Will Ethereum be forked due to EIP1559?

Recently, there has been an issue on the Ethereum that the miners have a lot of disputes about a proposal called EIP1559 (EIP is the meaning of the proposal). The supporters and opponents also set up two .org websites to express their positions.

There is also an episode here. The supporter bought the domain name stopeip1559.com, so that if the .com domain name is entered by mistake, he will still jump to the supporter’s webpage.

It can be seen that there are still some disagreements and stalemates in the community. I think it is not a big problem for our currency friends, so yesterday I did not mention this in the content of the ether, but I also saw that there are friends asking if there will be a fork. , And what impact will it have on the price of eth, so today we will integrate things about 1559, in a nutshell.

About EIP1559

This proposal is to improve the gas fee model. The most important change is the bidding model. The current model is relatively simple. All transactions are submitted to a memory pool called mempool in real time, and the miners choose to pack them according to the level of the fee. The transaction in the next block.

For users, whoever pays the high fee can complete the transaction as soon as possible, but how do we know what is high and what is low? At present, most wallets will generally provide three types of gas fees: slow, medium, and fast according to the network situation. Users make quick decisions, but in fact they are still vague.

The problem here is that bidding for commissions is like an auction, but you don’t know what the value of what is being auctioned is, nor what the opponent’s expected price is, so what will happen? Maybe you only need a gas fee of $1, but everyone wants to confirm that the transaction is blindly increasing as soon as possible. It may not be possible to complete the transaction with $5. Now, once the wallet is slow, it will provide you with an acceleration option, which is in disguise. Increase the cost of gas fees.

Therefore, when the network demand increases, the gas fee will have a rapid spike as shown in the figure above. With the development of defi, there is more immediate demand for transaction collection and settlement, and the gas fee problem has also become a pain point on the ether.

Proposal 1559 hopes to optimize the model to smooth out the fluctuations in gas prices, and to properly expand the capacity and improve user experience. It divides the gas fee into two parts, one is the basic fee, which will be based on the network status. For example, the capacity usage of each block is used to set the fee. This is directly calculated by the wallet and must be paid for each transaction, so we also understand that it is a fixed fee, and the fee is received at the same time eth is directly destroyed, which means that there is the possibility of deflation in the future of eth chips. This is also the reason why many investors will regard 1559 as a good thing.

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The other part is the miner’s fee, which is extra, that is, the user does not have to pay, but when the gas fee reaches the upper limit, that is, the network is relatively congested, the miner will sort and pack according to the level of the tip.

1559 Supporter’s Position

Its biggest advantage is that it can improve the network user experience. When the network is not congested, it is basically a unified pricing model. The wallet can give an accurate benchmark fee, and it also appropriately reduces the user blindly paying too many fees to cause network congestion. It happened.

Incidentally, there are several positive effects on the network. For example, under the 1559 mechanism, network fees can only be paid using eth, which consolidates the economic value of eth on the main network (now the network can set other erc20 tokens to pay For miners).

Moreover, a large part of the handling fee is destroyed, because Ether itself is an inflation model of additional issuance, which is equivalent to a dynamic adjustment of the issuance mechanism. Some supporters believe that this will be more conducive to the long-term development of the network.

Another point is that it can reduce the incentive of miners to manipulate fee prices in order to get more income.

Of course, pay attention here. 1559 only moderately changed the handling fee model, which may play a role in expansion, but it cannot fundamentally solve the problem of expensive handling fees and ether performance. If the network is congested, the handling fee will still be Expensive, it’s just that when the relative demand is lower, you can just use the basic fee and not bid, and the processing will be relatively faster, because if the proposal is passed, the gas capacity will also increase, and the transaction volume accommodated in each block will increase.

In addition, the Ethernet performance still depends on the layer2 we talked about yesterday or the long-term eth2.0.

1559 Opponent’s Position

Most of the opponents here should be miners. The biggest reason for the opposition is also the appeal of interests. An obvious change brought about by 1559 is that the income of miners will drop significantly, and they can only get block rewards and possibly or possible. There is no tip, and during the peak period from last year to this year, the total monthly income of ether miners was converted into hundreds of millions of dollars.

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And this is not just a problem of short-term wage decline. It may be difficult for miners to benefit from the success of Ethereum in the future. After all, most of the handling fees are consumed.

In addition to the issue of revenue, there are also some controversial points, such as whether the 1559 model can really improve the user experience of handling fees. If there is still vicious competition in tipping miners under congestion, then this is equivalent to users. Not only do you have to pay the miner’s fee that is not too low, but the basic fee must not be small. The basic fee here is like a tax collected on the Ethernet network.

There is also the destruction of deflation, which is a speculative point, but will it be a good thing for the long-term network? Of course, there may not be much data to prove the above two points. Some people say that filcoin also uses the 1559 model. However, the ecological gap between the two is still somewhat large, and it can only be seen in the actual situation after landing.

In general, I think there is some truth to both sides. Even if it is a miner, it is understandable to consider the interests, and what they mentioned cannot be regarded as “evil”.

In the current team, the defi ecosystem is basically EIP1559, and about 60% of the miners are against it.

However, the mining pool can only express its attitude towards this at present. There is no saying that the proposal on the ether is passed or not, and regardless of our support or opposition, 1559 is expected to go online around July this year and will be merged in an upgraded hard fork. Update.

And the kind of fork that the market thinks about splitting new coins, looking at the distribution of computing power, they may split a chain that does not contain eip1559, or build a new chain by themselves (the ether also has a difficulty bomb, a simple fork If the currency does not follow the mainnet update, new coins may not be dug out later due to increased difficulty).

At present, many people think that the possibility of forking the new currency is not very large, because V God and the ecological team are all on the 1559 side, even if there is a forked currency, the ecology will be moved to the original main chain with the greatest value. Miners maintain a chain that doesn’t have much value, just like etc. It may even be far worse than etc, and it doesn’t make much sense.

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But this depends on whether these mining pools want to do things. If there are enough benefits, especially if the current market trend is maintained, I don’t think it can be concluded that there must be no new coins here. I just think that the current ecology It shouldn’t be possible that both coins can change at once.

As for the price, for investors, these things don’t need to be too complicated. I may also be a little nagging above, mainly saying that I want a lot of friends to figure out what’s going on here.

From the perspective of investment speculation, it is enough to follow the market sentiment. If there is no fork, everyone will be happy. The speculation on deflation may also be a good thing. After a fork, the market understands it as a candy airdrop, which is also a good thing.

The only negative point is that if the fork is forked and the short-term price of the coin is okay, analogy to the previous bchbsv, which has a short-term market attention, it may cause miners to switch between the two chains. It will become unstable, and there may be some negative factors. Of course, this will also depend on the overall trend and how everyone understands it. The negative factors on the chain in the big bull market are often not reflected in the price.

Conclusion

As people who eat melons, we still hope that everyone will be happy, after all, harmony makes money, and harmony makes money.

Author/ Translator: Jamie Kim
Bio: Jamie Kim is a technology journalist. Raised in Hong Kong and always vocal at heart. She aims to share her expertise with the readers at blockreview.net. Kim is a Bitcoin maximalist who believes with unwavering conviction that Bitcoin is the only cryptocurrency – in fact, currency – worth caring about.