Ethereum network developers have defended incoming changes that will burn ether tokens and cut fees paid to miners, saying they’re popular with users and could boost the cryptocurrency’s price.
- EIP-1559 is popular among ETH users and will reduce fees.
- Once implemented, Ether will be burned, making ETH a deflationary asset.
- Disputes between miners and developers will be resolved one way or another.
The planned update to the network, also known as EIP-1559 (Ethereum improvement proposal) “is very popular among Ethereum users as it potentially makes Ethereum a deflationary asset,” ConsenSys developer Ben Edgington said last week.
Ethereum developers gave the nod of approval for major network changes earlier in March, which is set to overhaul the current system under which miners are paid for transactions in what could be construed as an auction process.
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The changes have not come uncontested, however, given that miner revenue will be slashed, with some miners even proposing a strike of sorts.
Still, developers say users support the changes, in part due to the fact that a reduction in coin circulation could contribute to a rise in ether’s value, but also because Ethereum is ultimately moving away from proof-of-work (PoW) to proof-of-stake (PoS).
The token trades above $2,000 at the time of writing and has risen 181% since the start of the year.
Lead developer on popular Ethereum wallet MetaMask, Dan Finlay said: “Its purpose is to provide a more predictable transaction pricing system that reduces overpayment, and has some deflationary economics as a side benefit.”
Under the changes, which will be effective in July, users will send a base transaction fee to the network that would then “burn” ether tokens (i.e. remove a portion out of circulation permanently), thereby reducing the number of tradeable coins .
The mechanism will move away from the current mechanism, whereby users have to bid to have their transactions included in blocks by miners, which makes fees very costly during high network traffic time-periods.
It will move the system away from the current mechanism, in which users have to bid to have their transactions included in blocks by miners, which can make fees very costly at times.
Edgington said these issues are “a significant problem for the usability of Ethereum and a barrier to the broader adoption of Ethereum by non-specialists.”
The co-head of fintech at ConsenSys, Lex Sokolin, said the changes will take network fees “from having an unpredictable and unbounded pricing mechanism to something that is much more predictable.”
On the flip side, the anonymous founder of Pylon, a North American ether miner, said there was a lot of “turmoil” in the Ethereum world, saying that since miners had spent time and money building facilities the update could incur heavy losses on the company.
“It goes back to the point [that] developers don’t mine, so they could care less about a miner, and miners don’t develop, so they could care less about reducing the congestion,” he said.
Some ether miners threatened to go on strike, or try to disrupt the system in other ways in protest at the changes.
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