Ethereum Miner and Developer War Escalates, But We’re Not Overpaying For Network Security On A Transactional Basis

Ethereum Miner and Developer War Escalates, But We’re Not Overpaying For Network Security On A Transactional Basis



We attended Ethereum’s core developer call last week, various Ethereum Improvement Proposals (EIPs) were discussed which aim to change the reward given to miners for mining blocks in Ethereum and securing the network.


This debate is causing a major battle between developers and miners and we detail these argument points with our opinions below. This debate is undoubtedly weighing on Ethereum’s price since if miners leave and the network is unsecure it could be open to attacks that threaten its entire value, but if inflation is too high and we delay the move to proof-of-stake by keeping miners happy with high rewards, then Ethereum doesn’t have a future.


We also introduce a new metric that compares the money paid to miners per transaction on Bitcoin and Ethereum for network security which denotes Ethereum is not overpaying for security vs Bitcoin on a transactional basis.


We ultimately believe EIP-858 should and will be adopted as despite under-paying per transaction vs Bitcoin, we are overpaying for network security on a pay-out ratio method. This is since Etheruem’s market cap is well below Bitcoins.  For investors, we believe after a viable EIP is adopted, slated for late October 2018, that lowers the block reward and the network is demonstrated as still secure, the end of this war will lead to an increase in ETH’s price above current levels.


Also, with EIP-858 we believe miners won’t leave and network security will be fine and it’s a runway to Ethereum’s mining free future; Proof-of-Stake. The Ethereum contends inflation is too high, and we believe EIP-858 pulls the band-aid off and lowers inflation and positions the network for the transition to proof-of-stake.


The Ethereum community has four reasons to lower the block reward (inflation) that we analyze in this report.


  • Inflation is higher than Bitcoin, and supply wasn’t supposed to cross 100M for a century.
  • We are overpaying for network security – in part, not according to our new metric.
  • Network security is safe – last time the block reward was lowered the network was fine.
  • It’s a runway to the future of proof-of-stake

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