Ethereum

Eight ETH Mining Pools Unite Against EIP 1559 Implementation

Eight mining pools, controlling about 30% of Ethereum’s hashing power, have teamed up against EIP 1559, which offers burning ETH when paying fees.

A small Ethereum pool Flexpool published an article on Medium in mid-January in which the pool owners spoke out against the adoption of EIP 1559. The proposal seeks to address problems with the existing transaction fee model forcing users to pay more than necessary.

The small pool, which mined only 10 blocks in December , has encouraged Ethereum miners to leave the main mining pools that support the upgrade, such as Sparkpool and F2Pool.

“Don’t be a slave to your pool. Pools support the robbery of their miners only so that they can drive up the price of ETH for wealthy speculators, ”writes Flexpool.

According to the creator of the pool, Alexander Sadovsky, since the article was published on the blog on January 14, about 400 miners have joined Flexpool.

EIP 1559

Vitalik Buterin published EIP 1559 in April 2019. EIP 1559’s proposed fee structure autonomously adapts to network requirements and allows users to pay only the fees they actually need to complete the transaction. In June 2020, the Gitcoin open source community foundation said it would fund bug-finding and testnet participation incentives for EIP 1559. But this model is economically disadvantageous for miners as it reduces their revenues.

Ethereum miners already expressed their disapproval of EIP 1559 last fall  , and some said they would refuse to implement EIP if it is included in a future hard fork. In December, Buterin called for EIP 1559 to be implemented as quickly as possible, and developer Eric Conner announced its upcoming implementation. He said that EIP 1559 would destroy a lot of ether. They will be burned after every transaction processed on the Ethereum blockchain, which is very different from the current mechanism.

Miners against

It’s understandable why Ethereum miners want EIP 1559 never to be implemented or delayed indefinitely. Miners have benefited from the surge in network activity caused by the development of DeFi projects. According to data BitInfoCharts, the profitability of mining close to three-year high, as the network congestion has led to the fact that the transaction fees than once  reached record levels in 2020.

It is not yet clear if the larger mining pools will react to the Flexpool-initiated campaign. According to current data, the three largest mining pools – BitFly, F2Pool and Sparkpool, are either opposed to EIP 1559 or are in a neutral position. BitFly has long opposed this proposal and recently reiterated its position and stated that EIP 1559 “could threaten the future of Ethereum.”

F2Pool director Da Liang said he was “neutral at this stage and not ready to make any official statements.” In June, SparkPool CEO Xin Xu said that “an improved fee payment model is needed” and that the pool “has supported EIP 1559 for a long time.” However, the pool recently posted a link to an article against the EIP on Twitter .

Nonconforming Ethereum miners require at least 51% of the network hashing power to prevent EIP 1559 from being implemented. In this scenario, miners will be able to censor blocks using EIP 1559 functions. Processing any blocks that meet EIP 1559 will be stopped.

Developer Tim Beiko, unofficial manager of EIP 1559, said this is unlikely, especially since the EIP is in its early stages of development. He added that developers may opt out of EIP implementation for several reasons in the future, including problems with consensus among Ethereum developers.

Sadovsky expects Ethereum developers to make some concessions to miners given the backlash in the community. In his opinion, they are unlikely to completely ignore the miners, because they “care about their reputation.”

Developer opinion

As noted developer Ethereum Zsolt Micah (Micah Zoltu) from the miners are not many options for action if “they do not want to attack the Ethereum network.”

“Any censorship by miners against the interests of users will almost certainly lead to very aggressive actions by core developers against miners,” he explained in his blog. “The most likely retaliation for the developers would be an accelerated Proof-of-Stake launch that would eliminate all Ethereum miners entirely.”

Tim Beiko said that miners are unlikely to fulfill their threats. Collusion against the upgrade will entail high costs for mining companies:

“Miners can easily make it clear that they are against changes. But it is much more expensive for them to actually carry out their threats to the end. “

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Experienced Founder with a demonstrated history of working in the newspapers industry. Skilled in Data Research, Management, Investment Research, Teamwork, and Leadership. Influencing the technology, people, and technical analysis of the Cryptocurrency and Blockchain world.
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