Ethereum Rolls Out EIP-3554, Is It Beginning of End of ETH Mining?
Coinspeaker
Ethereum Rolls Out EIP-3554, Is It Beginning of End of ETH Mining?
Ethereum core developers have been working hard to quickly transform to the Proof-of-stake (PoS) blockchain. On Thursday, September 29, Ethereum blockchain received another update with EIP-3554 (Ethereum Improvement Proposal).
The Ethereum community has been actively working on a way to overhaul the ETH mining process. However, the biggest challenge has been working with its difficulty bomb. This concept of the Ethereum difficulty bomb refers to an increase in the level of mining difficulty and time required to mine new blocks on the Ethereum blockchain network. Speaking to CNBC, Tim Beiko, the coordinator for Ethereum’s protocol developers said:
“It’s a mechanism in ethereum that makes it exponentially harder to mine. It’s like we’re artificially adding miners on the network, which raises the difficulty, making it harder for every other miner that’s on the network to actually mine a block.”
The EIP-3554 implementation further delays the activation of the difficulty bomb by six months. Once EIP-3554 goes off, it will make Ethereum unmineable.
Moving to PoS Ethereum 2.0
The two biggest blockchain platforms Bitcoin and Ethereum follow the Proof-of-Work (PoW) consensus model. This involves mining new blocks and adding them to the blockchain network.
The PoW models have received criticism since they require high-end hardware and large power consumption. Besides, blockchains adopting these models have also faced scalability issues. Thus, Ethereum has been making the move to shift to a widely scalable Proof-of-Stake (PoS) model.
The Ethereum development team has been also reducing the limit of ETH staking to become a node validator. Previously, validators needed to stake a minimum of 1500 ETH worth a staggering $4.2 million.
The new Proof-of-Stake (PoS) proposal reduces this to only 32 ETH currently worth around $90,000. “It’s still not a trivial sum, but it’s a much more accessible system,” said Beiko.
Over the last several months, the Ethereum community has been testing the PoS workflows on the Beacon chain. However, Ethereum developers have been undergoing several challenges with the PoS implementation. Beiko said:
“We knew that there would be a lot of technical work to address things like the increased centralization that we see in other proof-of-stake systems. We’ve achieved that with the Beacon chain, where there’s one or two orders of magnitude more validators … than any other proof-of-stake networks.”
Of course, the Ethereum miner community isn’t happy with this since the PoS Ethereum 2.0 will compromise their financial interests. Post the complete transition to PoS platform, Ethereum mining revenue will drop to zero.
Last month’s London hardfork upgrade has already hinted that this is coming. The EIP-1559 gas-burning mechanism makes the Ethereum blockchain deflationary with time. This was to reduce the problem of high gas fee on the Etheruem network.
Ethereum Rolls Out EIP-3554, Is It Beginning of End of ETH Mining?