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Ethereum Miners Against Proposal That Sees Block Rewards Reduced By 75%

Ethereum Miners Now Receive Majority of Their Revenue from Transaction Fees

A new Ethereum Improvement Proposal (EIP) has been proposed, and subsequently received large amounts of criticism from Ethereum miners. According to the miners, the people suggesting this are more keen on the interests of the investor, over the security of the network at large.

Reducing Rewards By 75%

EIP-2878 stands as a proposal to reduce the block rewards by 75%. This would mean that for every 2 ETH gained per block will be reduced to a meager 0.5 ETH. The logic behind it is that it would bring the inflation rate of ETH to a level such as Bitcoin, thus retaining its purchasing power.

This was proposed on the 11th of August, 2020, by John Lilic, the Managing Director of Consensys, and Jerome de Tychey, the Global Head of Client Success at Ledger. This proposal was shared on the Ethereum Magicians forum with an in-depth explanation, which allowed miners and developers alike to discuss the validity of the proposal.

downturn in the cryptographic money

Too Much At Once

While miners, in general, were against it, GPU miners were particularly so. They highlighted how the EIP would see a block reward drop more than twice the percentage of the previous reduction in the network, warning that a 51% attack may very well be possible as a result.

Time Beiko, the Product Manager of PegaSys, is convinced that this is far too dramatic of a change. He highlighted that Ethereum has already seen two reductions, first from 5 to 3, then from 3 to 2.  Percentage-wise, the reduction was first by 40%, then 33%, and now they propose a reduction of 75%. A quick number crunch shows that this stands as 90% less than the original amount of ETH rewards of 5 ETH.

Threatening The Security Of Ethereum

According to Beiko, the biggest consideration to be kept in mind is the security of the network itself. He highlighted the need to keep the probability for a 51% attack low, as well as the need to keep the miners on the network as diverse as possible.

Another user highlighted how profitable AICS are compared to GPUS, stressing the need to change the algorithm before the block rewards get reduced. Should this not occur, the GPUs would be removed from the network, causing the ASICS to hold complete sway in the network.

Jimmy Thommes stands as the co-founder and CEO of Bit Capital Group. He warned that Ethereum shouldn’t try to imitate Bitcoin’s inflation rate, due to the two networks not serving the same purpose. Alongside this, the proposal itself made the miners feel like they’re being used, as well.

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      A journalist, with experience in web journalism and marketing. Ali holds a master's degree in finance and enjoys writing about cryptocurrencies and fintech. Ali’s work has been published on a number of cryptocurrency publications.