe it's called 'inclusion fee' now, which is the part of the transaction fee that goes directly to the miners. And as with our models and research on the EIP we expect that most of the time the tip is fairly low. It compensates miners for the marginal cost of including transactions but there's a bunch of use cases where the tip might be quite high. So if you look at things like DeFi arbitrage for example, these transactions are quite valuable and people will want to put large tips on them in order for them to be included fast. And then when we mentioned earlier blocks - we want to keep them 50 percent full - so when they actually do end up 100 percent full people will have to outbid each other on the tip, which is basically the system we have today. So even though those are kind of short periods, they will happen and there'll be these tip auctions. So that's my 45 second summary of 1559. And again if you're not familiar with the suggestions, reading through the various resources and explainers that are there, there's really a ton.
Hudson - All right thank you so much Tim. And I forgot earlier on the intros because it wasn't on the initial sheet... Pooja, who is the Chief Cat Herder from the Ethereum Cat Herders is the one who was one of the main organizers of this call. She's also handling Youtube chat along with Trent who's volunteer modding and so everyone thank Pooja for helping organize a lot of this. Next up we're going to give two minutes each to each miner on the call. I'm not doing that because of any greater importance for one stakeholder versus another, but because it's pretty much been shown that miners, or certain miners are opposed to 1559 and most of the other stakeholders on the call are publicly for or advocating for 1559 in some way shape or form. So we'll go through and hear the sentiments from the miners and then go into discussion based on what comes up from those conversations. So we'll go Chun Wang, then Michael, then Chris, then Roger. So Chun Wang from f2pool, do you want to give a less than two minute overview of your position on 1559?
Chun Wang - We were about the first user mining project in China who originally introduced Ethereum mining to the Chinese miners. So we started to mine our first Ethereum block back in March 2016 and soon after that I heard there was a very serious incident on the Ethereum network which was the DAO hack and I must say back then we decided to oppose the fork. So then we got Ethereum Classic and it had been four years since then and they feel that probably Ethereum Classic was a mistake. A lot of ETC mining pool, it's your miners, if now it's like because of the EIP wanted finance we have another similar fork or anything another secondary Ethereum Classic. I don't think it's going to anywhere if it's the only support from miners because Ethereum has value not because of some miners mining on it, because the service has value is because Ethereum is a great platform and they have developers, have users, building applications and users use Ethereum network for different applications. So if you think this way I think like a miner supported Ethereum is my miners this is should be like supports a security network because they're getting a reward and get him, getting a lot of benefit from the network. So but if one day like a miners is going against the benefit, the goal of the Ethereum. I think we probably cannot like to go into the same direction. So if you're looking into the future I think so what makes Ethereum successful so will have to bring more developers, we have to bring in more users. Without such a change in the fee structure it's quite hard. Ethereum network is already full at current stage, so we have to make some change to introduce something new to help Ethereum go to the next step.
Hudson - Okay thank you so much for that. Next up we have Michael. Take it away.
Michael - Thanks guys, and thanks for having me on here to help represent the larger group of the, I would say, the at home miner and the folks that really had been following the channel out there with the rest of the community. I came out pretty early on being opposed to a particular component in it and that had to do with the fee burn. It had to do not just to the impact that will happen on the miners out there... the new growth of mining that's out there. We're almost two times the original top of the hash rate but we're looking at an abrupt change. When you have such exponential growth like that that would occur in certain scenarios, when you have a possible descending price and a high usage of the network right, you're gonna have an average block time block reward that is exponentially higher than the reward. And in certain scenarios where you have a reduction of price, like what's going on right now, and if it continues to hold that trend, you could have a very big imbalance by the time this thing goes live. When it comes to the burn where I've been estimating around 50 percent of the network, but if we get down to lower figures such as six/seven hundred dollar Ethereum price which nobody can control and you have block rewards because people are doing still a lot of activity on DeFi, you have a position where you could have a six to seven equivalent block reward get dropped by more than 50 percent.That presents a very interesting risk to Ethereum that I don't think Ethereum's ever had to deal with in its life, where you have an exponential amount of hash power and you have this incentive artificially come in. It actually creates a situation where you have a size of pi of a potential hash power that now comes off of it looking where that hash power is going to go and you have an attack vector that Ethereum hasn't had to deal with where pretty much every coin in the market that is proof of work besides Bitcoin has had to deal with which is a resistance attack against 51 percent. It isn't theory, it's happened to almost every network. Pick a network that's not Ethereum or Bitcoin that's proof of work that's probably gotten attacked at least once. I see that as an existential risk. I'm concerned about that existential risk and I think there's multiple ways to address it. Hopefully we'll cover a couple of those today. If EIP-1559 goes in as it is wholesale, I think there's still a way to address it through a bump in the block reward. There's models that have been built on that and I'll point folks to that. That development has been a kind of a community effort on explaining that risk, so hopefully we can get to that at some point today but,, that's where I feel I'm representing the larger group out there that right now is the rolling wave of that hash power coming on and hopefully we can get to some of that today. But that's where we stand.
Hudson - Great, thanks so much. Chris from Flexpool - you have two minutes.
Chris - Hi, I'm Chris. What we as a pool feel is that our our miners were quite upset over 1559, so we talked to them and then we made an announcement stating our opposition and other pools got on board. As we've talked to other miners and we've talked to the devs we've come to say that we don't mind 1559. I said it does bring several improvements to the Ethereum network and honestly we do think it would improve things, but when 1559 was first thought up the gas was so small on blocks and and now it's more than double the actual base fee. So now we're talking about a cut in what miners make of over 50 percent and talking to other miners we've tried to find a middle ground here where we make a great sacrifice for the community and perhaps the community can give us something back. As Michael has pointed out we do believe the base fee should be increased from two to three just so instead we have a 50 percent drop you have basically a 40 percent drop. But also miners we put out, because i've been working together with a couple of miners... so one of them put out a poll on reddit and in that poll we had different options of what miners want to do. So 55.33 percent of those miners said they could accept 1559 if 969 came along with that. 969 is the minimum change necessary to prevent broad ASIC proliferation on the network. As you might remember, several miners believe ASICs should not be part of the network. Along with 55 percent of them voting for 969, seven percent of them voted to increase the dag so you basically have 63 percent of miners voting not to have ASICs on the network. They said if you do that then they can accept 1559 which is a huge sacrifice on their part. I think I'm done.
Hudson - Okay, thank you so much for that. If you have a link to the poll throw it in the Zoom chat and we can take a look at that for anyone who wants to do a rebuttal for some of that piece. Next up for representing the miners, and not necessarily for obviously but whatever they want, Roger from Innosilicon, an ASIC manufacturer. Go ahead.
Roger - My name is Roger and I'm the CTO for Innosilicon. Innosilicon has been building ASIC miners since 2013. We did the first Bitcoin 28 nanometer ASIC miner back then and in 2018 we started doing Ethereum ASIC miners. Over the last two/three years we had the first generation a10 and also a follow-up of a10 pro and right now we are working on a11, so we have been a supporter for the Ethereum protocol and we strongly believe in the protocol. So 1559 - it's going to reduce the gas fee which upsets some of our customers but overall I feel they will continue to support Ethereum whatever the decision will be. We're just a little bit nervous about the discussion about attaching EIP-969 on top of 1559 because that's going to disable a lot of our customers from being able to continue to do mining. So overall I think because we have the first hand data and overall I believe right now the ASIC mine only represents a small fraction of the total hash rate out there. We believe that a lot of the times we've been blamed on our people worried about the ASIC miner proliferates, but in reality it probably only represents around 10 percent of the total hash rate if you add all the ASIC miners together. So we want to say that we will support whatever decision is made on the 1559 but we don't want 969 to be added on top of it. I think that's all I want to say.
Hudson - Thank you, Roger. Now we're going to go into people who can kind of discuss some of the things that were just said or other points they want to bring up - technical or non-technical. When it comes to this, to what was brought up if you would like to speak go ahead and raise your hand and i'll try my best to make sure the order is in place. We'll start with Hasu.
Hasu - I would briefly like to address what Michael and Chris were saying. So Michael said, quote me if I'm wrong but, if we lower the revenue or if the revenue gets lower as a result of EIP-1559 then this presents a large share of or a share of dormant hashrate that could pose a security risk to the network. I would respond to this that Ethereum and many other coins have survived long-term bear markets where the price of Ether and the fee revenues dropped by way over 90 percent and they have never had any issues with their security. The point where many networks have had issues with their security is if they went for GPU over ASIC mining so I would name this as a different concern that I have to removing or to introducing EIP-969, which is that no network that has ASIC mining or an ASIC-friendly mining algorithm has ever been attacked with double spend attacks, whereas many GPU mining coins have.
Hudson - Okay Thomas, go ahead and lower your hand after it's raised if you are done with your rebuttals.
Tomasz - Yes, I think my statement as a client developer would be we look at EIP-1559 and other EIPs both together and separately. Together in a way that we need to know what tools we have at our disposal in case there's sudden changes of the hash rates appearing around EIP-1559, which by the way we don't really expect because we think that there is a very long process of communication around EIP-1559, a long preparation process for the community, for miners, for users to understand the implications, to prepare any potential shifts of hash rate and also any capital expenditures. Still we need to know how to react and that's why we have the list of various EIPs but we cannot see them as a kind of bargaining tool for whether EIP-1559 goes in or not. We see that EIP-1559 is simply a big improvement and we believe strongly that based on all the research done and testing and implementations that it's safe and it will be safe. It doesn't mean that we can just avoid monitoring and being aware of of what we can use to to make sure that that safety remains whatever the market conditions, whether the price goes further up or down or whether anything unexpected happens. And we cannot say that no attacks happened - we know Ethereum Classic had some moments of tough days around mining, around attacks. We need to be aware of that and we need to know what the tools are there.
Hudson - Real quick before we move on to Michael... when you say we as in we are...
Tomasz - Sorry, as a developer. I'm sorry.
Hudson - No problem you could be speaking on behalf of another miner obviously just wanted to make sure we got clarification on that. Michael go ahead.
Michael - Yeah so I wanted to respond specifically to what Hasu was saying and I guess I'll land it on a hermetic principle of cause and effect and the difference between any other prior year of mining. If we talk the 2018 peak where we hit about 300 terahash total network and drew all the way down to 136 terahash at the lowest point, and including last year, we're at about 140 terahash when we had 86 dollars. Those were natural events. Things pulled back down and a lot of miners turned off. The difference that this proposes is not a gradual decrease and a decision point for miners. This is an abrupt change at a particular point in time and there are many models where this is a non-issue. I would say out of the 10 or 12 that are part of that, the mining analysis sheet that i've done so far, there's only a couple that really put it at a real potential risk and that really comes down to a couple effects. If you have a descending price and a high volume usage of Ethereum, where disproportionately the transaction fees make up more than 60 to 80 percent of the miners intake, I can't tell you how many times in history where certain things were said that that wasn't a risk and it happened. I know some folks crossing the ocean were holding on to some icebergs because they didn't think a ship would sink and what I'm trying to explain is that I think we can watch this as a rolling wave. I think we can be way ahead of it I think even if EIP-1559 moves forward, it's like a forecast is what we're doing right now. We have an actual that we're going to keep filling in and then we'll have a latest estimate to ensure what trigger needs to be in place when 1559 would execute. That trigger may be a block reward increase to ensure there's not a cliff that it falls off of, so it's not going to be a gradual change / an adjustment. It's going to be a cliff if there's a large transaction fee, and that's what the hash rate follows - the profitability. So if we get into a situation in June and we're still averaging 6, 10 spikes of 25 Ethereum per transaction block, which is bringing up the relative payout to a miner, and we have a descending price, we have a real risk of cash rate following all the way up to 700 terahash. At this current 7.5 percent month over month compounded growth which we've seen since essentially November with the price increases, if that continues to go up it may offset it. But bottom line is to ensure that we're tracking it and that's what I'm bringing up from a risk perspective because as a miner of GPUs we're long the entire crypto ecosystem, meaning there is no social contract. Ethereum doesn't have to do anything for us in that behalf it but it's a two-way street - if something else becomes more profitable and the size of pie of total potential hash power continues to increase Ethereum can get itself into a situation where if it gets unproportionately imbalanced, that it is an attack factor. What I'm trying to ensure that people understand is that we need to have the ability to track that and to make an adjustment accordingly. As a miner there's been a few times that folks have been burned. There has been instances where ASICs are on a network FPGAs. If we look at something like Verge, you look at a few of the other networks that were smaller that have had issues like this. It is not... ASICs do not... they give a false sense of security if when you're looking at a 51 percent attack, if enough hash rate is purchased from a brokerage, folks that are that are going after that brokerage value, where they're going to get more yield than mining at a pool, unbeknownst to them their ASICs could be used to attack the network. So I think it's a fallacy to think that ASICs protect you from that because their incentives are aligned to the coin. If a brokerage such as Nicehash has a higher margin of return and you got investors that are not really watching the network, they're just going to look at where they can get the best yield at ASICs, FGPAs or GPUs. So I'll let the floor answer that counter.
https://youtu.be/EdXhL6VR0mU?t=20634:26
Hudson - Thank you Michael. Next up we have Hasu then, then Micah then Georgias and Chris. It looks like the order is correct on my screen.
Hasu - To talk more about like how well, I guess, it's always good to have like a frame of reference how much revenue we are actually talking right, how much revenue could be burned and how minor profitability would actually be affected. So at this point I think it's important to reiterate that miner revenue consists of three sources. The first is the block subsidy. That's two each per block plus the anchor rewards. Then you have congestion fees. That's basically users paying just to get included in a block. And then you have MEV transactions and that is arbitrage bots bidding up gas prices in the memory pool to get included at a specific point in the block or very early in a block. Georgios and I, actually right before this call, published an analysis on insights.therabit.com that you can check out where we for the first time we leveraged MEV classification data from fledge bots MEV explorer that shows that we believe that the impact of MEV on miner revenue has been greatly understated so far. Flashbots only gives us an absolute lower bound for how much MEV actually makes up of miner revenue and we find it quite likely that we are talking, at most, about a reduction of 20 to 30 but probably way lower revenue for miners due to EIP-1559. That is because MEV transactions are not affected by this. They will continue to be in the tip whereas only the congestion fee would become the base fee and hence be excluded.
Hudson - Would that be across all miners or just the pools who are extracting MEV specifically?
Hasu - So you don't need to extract any MEV specifically. In fact we cannot even see the revenue that miners get by extracting MEV specifically. We can only see the fee revenue that they get from the so called priority gas auctions between arbitrage bots and liquidation bots that happen in the memory pool.
Hudson - Got it thank you. Okay I think next up was Micah.
Micah - It was but I was going to say the same thing about MEV so...
Hudson - Cool, all right Georgios?
Georgios - Same.
Hudson - Okay, Chris go ahead.
Chris - Hey, I just wanted to reply here. I've seen discussions about the minimum amount we should pay for security and when you have a coin that's worth 10 or 100 million, the minimum is fine. But when you have something worth, I believe, 200 billion was the number, around a quarter of what Bitcoin is worth, you're not talking about the minimum. Here you're talking about trying to pay the maximum you want for security. When you look at neighbourhoods in, let's say, a city, the neighbourhood with the most stuff to steal always has the best security. Here you have Ethereum, and it's a massive project, and you're talking about paying, I believe, one or two percent a year, and you're saying we should pay a little bit less because we should pay the minimum. But in the end what you really need to pay for security is the maximum to keep Ethereum safe because you want people looking outside saying "these guys are paying as much as they can for security."
Hudson - Okay, Aftab?
Aftab - Thanks Hudson., I wanted to offer a few points around what we've heard so far but also talk a little bit about EIP-1559 from a user and investor perspective for a second because I know there's a lot of people on this call who are on the youtube that might not have a lot of familiarity. I feel like it's important to discuss why we're even having this conversation for a minute. I do want to say first I am sympathetic to the miner position. I understand their point of view. But I also want to point out that we've had this kind of existential concern argument before and just economically, and this isn't a personal comment, it's just economically they have an incentive to present the worst case scenario which may be very unlikely to occur. And we saw this previously in ProgPow as well and everything that we were told that would happen in that situation did not in fact happen. Ethereum hash rate is now higher than ever and the network is very secure. But I do think from a community perspective and what I talk to people about in the community is they really view this as a massive UX improvement first and foremost. Ethereum is now at a place where I don't even want to recommend it to some new users because I know their first experience is they're going to have a stuck transaction, probably on their first or second transaction, and they're not going to know how to troubleshoot it. So being able to get a transaction in at a defined price with a very high reliability or expectation that that transaction will be included is huge. I think Tim Roughgarden's paper where he compares this to the Amazon versus the real estate model where in Amazon you buy something, what the price is, versus in real estate you're bidding and have no idea if you're going to get it for that price. I think that's a really good example for us to think about. I do want to talk briefly about the monetary policy benefit of why we're thinking about this and why users and investors and holders of ETH think that this is important. Miners have clearly provided a really valuable service to the network over time and they've helped to distribute the token to allow us to eventually transition to proof of stake. But let's not forget that really since the beginning of Ethereum's journey, we've had that expectation of moving to proof of stake. And even since those earlier days ETH has become far more important as an economic asset. It's a critical core asset to DeFi - a fundamental underpinning of it - and there's little doubt that economically hardening it creates a benefit, a very broad benefit for all ETH holders and investors versus a concentrated one for the people who participate in mining. So if we can achieve that without creating a significant detriment to functionality or to security then we should do it and we should really have that conversation around why we should do it. And then finally I do think economically hardening now helps us to ensure a secure transition to proof-of-stake because stakers will not just be earning income from issuance, they will have assets locked in the base asset which is ether. And so creating conditions where we may economically harden that asset, which may lead potentially to an economic appreciation, helps us ensure that staking will be successful and that proof of stake will be successful. And finally fee burning perhaps allows us to have that best of both worlds. In Ethereum we don't believe that a simple hard cap is secure and so we know that we need issuance. And so this allows us potentially to have issuance while also keeping a check on supply. So I wanted to interject that in what is otherwise a good technical discussion but I think it's important to remember why we're even talking about this.
Hudson - All right we got Rick and Georgios, then Michael.
Rick - Hi everyone. I think over the years of working on this project and the various designs that have come up, and then listening to the conversation today, I haven't really been engaging with the miner community on this. We've sort of stepped away from working on 1559 but I thought it was important to come in here today. It seems to me that at a high level apropos of what the gentleman before me just said, the miners, I'm listening to the miners concerns and I'm really trying to process and understand where they're coming from and what their issues are. I feel like many of us on the more research side of things are are yelling MEV MEV MEV but it's not clear to me that the miners on this call... I know some of them understand MEV quite well because I've spoken to them about it in passing, but it doesn't seem clear to me that Chris and Michael fully appreciate the full environment that we're in with DeFi and DMV (sound muffled) and how that impact is going to be enormous for miners. So I don't want to presume. I want some feedback from the miners. How are you viewing MEV guest or any of the changes in the future and how have you folks been thinking about how that will impact your price?
Hudson - All right, and then we have Georgios then Michael.
Georgios - Thank you Hudson. So firstly, to quickly answer Rick's question, miners don't need to understand MEV. The existence of MEV being extracted by traders generates fees that miners earn via the priority gas auctions. So putting that aside, miners have another form of revenue that comes from MEV and they don't need to know anything about the MEV - they just get more money because of MEV. So that aside I want to respond to Chris's earlier point around how you should pay as much as possible instead of minimum. Firstly let's agree on some common ground truth: The Ethereum network exists to serve transactors and these holders and not the miners. So the holders, they currently subsidize security for everyone else via the block subsidy and they should not have to pay more than what's necessary. So then using that as a kind of a compass we can easily understand that their rewards should scale with the network size, and they should not be over the network size, neither should they be lower than the network size. Currently we overpay for security, so the EIP, what it does is that it brings things back to normal.
Hudson - Okay Michael.
Michael - Yeah there's a lot to cover here.
Hudson - Yeah exactly, you're gonna get an extra minute or two if you need?
Michael - So I guess I'll first start with the ASIC comment, the economic hardening comment, and a little bit of the MEV comment, and then that last piece of where miners are in the stack with regards to supporting ETH. ASICs piece with ProgPow, the comment there... The main concern back in 2018 was that there would, based on the history of every other coin that went with it, had the opportunity piece with ASICs was the concern that there would be essentialization of the hardware design. And purely from the economics of building and taping out that hardware you have by design a much less efficient supply chain to get opportunity out there for participation. So you have this natural collapse of your participants, you also have a natural collapse of the influence or anything that's part of that ecosystem. So what's played out is with the growth of Ethereum and the price of the transactions there's more GPU miners than there ever have been on the network. So to the extent of did ASIC resistance... or did any of that move to ProgPow... was it a non-issue? I think it was just an issue of the growth of the network provided a lot more participation and the inefficiencies in the supply chain, and part of the risk is Ethereum going to move to 2.0 prevented certain players from getting into the ASIC side of it. If tomorrow the core devs came out and said you what we're going to slip or we're going to have two different chains with 2.0 and we're going to continue with 1.0 you're going to have a proliferation of basic investment costs come in there and they'll start taping out stuff just because the economic value is there to do it. So I just think it's a mix of a bear market pulled some people out and it landed where it's at now but we're seeing already new ASICs come online with forecasts to build like Innosilicon is doing that and I think right now if the numbers are at 10 it's not that huge of an impact. The concern is if it grew past that and you would have a misalignment of, that when the network goes to move to proof of stake where you have GPU miners that are along all crypto market and can pivot to another algorithm, ASICs are lockstep with that algorithm. So now you have this resistance model in place, possibly causing some issues on the transition. When I talk economic hardening that's another. So for folks that are not tracking that, are on the chat and that are listening to this, that's effectively creating that reduction of supply. Or at least telling off the inflation rate of Ethereum, thereby trying to trigger a supply demand piece with Ethereum, thereby moving the price up for holders by design. I had a piece on this on a separate video. A lot of the content that I talk about has a lot more depth. So a little bit that I get to respond to it here. There is a lot of this already talked to on the channel, but bottom line, with an uncapped limit, all you're doing is just telling it off to try to artificially push the price up. I think the network use and a lot of the features that come with Ethereum drive a lot of its value and price and its confidence in it. When we start trying to tinker with the inflation rate you're in a non-known schedule way. It's artificially playing with it and I don't know if that has the same economic benefits. We'll see after EIP-1559 goes in if we come back into another bear market. Not saying that that's part of the reasons for that but I'm just saying, just like the two times that the ETH reward has been reduced it did not necessarily have the effects that people were expecting. From the five to three it was coming off of the 2017 high. From three to two we went as low as 86 dollars from 330. So I think there's a misalignment on that understanding that that has anything to do and I think there's a lot more economics to it that's not being covered there. When we start talking about MEV...
Hudson - let's cap another minute or two okay?
Michael - Yeah I'll be real quick because there's not a lot. So with a lot of that development and with DeFi being new since May of this last year I don't think there's enough data out there that we have seen presented or done ourselves to see what the real extraction value is. I'm gonna add it to the mining sheet and try to see if we can put a value to that of what a typical miner can see because it hasn't been covered. I have not covered it on my channel. I'm taking it as a note to do more research to make sure that can provide a better view for people to understand what that means for the ecosystem because we may be downplaying it or not talking about it enough to help concern... what miners can do. I'll just submit from that piece and then we'll let you guys get back into it.
Hudson - Perfect, Micah.
Micah - I just did a quick comment on the MEV thing that I suspect there's maybe a little bit of misunderstanding here. I just want to clarify, MEV is miners extracting value and I've argued for months it's a terrible name because miners are not the ones extracting the value right now. In fact I don't think we've ever seen a miner directly extract the value until very recently and has historically been traders and arbitragers and botters and whatnot. When people say miner extractable value the reason it's called that is because miners are in the best position to extract that value and they have a basically insurmountable advantage over everyone else. So if miners start participating in an MEV they can extract all of it and no one else can even stand a chance. There is literally no way you can beat a miner at MEV. So my thoughts for miners out there is that, and this is kind of unrelated to 1559 so I'm gonna keep it short but I strongly encourage you to look into getting into MEV extraction. Like there is millions of dollars a day in MEV extraction that is currently being taken by bots because they have the resources to do it so consider going into that business and then you can just ignore fees altogether because you're just making so much money in other things that you don't need the fees. Also you can if you want an easy route into that MEV guest is a tool that lets you get into that uh
Hasu - I'd hate to interrupt but I think it has to be said that what you said is not true. The miners do capture a substantial amount of all the possible MEV today, even if they have no idea what MEV is. And that's because the front running bots bid for priority in the mempool and the miners earn these rewards that often go up to like eighty, ninety percent of the entire MEV opportunity via the transaction.
Hudson - I thought Micah was talking about a different type of MEV like maybe...
Micah - Yes he is mostly correct there. I'll rephrase slightly just before I close out. There is a lot more value that miners could make if they get into this directly rather than just relying on the price gas auctions. If you're only relying on price gas auctions you get a little bit, depending on how long the block is kind of determines how much you get because the longer the gas auction goes on the closer you get to maxing it all out. And so for short blocks you can make a lot more, long blocks you make a little bit less. Anyways time to keep that in mind, miners, there is money to be made in other avenues besides fees, so if you're worried about your fee revenue going down consider getting into that and you can look into MEV-geth and flashbots if you're interested
Hudson - Thank you Micah and just to remind everyone let's try not to speak out of turn and just go in the order so we can make sure everyone gets heard. So Chun Wang is next.
Chun Wang - Yeah I'm just trying to equal what Georgios has said. I think we are trying currently overpaid for the security and if you check the Ethereum power network what is today like we have including the fees we have more than 20000 users created per day as mining reward and that means about 8 million users generated per year. Compare that to other PoS blockchains including Ethereum beacon chain, the staking reward barely pays for wealth or developers. So I think compared to pos and pow rewards there's perhaps 10 times a difference in terms of security. So compared to that I think the pow chain is seriously overpaid and I think it should be fine this uh... when we trying to switch to lower the reward, if you want to find nice because compare that to BTC Bitcoin halving, the manual reward of bitcoin last may suddenly instantly reduced by half and the ecosystem just going well and the entire process went quite smoothly so I don't personally worry about the transition. The activation makes the Ethereum have any anything like any incident any security issues and I do think like the MEV will take a important role to replace the fee reduction and I think once we become more we're actively trying to doing the research how to make the MEV part also redistribute to our miners and then our users so I think even the reduction of the fee and the ??? part will be a pretty nice additional reward after the 1559 transition.
Hudson - Okay next up, I'm hoping that Zoom is putting this in the order of people if it's not someone pointed out and we can put it in the right order but I think Chris is next.
Chris - As a pool operator, of course generally pools exist to defend their miners because miners are the ones paying us and you defend your client so we don't feel that miners are overpaid in the end as you pay more, more miners join and the amount per miner evens out so what we have here is a situation where EIP-1559 took a very long time to come in and now you have many more miners than there would have been had it come in earlier. So now you're stuck and and now we have a lot of miners basically all making around the same as they would have before 1559 came in. So now we have many pools that are saying they don't want to lose their miners because again this is a very big community and you have many people who are working here. I know people say miners not workers but we are workers. We maintain our rigs, we put money down, we're basically all small business owners. So now we have a situation where miners are all making this amount and you're proposing to cut it by 50 percent or more so I've talked to miners and it's not that we're opposed to 1559. We think it will bring several needed improvements and there honestly needs to be even more improvement because gas is getting a bit too high. But the thing is you're cutting our revenues with that and honestly we don't think we should need to cut our revenues that much and we think the community can offer something so that the gap is not so big. When you cut them like we're willing to sacrifice a bit but you're asking us to sacrifice more than half and now you're at a situation where you have Nethermine, spark pool and many other pools and they're coming out and saying this cut is too much. If you look at the 'stop 1559' you'll see that there's only one pool representing 10 percent of hash rate that even supports 1559 without any changes. So you're at a situation where 90 percent of the network is telling you we oppose this proposal.
Hudson - Okay next up I put Aftab, James, Tim, Roger, Michael and then Georgios so let's go Aftab next.
Aftab - Thanks Hudson. I want to start off just in response to what we just heard from Chris and I totally understand the concern around the gap in the issuance but I also want to reiterate that within a couple of years that gap is going to zero. When we move to proof of stake all of mining will be lost and we do want the network to be secure in that time but there's only so far that we can indulge proposals like that when in fact where the goal is eventually to move beyond proof of work. So that's the first point. I want to address Michael's point from earlier comparing this to other issuance reductions in the past and I certainly see the point there but I think this is not equivalent to those kinds of changes. This is a coherent policy change that's designed to create greater certainty around ether supply and within the market, especially among larger funds and investors, one of the points that they've expressed concern around for ether is that there is greater supply uncertainty versus bitcoin. We'll never really be able to address that most likely because I don't think there will ever ever be support for a true hard cap in Ethereum, but this certainly helps to alleviate some of those concerns because as long as Ethereum is a very widely used network, and if EIP-1559 is implemented that will help to keep supply in check and it will either reduce net circulating supply or it will basically limit the growth of that. So I just wanted to put those points out there
Hudson - Okay thank you also we're gonna just have no more hands up until after Q&A because we only have a limited amount of time left. So no one else put your hands up until after I start Q&A and then we'll start doing that. Doesn't mean take them down if you already have them up necessarily but I think I have the order still. Next up I think we have James.
[1:01:34])https://youtu.be/EdXhL6VR0mU?t=3694)
James - Yep I wanted to address the point of giving a lead time or that miners need to be able to prepare for this change and that this is something that's been in the works publicly for a long time. Even if today you are learning about it you have at least four months to plan and the last three months have been pretty heated discussion or a lot of discussion within the community and the first part was like two years ago. We did an implementation study with Vulcanized and then that happened. And then last March we started development significantly again a year ago with a github grants request where we ended up pulling the largest amount of grants that I think had happened up to that point - over 60 grand - and we restarted development at that time. And then we were saying it's probably one to two years before this comes in and here we are like year and a half and it's getting close. So there's been plenty of public discussion and development of it coming soon.
Hudson - Okay Tim.
Tim - Well just two quick points I guess. The first this going a bit far about the ASIC versus GPU discussion but it's worth noting that with regards to the point of ASICs centralizing the network there's already been several options brought up, things that Ethereum could do if this became a problem. ProgPow is obviously a big one, 969 was brought up on this call. So I do think we are in a spot where ASICs are not a dominant part of the network today. If they became one and that caused a threat I think we have a lot of approaches we can take to deal with that. And then the second point I just want to make is with regards to the idea that yes miners are small businesses and there's more miners that came in - this is something I want to just stress - like the mining community that's making profitability assumptions based on historically high transaction fees, historically high Ethereum to US dollar prices and relatively low hash rate growth because of a GPU shortage. You're basically buying the top and you're coming in at the peak of the bull market. It is an extremely risky business decision and miners should be aware of that. It's also worth noting that the difficulty will adjust up and eat most excess profits in mining over time and that 1559 is not the only thing that can impact the fees that miners receive from transactions. So for example there's a lot of talk about the high gas cost right now and moving to layer two. If there is a mass move of say most of DeFi to layer two, the fees on the main chain will drop considerably and that'll have a similar impact on miners profitability. So TLDR is it feels like it is a very frothy environment for mining, and yes if we put 1559 through or if we alleviate the congestion on mainnet with L2, mining rewards will drop significantly and that will kick a lot of miners who are only profitable at kind of the most profitable period in mining of the network and that's by design. If we are overpaid and we lower that amount then it becomes unprofitable and then the miners who stay on have a lower difficulty to compete with and they can be profitable in that context. So just want to point that out.
Hudson - Okay thank you, and then finally Roger. Before we move on to Q&A.
Roger - Hi yes. I just want to repeat again that we do support 1559, only that we felt that it could be a little bit moderated in terms of the reduction. Another comment is that the reason why the ASIC has not really taken over like the Bitcoin BTC is because by design the Ethereum is a memory hud, which means it relies on memory bandwidth and the ASIC does not have that much advantage over GPUs in terms of memory bandwidth. A third comment is that because of things like ProgPow and also EIP-969, it's forcing us like the ASIC manufacturers to actually start thinking about putting GPU cores inside our ASIC in order to make us look more like a GPU and ASIC like a hybrid, to overcome that the obstacle. I think that's all I want to say.
Hudson - Okay thank you so much, Roger. Next up we're gonna go to Q&A. We have some questions from youtube, discord and reddit. Discord and reddit questions were taken in the previous days via our the Ethereum Cat Herders request for comments. First one - when does 1559 come into effect? If it does pass the core devs and it's decided that it's going into a hard fork, what's the timeline for that if that does happen and I guess probably Tim or James is the best one to answer this?
Tim - Sure I can take a quick stab at it. So on the next all core dev call, which is next Friday, we're going to discuss whether we want to include 1559 in the next upgrade, which should go live sometime this summer - call it July or August on mainnet. So if it gets accepted by the core developers, and Tomasz kind of went on about the process at the beginning of the call, then it would go live on mainnet around say July just to be to be safe.
James - And a little point on that is that London will happen in July no matter what because of the ice age, but whether or not it includes 1559, London is independent of that.
Hudson - Got it. I thought you were setting a date for London and I was about to be like, wait, okay, anyways...
James - Oh no the ice age is coming and we for sure have to address that.
Hudson - Yes that is correct. Regardless of the 1559 goes in we're addressing the ice age with London. So actually that first question when it would come into effect was fritz 1818 from reddit. This next question is from bitcoin root user and reddit... I would like to hear how burning 0.0001 percent of the supply every day will make the price rise enough to make up for 50 percent reduction in profits the miners will experience. They're talking about how to further centralize Ethereum as it'll impact hobbyist miners significantly more than larger farms who negotiated lower electricity and hardware cost. Yeah so I see some hands raised. If you don't want to respond to this put your hand down, otherwise we will let someone respond to this. Tomasz, I saw his hand go up newest?
Tomasz - Yes so I think that the argument of pricing being affected by the change of issuance... we're not saying it's true or not. It seems that it will be affected obviously because even if it's a small number you have to discount all the future payouts and also we've seen recently that with the higher gas prices the transaction fees actually amount to a significant part of the of the payments to miners. If you burn all of that that becomes significant but still, this is not the goal of the of EIP-1559. EIP-1559 answers the problems of the short-term predictability of the prices and better user experience in picking the right payment for a transaction in any given time and allowing the demanded supply to be floating a bit more freely around that short-term demand shifts. So when you have sudden spikes due to some events in the network, the network will be able to accommodate to that. Also by expanding the blocks in the short term so you may also see more supply when it's most needed. That's what I wanted to say.
Hudson - Okay thank you. We're going to have Roger then Tim then Michael. Roger feel free.
Roger - I think I already made my statement so you can move to the next next person. Let me lower my hand.
Hudson - No problem, okay Michael?
Michael - I think the question is a relatively good point with the amount of total issuance that's already out there and then how much it's actually going to get burned. I think this is going to be me putting on a marketing hat and kind of tapping my old Anheuser-Busch experience. I think the messaging that comes with certain activities when it's a heavy transaction time, let's say the last couple days we had 12 to 25 coin per block happening. That's gonna happen with that when you start seeing that much being burned when you have the typical block reward inflation being at two but then you burn 25. There's a huge amount, in that particular transaction, that I think the messaging the bots that'll be on twitter, the feedback loop from and the investment folks that are invested long on Ethereum are gonna use that to an advantage on a messaging and that's not necessarily bad for miners too. Don't get me wrong that it's not all about yield and price. Any action that has that influence if price goes up exponentially, even if yields go down it's just a math problem. Either one swings. Right now we have both, right. We have price growth and we have yield growth, which is creating this rolling wave of new miners. If yields come down but then they're being burned, that messaging I think that will come out is showing nine ten twelve million dollars a day being burned on heavy transaction times. Now that's still not really fixed any user experience if that's what's still occurring if we have huge amounts of transactions happening, it's costing the user a lot. But I think the messaging on the supply will far outweigh the realities of the supply even if it's going in a downward motion because of the amount of inflation over years.
Hudson - Okay thank you. I'm going to ask, this is the last question, Hasu you can respond to whatever questions you wanted but I assume that this next and final question...
Hasu - I would have just an addition to what Michael said because this is a big thing that happened in Ethereum a few days ago right? There was this one transaction that actually had 25 ETH block reward. That is the transaction that Michael addressed. I just want to briefly say that in this transaction, the fees were that high because there were liquidation boards competing to liquidate positions on compound. In this block about two eth of subsidy would have gone to miners, and about let's say 19 to 21 from the fees would have also gone to miners because that is an MEV transaction and only two to three ETH would have been burned in congestion fees so that is actually the prime example of what part of a transaction is affected by EIP-1559 and what isn't. So to reiterate most of this transaction would have still gone to miners like way over 90 percent of it.
Hudson - So this actually brings me to the last question which is an MEV related question. why not stop MEV altogether via protocol level provable transaction? Shuffling MEV is the reason of the bad UX and high tips will cause the same problem, is what someone said. So who has a response to that?
Rick - I'd just like to point out that that's exceptionally difficult. So the way that the EVM is designed today and the way that the whole system works today, many of us myself included some other people in this group would love to be able to wave the wand and and have it work the way that's described in that question but just from an engineering effort it's exceptionally difficult to achieve that without basically creating a whole new system.
Hudson - Georgios?
Georgios - Yeah I like to echo basically the problem comes from the fact that ordering and execution are kind of like both in the hands of the miners and if there was a way to separate that then sure, but doing this kind of separation is very hard and it would require us to use like fancy cryptography. We have no idea how to do that reliably today while also letting users express their fee preferences. So the answer is yes we can do it but nobody knows how to do it well yet so it's not something that we can answer fully today
Hudson - We have an extra couple minutes there's a really good question that Pooja put in chat from crackling ice in youtube. Have feeds been modelled based on how full the block is? What is the potential for reduction in fees? I think some of you have done done analysis and research on this. Does anyone have any comments? Okay Tomasz and then Barnabe if you want to chime in too, I know you had some extensive stuff on there.
Tomasz - Yes EIP-1559 short term it's all about this about adjusting fees based on the how full the block is. As for the potential of decreasing the fees all the research says that EIP-1559 generally does not decrease the long-term fees. This is only driven by the supply and demand on the block space so maybe the part where the block is bigger because of EIP-1559, which is a bit of accompanying change, will decrease the fees. But Barnabe will probably give more details
Barnabe - Thanks Hudson, thanks for the chat so far. It's correct that EIP-1559 doesn't address the supply and demand issue that gives rise to the high fees that we see. That would be better done by scalability. It's also important to keep in mind that another issue that we observe is the fees within a single block are very widely distributed. The variance of the fees is very high so you have this basic uncertainty on how much you're supposed to pay and you are also referring to oracles that tell you how much people have paid recently. And so you can create these kinds of bubbles where everybody is just overpaying continuously. EIP-1559 by its design really breaks this cycle and tells, well actually no, this is objectively what the congestion price currently is. That's what EIP-1559 is. It's a congestion pricing mechanism. It's also why MEV is out of the burning let's say it's out of range for this mechanism because MEV isn't specifically congestion. What we really mean is that users want to use the chain and it's not really about position - it's just about inclusion. And this is why EIP-1559 works the way it does. This is why it targets the congestion and this is why congestion is actually not due to anyone, or if it is due to anyone it's rather due to the users or the transactors who pay the price of congestion.
Hudson - Okay thank you Barnabe. I think what we'll do now - we have nine minutes left and we have a handful of participants. We might just go to closing. What do you think Pooja?
Pooja - I think there was one question that is coming up related to hash rate and related to 51 percent attack if somebody can talk about that?
Hudson - Yeah Micah said he can if you want to read the question?
Pooja - So the question is if you put off 40 to 50 percent of hash rate and it comes back to 51 percent attack like we had in ETC what will happen with ETH price once you have lost security of network?
Micah - So I can talk about the attacks. I am not a price speculator so I won't try to speculate on the impact it would have on the price. So if 50 percent of the hash rates suddenly decides to all move to nice hash for example... I think this is what Michael is getting at, that if half the hash rate moves to nice hash it creates an opportunity where someone can rent enough hash power to do a 51 percent attack. There's a number of them out there that you can do. And then with that they they do something bad. The reason this is particularly dangerous compared to other types of 51 attacks is because the people who are executing the attack have no long-term commitments, whereas someone who's running a mining farm for example they have long-term commitments. Like if they burn down Ethereum, they burn down their own mining farm. So if they've spent a billion dollars on a mining farm and Ethereum goes to zero because they attack the network then they lose that billion dollar investment because there's nothing else they can do with it. So this is a very serious attack like if 50 percent of hashtag goes to nice hash that is very dangerous for Ethereum. We should be worried and we should take immediate action to deal with it because that is a very very bad situation because you can rent an hour for 100k and do very bad things. That being said whether we hit 50 percent on nice hash or not is a speculative question that again I'm not going to speculate on where hash rate's going to go but it is real attack so the question you have to ask yourself is do you think it is likely for 51 percent of hashrate to show up on nice hash tomorrow? And then on top of that you have to ask would it show up all at once or show up kind of incrementally. If it shows up incrementally, coordinators have an opportunity to do something about it. They can increase the block reward or do these other things we've been talking about to try to stop the hash power from moving to nice hash. So these are just things to think about when people are thinking about these attack factors. They are dangerous but just keep in mind how likely are they and how fast will they happen. Can we respond? Can we act quickly? Stuff like that.
Hudson - In the essence of time I'll give Michael 30 seconds and Tomasz 30 seconds
Michael - Awesome. I mean you kind of hit it already Micah. The main piece that T'm tracking with it is that we're in a different time than we were two years ago. And even with the rolling wave of possibly doing this in June, at the current exponential growth we're going to be close to 700 terahash. If that comes off, people that are investing in that are going to be looking on where the money's coming from. If there's a play for a competitive network, not saying any networks out there, somebody would do that, but somebody that's long in that position has every incentive in the world to have an issue with, to create an issue for Ethereum. And this isn't theoretical things. This has happened to several other networks. Pretty much almost every large proof of work mining network out there. So I'm trying to ensure that people are taking it seriously and then I think mathematically we can keep track of where things are at and how big of an impact it's going to be if this is put in in June or July where we're at in the stack and if a block reward or something like that needs to be adjusted to lessen the risk and that's all i'm looking for.
Hudson - Okay we're gonna have Tomasz - take 30 seconds to respond to the question and then each person on the chat is going to get 30 seconds or less to give just final statements on their position or whatever they want to say if they want to shill anything I don't care and then we'll close out with Pooja and myself and that'll be it. So Tomasz go ahead.
Tomasz - The amount of research, testing and discussion that we're bringing here, the amount of tooling that we build both in the space of protocol engineering and DeFi, just shows that we do understand the importance of these risks and we do monitor it and there's nothing that is not being looked at and not being treated to have proper consideration. So we have those tools. We do look at it. We understand those numbers and we listen to you also raising those concerns yeah. Sorry, all right, I do.
Hudson - Okay, no problem, all right, let's go through the list. I'll call your name and then you have 30 seconds or less. Aftab?
Aftab - Thanks Hudson. I just want to close with the thought that from the discussions that I've had with folks - the user and app community are strongly in favor of EIP-1559 and it represents a profound improvement to user experience by providing reasonable guarantees of transaction inclusion both for new and experienced users. And it creates conditions for economically hardening Ether which I think will be very important for the long-term success of Ethereum and its security as a proof-of-stake network.
Hudson - Okay next up we have Barnabe.
Barnabe - Yeah I just want to close saying the discussion was really amazing and I do support the EIP-1559 for the improvement that it will bring. I really do believe that it will make the experience much better for users. Not only for users but also it's been discussed for rollups so the architecture of Ethereum in the future definitely needs 1559 to keep going and to be modern and to keep up.
Hudson - Georgios.
Georgios - Yeah so firstly I want to point out a main takeaway from this discussion for miners based on the stuff that we've said that MEV drastically changes the landscape. The fee revenue that you would lose is much lower than you think or have calculated and so on. And then I want to rehash the fact that miners are long Ethereum and the Ethereum economy and as the Ethereum economy pi grows so will your revenue. So you should consider the option which grows the Ethereum economy and not be myopic about the situation. Thank you.
Hudson - Rick.
Rick - Yeah I want to say something a little milder than that. I just hope that the miner community takes their great opportunity in accumulating ETH to use that ETH to stake on ETH2 and I hope that they continue to participate in the Ethereum community and continue to explore the other opportunities. We expect that MEV will continue for some period of time, maybe in perpetuity on eth2, so hopefully the existing miner community will find a way to transition into the new system.
Hudson - Okay James.
James - Thank you great job at hosting this Hudson. I'm personally for EIP-1559. I worked on it for a long time now and for me it's a better fee system. My personal philosophy of mine is incremental improvements over time have exponential benefits and that's me.
Hudson - Micah.
Micah - If any miners would like to better understand how they can take a lot of money from DeFi users via MEV, please reach out to me on discord. I will happily walk you through it. And also if anyone wants to better understand the various attack vectors themselves, like on a technical level again reach out to me on discord. I'm happy to talk to people about the mechanism design of these attacks and how to launch them etc.
Hudson - Okay Tomasz.
Tomasz - Yeah, fully in support of the EIP-1559 and always willing to explain it further and also listening to all the concerns and taking them into consideration.
Hudson - Chun.
Chun - At first I became a miner in bitcoin network in 2011 because of a hobby, because I feel interesting, I feel excited, I saved a switch from city at home and I keep mining for two years before like creating my own mining crew. Well for the today's mining community we're being paid nicely by the network but who cares about what they are paying, what they paying them. Who cares for the miners. Who care about you know.. what about Ethereum is real future decentralization or even our earth the climate change. Most of miners they do not even know how to use a wallet. They never use the on-chain wallet and no never have the know-how to have you know ever use an ETH or DeFi application so I feel that this is all this stuff EIP-1559 organized by some small mining pools. It's just about the money and the dirty money.
Hudson - Okay we got Tim.
Tim - So lots of people said lots of good stuff already. One thing I'll say it's been really interesting to me to hear from the different miner groups on this call and to see like pulls in favor, pulls again then also I guess from the ASIC point of view which is not something we we hear a lot about first hand. So I appreciate you all kind of taking the time to come on this call.
Hudson - Okay Michael.
Michael - Yeah I'm obviously for. I think originally I was very against EIP-1559. I see the benefits. I've learned more as i've looked into it. I'm still concerned - just looking at the growth of Ethereum and the opportunity that's out there for everybody that are not tracking these conversations or not looking deeply that much into it and are you know essentially YOLOing into the space because it's an opportunity there. I think that we need to keep an eye on if this is moving forward that we take a pragmatic approach that we keep Ethereum safe. So if that includes just offsetting even one Ethereum per block reward I think you mitigate and you take everything off my model that I have out there right now which isn't a perfect model it's just a model you can help me get that cleaner to represent the network but as long as there's an understanding and an opening to not race to the bottom on paying for security but keep it in an amount I think that makes Ethereum go long and secure I think the mining community can get behind that.
Hudson - Thank you. Chris.
Chris - So what's happening with 1559, miners generally support all the improvements. It's just that we're being asked to make... basically part of the community is asking another part of the community to make a giant sacrifice for 1559. So what miners are saying is that it's important that you understand we have concerns and we're asking for things from the community too. We believe that over time difficulty will adjust to bring miner rewards to nominal. But however the current modelling shows that it will not generate a security risk of approaching PoS if it stays on an unwasted trajectory. So we believe that you have a large pool of non-profitable hardware here and that non-profitable hardware is going to be incentivized prior to PoS to attack. And since many of us GPU miners are moving on to 2.0 and we're all planning to stake, we believe there's a risk to Ethereum by not passing 969 here and we think that if 1559 passes we should also have something that we've been trying to push for all this time past to try to balance it out a bit. And as I and you've seen with the 1559 sign up, you have ninety percent of hash rate by pools who are not pro 1559 so you're pushing into this and you might push 1559 and suddenly you're left with one only one pull mining assertion because every other pool has not said they are gonna join you on this so we would much rather prefer a compromise where we both get what we want. Miners agree to take a cut but not as much a cut as you're proposing and in return you pass something that we've tried been pushed for a long time.
Hudson - Thank you Chris. Roger, finally.
Roger - Oh hi, yes I just want to say that we are a strong believer in Ethereum and that is why we made a large investment to build the ASICs around it. Currently we don't represent a large portion of the history and in terms of 1559 we do support the idea. Also we are hoping that the approach can be a little bit more moderated but whatever the the community decides we will support it and we also hope that we and also our customers can continue to participate in mining as ASIC miners. Okay yeah, that's all I want to say.
Hudson - Okay, I was incorrect. Last was not Roger, it's gonna be Hasu. I'm pretty sure is that the last one yeah go ahead.
Hasu - Thanks Hudson. So yeah, EIP-1559 will lower miner revenue and that's why we are kind of having all this debate about it in the first place, but Ethereum exists to serve users and holders and those holders are currently overpaying for security. It is of course within our right to lower what we spend on security and that's what EIP-1559 achieves. It is not one part of the community asking another part of the community for a favor. This is simply not true. Second we have plenty of empirical evidence that if we lower miner revenue, it does not affect security. We have seen many bitcoin halvings and we have seen many crypto bear markets that are not 10 to 20 to 30 percent declines in revenue but that are 90 to 95 percent declines over way longer periods of time. So in my opinion there's no ideological argument and no practical argument against including EIP-1559 in the London hard fork without further changes. That said thanks everyone for the discussion.
Hudson - Yes, we're going to have Pooja if you want to have 30 seconds for anything Cat Herders related and anything you want to talk about.
Pooja - Yeah it's so great to see researchers, developers, EIP authors and miners together on one call. Organizing this meeting has been a fantastic opportunity for us. tThe fact that various stakeholders came together to discuss a proposal for a future upgrade is impressive in itself and it's a symbol of a strong progressive community. On behalf of Ethereum Cat Herders I want to thank everyone who joined us on the call and tune into the live stream. This was our second EIP special community call. First we did for account abstraction and we hope to bring more as we go along with the journey of Ethereum development. Thank you Hudson for moderating this call it's brave.
Hudson - All right thank you so much Pooja. We'll wrap this up now. Thank you everybody for joining us. Thank you everyone out there for viewing the stream or watching it over later on replay and yeah, everyone have a good rest of your day or evening.