A storm is brewing in the Ethereum ecosystem. In recent weeks, the blockchain network has been sharply divided over a proposed update that could deny miners their main revenue: gas fees. In the latest twist, the creator of the network, Vitalik Buterin, has proposed an accelerated push to make Ethereum a proof-of-stake network. Such a move would be the first step towards Ethereum 2.0, more than a year before the scheduled update date.
At the center of the dispute is Ethereum Enhancement Proposal (EIP) 1559. This EIP proposes that network users would send part of their gas rates to the network itself, not to miners. These fees would be burned, essentially reducing the supply of Ether and ultimately increasing its price. Vitalik, who wrote the Ethereum whitepaper, was one of those who proposed EIP-1559.
However, Ethereum miners do not share the same opinion. Since then, a group of them have organized to move their hashing power to Ethermine, a mining group opposed to the April 1 update. As Criptoreport reported, they see it as a "show of force."
Vitalik Responds With A Bold Upgrade Proposal
Vitalik and other developers supporting the update have now responded with a defensive move. In an informal document, the developers proposed a “quick merge” that turns the network into a proof-of-stake consensus mechanism.
Ethereum miners are trying to perform a 51% attack to stop EIP-1559.
In no time, Vitalik Buterin responded with a “quick merge” proposal to escalate the ETH 2.0 merge.
We # SupportEIP1559! https: //t.co/LDVEyGtHqA
– Status (@ethstatus) March 12, 2021
"The goal of this document is to describe a mechanism by which a merge can occur quickly, with little modification to the ethpow or beacon clients," they say.
Signal, the Ethereum-based private messaging platform, described the opposition EIP-1559 as a possible 51% attack. Furthermore, he noted that those who oppose the update have now far exceeded the required hash power of 51% required to coordinate such an attack.
"While this EIP obviously benefits the Ethereum ecosystem in general, some miners believe that they can turn things around to maintain their exorbitant block rewards by blocking the upgrade entirely," states Status.
However, in his proposal for a quick update, Vitalik does not mention a possible 51% attack. Rather, he describes it as a balancing act. If they coordinate such an attack, they will still lose out in the end, he noted.
Miners could do a "balance attack" and mine multiple strings, so there are many options for which ethpow block to include. But ultimately, as long as there is at least one honest miner, eventually at least one block will be created with total difficulty> = TRANSITION_TOTAL_DIFFICULTY.
This merger, if successful, will transition Ethereum to a PoS network, "leaving the fine tuning for a future fork of ETH 2.0." As the developers point out in their informal paper, "the minimal merge will make work easier on these things, since you no longer need to worry about merging two strings at the same time."
Now what about EIP-1559?
The stalemate between developers and miners is unlikely to come to an end anytime soon. For developers, EIP-1559 is the only way to go as it will finally allow Ethereum users to transact for just pennies instead of the very high fees currently charged by the network.
Most of the apps built on Ethereum already support the upgrade. There is a GitHub repository of Ethereum developers, showing projects that are pro-EIP-1559. They include almost every major DeFi project, including Aave, Curve, Kyber, Compound, BadgerDAO, and MakerDAO. On Uniswap, the update received 42% support, but the other 58% of voters abstained from voting.
The miners are unlikely to back down either. They believe the upgrade would cost them a critical source of income. Flexpool, a small mining group, has led the opposition to the upgrade. In a long blog post, the group described EIP-1559 as "yet another move towards whales securing their bags."
On the new proposed base rate, Flexpool explained it as: "Instead of giving the waiter a tip, you just burn it in front of him while laughing at him."
Flexpool is supported by the two largest Ethereum mining pools: Ethermine and Spark Pool. Combined, the two control more than 45% of the network's hash power. F2Pool, the third largest pool with 10% hash power, is the highest profile mining pool that supports the upgrade.
Sparkpool opposes EIP-1559. https://t.co/6pw7QNN2Ug
– SparkPool.eth (@sparkpool_eth) February 25, 2021