For Ethereum in the coming year, there are several very important key points in its history coming:
*EIP-1559
*PoS
*Layer2
All three are very important. If you have to say that PoS is the most fundamental impact on Ethereum, it will directly change the nature of ETH and turn ETH into a real productive asset. For details, please refer to the previous article of Blue Fox Notes "ETH2.0: PoS pledge has a profound impact on ETH". The impact of the above three on ETH is very far-reaching, and only when they really land, people can really feel it.
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EIP-1559
Discussions about EIP-1559 are now basically everywhere, and people are becoming more and more aware of it. Simply put, EIP-1559 changes the way users pay for transactions on the Ethereum chain. Before EIP-1559, Ethereum adopted the first-price auction (first-price auciton) mode. People submitted bids on Ethereum, and miners filled the transaction into blocks according to the user's bid, and received the user's payment. Fee. This bidding mode makes it difficult for participants to bid correctly, either high or low, because it is difficult for bidders to have a clear basis for bidding, it is more like a blind man feeling an elephant. This bidding model is similar to the second-hand housing bidding model in some countries.
EIP-1559 adopts a fixed-price sale model. No more bids by users, but quotes by the protocol. Of course, the agreement quotation, if the user feels that it is too expensive, the transaction can be canceled. This is similar to the experience of users purchasing fixed-price goods online in reality. Of course, in order to speed up transactions during congestion, users can also tip miners by tipping. The advantage of the agreement quotation is that it has a more comprehensive basis and makes a more suitable quotation according to the supply and demand situation.
In addition to the base fee + tip, EIP1559 also proposes an elastic block space. It regulates the market according to the balance of supply and demand. The block space can be doubled at most. That is, if the target is 10 million Gas, the block limit can be 20 million Gas. If the target is 12.5 million gas, the block cap can be 25 million gas, the base fee is not always fixed, it will be adjusted according to supply and demand.
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EIP-1559 and ETH
From the current point of view, EIP-1559 will at least have the following impact on ETH:
*The burning of the base fee reduces the circulating supply of ETH. This amounts to a certain level of subsidy for all ETH holders. ETH becomes a productive asset that earns income indirectly.
*It also has an impact on the new issuance rate of ETH. If the burning amount of ETH is large enough in the future, it may even be a situation where the burning amount is higher than the newly issued amount. Of course, this is only possible when the Ethereum ecological transaction is prosperous. In this case, ETH becomes a deflationary asset. Even if its burning volume is lower than the newly issued volume, it can reduce its inflation rate to a certain extent. This is also an important basis for some people in the community to begin to regard ETH as a value storage asset, which was previously the narrative of BTC.
*The mechanism of EIP-1559 is more friendly to the user experience of using Ethereum, which may lead to greater acceptance. You can simply imagine that if users go to an e-commerce platform to buy goods, is it convenient to buy through bidding, or is it convenient to buy at a fixed price?
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EIP-1559 and miners
It has been said that miners' earnings would be slashed due to the base fee being burned. How do you see it?
The current income of miners includes: block rewards + transaction fees. If the transaction fee is subdivided, MEV can also be divided. Many arbitrageurs or liquidators initiate a large number of trading activities. In order to realize profits, they must complete transactions quickly, so they will continue to compete with high prices.
After EIP-1559, the block rewards for miners remain unchanged, while the proportion of MEV revenue may increase, and the proportion of basic fees will decrease. EIP-1559 will definitely have an impact on miners' income, but it may not necessarily be as big as imagined. Miners still have a chance to make good profits.
On the whole, EIP-1559 has not changed the block space of Ethereum (it is only a temporary elastic space). During congestion, various traders still have to compete for block space of Ethereum. In development, arbitrageurs and traders will still compete fiercely for block space, and miners also have the opportunity to earn a lot of income by selling transaction priority.
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(Cumulative MEV, Flashbot)
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EIP-1559 is not the fundamental mechanism to address high fees
EIP-1559 by itself cannot solve the problem of high fees in Ethereum, but it may reduce the average transaction fee. When there is congestion, there will still be the problem of high fees. In other words, EIP-1559 is not the fundamental mechanism to solve the problem of high fees. The fundamental way to solve the problem of high fees is to realize the scalability of Ethereum. For example, Layer2 or fragmentation.
EIP-1559 also faces potential problems
EIP-1559 is not perfect. It also faces potential problems. For example, variable blocks may introduce new attack vectors, such as flooding the network with a series of largest blocks; or the potential manipulation of base fees by miners, but since it is difficult for miners to collude, the manipulation itself is also difficult; in addition, how to determine Whether the base fee is the best design is unclear. The potential problems of EIP-1559 will be highlighted with the implementation of practice.
The Year Ahead For Ethereum Is Unprecedented
With the advancement of EIP-1559, Layer 2, and PoS integration, Ethereum has undergone great changes in the value capture, scalability, and attributes of ETH. some crisis.
However, if all goes well, it will usher in a new era for Ethereum, which will be another level of competition. When these three are all on the ground and stabilized, Ethereum has the opportunity to highlight its unprecedented energy, and has the opportunity to have a very significant impact on the entire encryption field.
If it is said that at the beginning of its birth in 2014, Ethereum also referred to many ideas of Bitcoin, but now Ethereum is moving more and more towards its own development path. This is a completely different path, which may usher in a new era of encryption.
