Vitalik Buterin stands as the co-founder of Ethereum and has called for reforms to be made in regards to the network’s crypto fee system. In short, Buterin warned that this rise in transaction fees, having reached 100 gwei, could undermine the network’s security as a whole.
Transaction fee revenue is now nearing half as high as block reward revenue. This actually risks making ethereum *less* secure because of https://t.co/Dase8SL30z. Fee market reform (ie. EIP 1559) fixes this; another reason why that EIP is important. pic.twitter.com/eqU3tAMh67
— vitalik.eth (@VitalikButerin) July 21, 2020
ETH Fees Going Too High, According To Buterin
The idea behind this security compromise is based on a paper, one that suggested that increasing reliance on transaction fees from miners may incentivize them to enact selfish mining practices. This, according to the paper, comes as a bid to extract greater profits, which then threatens to disrupt how transactions are processed, to begin with.
Buterin gave these comments after users started to report that Ether transaction fees have gone up to 100 gwei. Ryan Adams, the founder of Mythos Capital, tweeted earlier today that Ethereum had no choice but to find ways to put more value in each block, as things couldn’t go on like this.
We live in a 100 gwei world now.
The old days are gone.
We haven't even seen retail fomo and it's like this.
We have to find ways to fit more value in each block.
DeFi rollups, wallets supporting layer 2.
Mainchain for settlement.
Gonna take the whole community.
— Ryan Sean Adams – rsa.eth 🏴 (@RyanSAdams) July 21, 2020
Pushing For Integrating A New EIP
Buterin’s proposed solution is implementing Ethereum Improvement Proposal (EIP) 1599 in order to reform the network’s fee structure. This reformation involves burning base fees in order to reduce the overreliance on transaction tariffs that miners currently have. Even so, some members of the Ethereum community have yet to accept the proposal.
As justification for this push, Buterin’s post cited a paper that was published in 2016, titled On Instability Of Bitcoin Without the Block Reward. This paper was authored by four researchers from Princeton University, and outlined the various risks that can be associated with transaction fee increases within a blockchain network.
Trying To Circumvent Human Greed
The paper was made as a bid to warn against an array of threats to the security and performance of the Bitcoin network. Particularly, threats that could arise should miners in the network rely on transaction fees more and more as opposed to block rewards, which will dwindle over time.
The researchers warned that high levels of variance within transaction fees could incentivize otherwise “selfish” mining practices, as mining rewards become less and less. An example of this is miners trying to fork “wealthy” blocks in order to steal the rewards that are contained within said blocks.
EIP-1599 would see an overall increase in total network capacity, going up to 16 million gas as opposed to 12.5 million it is now. The proposal further dictates the base fees based on whether or not the capacity is above or below a target of 10 million gas. The idea is that the base fee itself would be burned, with only the tips paid to prioritize transactions being kept by the miners.