❓What do you think about EIP 1559? Will it have an impact on the ETH price? 👍Hit the like button if you enjoyed this video 🐦Follow Finematics on Twitter ► twitter.com/finematics 💛Support Finematics on Patreon and join our Discord community ► www.patreon.com/finematics
I don’t mine personally, I wish I knew how to with all the techno stuff, I just know how to buy some crypto lol but I do know one thing; albeit the general public do make the ethereum network as a whole, miners are the core , they are the ones confirming every transaction. Big shout out to all the miners out there for helping to build the foundation of every useful network there is now 👍🏽
Thanks for making this video! I now understand more, but I don't feel I understand enough to put this into code. Would it be possible for you to explain the steps? For example 1: Get the latest block 2: Get the value XXX 3: Get (some other value) 4: Add XXX to (some other value) 5: Store that value in the new transaction's ZZZ property. If someone can explain these steps to me, I would appreciate it very much!
EIP-1559 does not directly change the maximum gas limit per block, instead, it introduces a new fee structure to improve transaction fee predictability. Increasing Ethereum's network capacity, which is a separate topic addressed through other EIPs. For example, EIP-3198 proposes a mechanism to query the current gas limit, and EIP-3200 suggests a way to adjust the gas limit dynamically based on network conditions.
From this explanation, it seems like it will be easier to predict the gas fee required to trade on the Etherum network but as you said, it will impact the way miners will prioritize their workflow and screw up the whole system, I'm pretty sure if this will happen the Etherum team will try to incentive the miners with maybe portion of the base fee so they will not become cherry pickers. So do we know when is EIP 1559 will be implemented if it will happen at all? when is ETH 2.0 will be implemented?
Before the EIP-1559, the gas fee is the Miner tip you already pay, and now after EIP-1559 you will have to pay the additional Base fee. I'm not quite sure if this the improvement or deprovement.....
11:50 Deflationary?.... Well you says that ETH would become like that if: tip + block reward < base fee. But i think that you forgot the fact that the tip is not printing new ETH. In my opinion ETH would be deflationary if: Block reward < base fee. But yeah, Please correct me if i am wrong.
Why is volatility for gas prices swapped for volatility in block size, if block size is affected by either high or low usage of network, which is affected by the gas price? (aka previous block's price)
This is fantastic, thank you. I'm binging all of your videos. Blockchain technology and Defi is a real rabbit hole and the more I learn, the more excited I get.
I'm not a stupid person, but I still don't get the concept of Fee vs Miner tip and how changing it would solve any issue of congestion at all. Basically you take money away from miners to make ethereum less valuable, but the network still keeps congested, miners get less money and angrier and stop mining, thus the network will get even more congested. That doesn't make sense withint a Proof of Work system... I'm a miner, if ethereum stop being profitable I'll just ditch it for the next coin. Don't see how this is any good at all.
Miners will make more money from the price rising much higher due to more people willing to buy Eth. Lower gas prices will create MUCH higher demand. Also regular users who aren't buying new coins won't be effected by these crazy rushes to buy into these new projects..
@@Snide01 It may increase the prices, but in no way It will increase the price 2x to 4x as it is nowadays. Also let's be honest, nobody will use "miner tip" because of the nature "Why should I spend more when nobody forces me to?"
@@DangelGames People are already using a miner tip so to speak, people will pay extremely high fees to get their transaction to go through first. Seconds can be the difference between a 10 times gain or 100 times gain.. Whales don't care whether they pay 15 or 150 dollars when they are making tens of thousands..
@@DangelGames 2x would be possible if the block size would increase 2x too. Increasing the block size means means more transactions in it. Assuming that the number of transactions posted on ethereum per secound will be the same, it will cost miners 2x longer waiting to mine a block. And this may set the price 2x larger.
How is that a good system? Wait to use the contents of your wallet until you can afford to? Seems like its just moving the problem instead of fixing it.
i dont know about anyone else but the fees seem 100 times higher than the old way at least to me i use to get a transaction done for under 10 at times if i wanted for the right time and now i cant get one done for less than 100
Did EIP1559 work as intended in terms of keeping ETH deflationary and ensuring that the value of ETH does not drop? Is there research showing the effect of EIP1559 on ETH price stability?
Miners should like what this does for eth in the long term. Both for their current ETH holdings price, and future of the chain as the competition in the market for increases
@@tuanha6843 Tbh EIP 1559 doesn't benefit us miners at all, the only thing it dose is make the rich richer. Miners get paid less (significantly less) and ETH whales make more money as the currency increases In value solely because they are burning ETH out of circulation. In the long run I see this hurting Ethereum since when we mine, we mine whatever is most profitable. If miners move away from ETH because of the new EIP it just becomes a low value joke currency.
@@epiksarcasm1028 And when ETH 2.0 is implemented and mining switches to proof of stake, the whales will have majority control of the mining network because they will have the most available to stake. So they will be getting richer from deflation and richer from staking. The more you have, the more you get. This will lead control of the ETH network to become centralized around the major ETH holders, which defeats the purpose of crypto currency.
@@SafetyLucas facts bro, lowkey when the eip hits, unless profitability magically increases or they brick all etherium asics then I'm moving on and selling my rigs and building new ones based on a better coin
There is a small mistake at 11:45 not trying to be pedantic, but it is an important concept. You state that eth could become deflationary if "the block reward plus miner tip is lower than the base fee burned". This is not accurate. The tip has no bearing on deflation, it is if the aggregate block rewards are lower than the aggregate base fee burnage. The tips are merely service fees, and the eth represented by them is only being transferred, not created or destroyed.
Inflation is the increase in the money supply, deflation is a retraction of the money supply. Inflation directly leads to rising prices of goods and services and falling prices of currency as more people have more money to bid for those goods and services.
Even though the other reply somehow explains the idea, as a statement it is false (because of the egg/chicken problem), so I'll add a reply. Inflation is decrease in the value of a currency. It is not increase in the money supply. The value of currency of course can be from the increase in the amount of money, but it can as well be not. The amount of money has increased in our societies all the time, but we still have seen deflation, e.g., during the corona crisis. Also, the amount of ETH has increased and we have seen increase of the value at the same time (deflation). There is of course general correlation between inflation and increasing amount of currency, and there is the same general correlation between deflation and decrease in the amount of currency, if demand stays the same. The latter one is of course rarely tested in usual currency markets, because it is usual for the amount of currency to increase, but it can be seen, e.g., in the price of goods (e.g., oil) (demand/supply). If the oil supply is less, usually it increases the value... and therefore decreases the average value of currency (basically deflation for oil, inflation for the currency). Of course lowering the supply doesn't necessarily increase the demand or even keep it the same. We have seen this many times with oil. That is anyway the basic idea behind saying that burning the ETH is deflationary. Less ETH -> less ETH to sell/less sellers -> more expensive in terms of other currencies if someone wants it.
I don't understand why they burn the fee instead of giving it to the people doing the work, i.e. the miners. The only reason I can think of is that this proposal was made by large holders of etherium in the hope of getting richer, to the detriment of the defi community.
Because miners will most likely collute to artificialally increase the base fee for their own greed and profit. So no one gets it. Did you not watch the video? It says so right here 8:42
I dont see how EIP 1559 will limit the number of overpaid transactions due to the concept of tipping the miners. It seems that with tipping, miners will just take transactions with the highest tips and neglect those without tips when the block size fills up, so we will still be in a state where transaction costs are highly variable. Of course, with this proposal the block size is doubling, but couldn't that have been implemented in the current protocol? I dont see how this is solving any problem. It seems like there is some other motivation with the proposal; I am guessing with burning the ETH to either de-incentivize miner collusion (but still can happen with tipping) or simply to make ETH deflationary as was mentioned.
But Like Wouldnt this disturb the amount of miners Because Like it is money motivating miners To Mine Ethererum yes this will solve the problem But I Will Just End Up Creating An Even Worse problem So Sha it has already been implemented lets see
Nobody knows. There is just belief that it goes up, when you decrease the amount. However, the changes might have very surprising effects, because the biggest reason that Ethereum is so popular at the moment, is because mining it is so profitable. If the miners disappear, it could as well be that the demand disappears. But I'm sure they have backup plans if the change has very negative effects. Of course if the drop is too heavy, the backup plan might go down the drain.
@@bkkavila8029 Nobody's going to jump into a market to make a loss or break even . . . Go watch a video on economics or somethings. @Tiger Fang There is nothing stopping it from happening and nothing stopping a 51% attack in retaliation. Vitalik doesn't give a crap about miners anymore since he's only interested in expanding his own wallet for short-term benefit. That's the real reason behind forcing deflation and the move to POS; to fatten the whales.
With the tipping opting, they are creating same problem. The tipping opting will cause more harm than what we already have. Miners will send transaction based on how much you tip and will result into a bigger problem, if you don't tip enough they won't send.
no duh, fee burning is already gonna fuck over profitability. All its doing is making ETH whales richer becuase they dont want to pay the people keeping the currency alive
And then you realize that 1. High gas prices won't be solved 2. Mining will likely become unprofitable ==> people will mine way less, which means greater network congestions, which means higher fees 3. The deflationnary model will make the ETH just like BTC or gold : for rich only, and at some point there won't be enough to simply sustain the system For now, at most (assuming all blocks have lead to an uncle), there are "only" 3.75 ETH created ex-nihilo at each block. Considering the average mining time of 13.5s, that's 6 400 blocks per day, which means 24 000 ETH created per day, AT MOST (2ETH for the main block, 1.75 for uncle) Assuming a classic 2 ETH per block, that drops the actual daily production to 12 800ETH. And then you go on etherscan, and you see that extremely often, the average transaction fees of a block are above the fatal 2 ETH. Once again, if mining profits are divided by 2 basically, many miners will move to another currency to secure, and network will see higher and higher congestion, which means, according to EIP-1559, higher gas prices. And Higher gas prices is toxic to everyone, except those who hold the most, who wait for deflation to make them richer than ever. EIP-1559 was made by, and for, rich holders of ETH who just can't wait for ETH 2.0. Most pools already stated they were against EIP-1559, and still they are not listened to. ETH is no longer a community project, it's no longer democratic. It's become what it was supposed to be : an ever centralizing currency, not governed by states, but by its creators. Laws were never made to protect people, they were made to protect those who made them. Vitalik, and Beiko are the ones at the origin of that. Would they do that if they were miners? Hell no! Do they do that to see their fiat currencies account grow bigger as time passes? Hell yeah! I started mining in January 2021 on ETH, thinking it was going to be THE currency of future. As soon as EIP-1559 will be deployed, I'll stop mining, as I can't ethically support a system that centralizes resources, power, and decisions in the hand of the grand rich of this world.
I didn’t really understand the video but you seem to know what you’re talking about. Was this proposal implemented yet? Instead of mining, investing in ether is a good idea, isn’t it? It still has growth potential?
@@EXPLOSIVEXPLOSION The EIP-1559 will be implemented around July 2021. Miners who are against threatened to do a 51% attack, so in response, ETH will get rid of miners way earlier than what was planned (october 2021 instead of august 2022). Investing now in ETH could be a good idea and profitable, but I can't say anything precise or accurate, I'm not an oracle. I think the peak of ETH 1.0 will be reached in July, after what it may suffer from the loss of many miners who will start to mine other currencies. For after, I can't say. It'd the first large crypto currency to move onto a PoS consensus, so we'll see.
1. Yes. This proposal is about giving a chance to make ETH deflationary or inflationary, i think. 2. But miners/validators are those who recieves the created eth first (2ETH per block as i know). And becouse of this, they are the ones who dictates the prices. If they will notice that it is harder to get the reward from block, they will sell less ETH (price will go up becouse of it). 3. It is true that it is a nonsense that all the EIPs are dictated by the creators of ethereum. The only thing that we can do with it is to use seprate blockchains (but rather with bridges between old blockchain and new blockchain, and "natural selection" will kill unused cryptos) or use other ethereum clinets, as an act of using the diffrent protocol/system (83% of nodes are using geth).
There seems to be a fundamental mistake - EIP 1559 proposal makes it Deflationary, in general. irrespective of whether the following equation you mentioned holds - "Block Reward + Miner Tip < Burnt Base Fee". In simple the total supply is shrinking, because of which there would be shrinking in the total supply of ethereum in general. In a way better to logically consider - "Block Reward < Burnt Base Fee", cause the Miner Tip is actually in Eth circulation.
Why does the base fee need to be larger than the block reward AND the tip to make ether deflationary? Wouldn't it just need to be larger than the block reward? I'm no expert, but from what I understood the miner fee is paid by the user making the transaction which means the ether supply isn't increasing.
First off I have to say this is the best explanation of EIP 1559. However as a miner this concerns me. This seems like it will be a 50% reduction in profits. Also if price drops enough it could become unprofitable and become an attack vector to the network itself. I wish they had increased the block reward to offset the losses.
I've read analysis capping the reduction in profits to 30%. Also, this is the right thing to do on the road to 2.0. The fact EIP 1559 makes ETH deflationary, should by all accounts affect the price in a positive way, amortizing these reductions. I commend F2Pool for being on the right side of history here, as they put it. You'll be OK! ;)
@@vojin7video it’s not about being on the right side of history. If enough miners decide to stop hashing it will negatively effect the network. You and the devs are assuming you can effectively predict future price action. Most miners have a vested interest in Eth increasing its utility. Most miners don’t mind loosing profits just increase the block reward by 1 is all. The current model is we would lose 30-50% a lot of this depends on the tip and network usage which is unpredictable
@@codyswartz997 I think the only people who could possibly attack the network are Ethereum miners themselves and they would suffer financial loses. 30% reduction can be compensated by a 30% price increase. Not to mention all the huge fees earned on a packed blockchain.
@@davycrockett8886 I completely disagree. Someone with a lot of money or wants eth to loose dominance to say Dot. They would be the ones to pay for the attack via nice hash
As a new crypto person, I am mining. This change will cause me to mine something other than eth. Not sure what that means to all of this but, I would be discouraged to point my miners at eth.
I will prob stop minning. Only reason I am doing it now (I only mine on my single gpu gaming rig) is that it is so stupidly lucrative. Last week I was making 0.003 eth a day which should not be ok on a gpu I bought for 500 dollars 1 year ago (2070s). Let's be honest, gas fees are holding back eth so there needs a change. We'll wait and see i guess
If you plan on mining long term (which is the only way it's really profitable from what I understand), then ETH seems like a bad choice anyway since ETH 2.0 is Proof of Stake and does away with miners completely. If you wanted to continue as a validator for the Ethereum blockchain, you could always stake your ETH and become a validator node.
EIPs are not only inspired by BIPs. All governance proposal processes (including non crypto ones, e.g. PEP - Python Enhancement Proposal) are inspired from Internet Engineering Task Force (IETF) Request for Comments (RFCs) which have been used since the first days of the internet.
good, i am glad the fee structure is so simple and straighforward.:p what are these guys thinking? hey lets make it MORE confusing than other payment methods? dead in the water... overthinking this will result in people getting upset or confused...
Nobody can guess what it will cause. Miners can move away or simply miners can stay with ETH because ETH would yield less ETH but more $ per ETH balancing the chance. Nobody knows what it will mean for miners.
❓What do you think about EIP 1559? Will it have an impact on the ETH price?
👍Hit the like button if you enjoyed this video
🐦Follow Finematics on Twitter ► twitter.com/finematics
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@@שמואלדישראלי-ב2י popping oo
Eeeeeeeeeeee
I hate doodle videos
finally someone who actually puts effort into the videos
thanks! :)
Ethereum Classic
This is one of the most accessible explanations that I've watched. I think that it's going to have some trouble from miners like myself
get a day job and it won't matter
Miners are thieving bastads!
I don’t mine personally, I wish I knew how to with all the techno stuff, I just know how to buy some crypto lol but I do know one thing; albeit the general public do make the ethereum network as a whole, miners are the core , they are the ones confirming every transaction. Big shout out to all the miners out there for helping to build the foundation of every useful network there is now 👍🏽
@@tspirit99 without miners crypto wouldn't work though...
I am instant fan of this whiteboard format.. keep it up and i will spread to my 10000+ community also..
Awesome, thank you! :)
Thanks for making this video!
I now understand more, but I don't feel I understand enough to put this into code. Would it be possible for you to explain the steps? For example
1: Get the latest block
2: Get the value XXX
3: Get (some other value)
4: Add XXX to (some other value)
5: Store that value in the new transaction's ZZZ property.
If someone can explain these steps to me, I would appreciate it very much!
You shouldn't add the miner tip here 11:54 it doesn't contribute to inflation
I guess the same. "tip" should not matter in correct formula
thanks, you're right, it was noticed earlier and I corrected it in the article
Dude, where were you all this time? :), thanks for making this videos
Your videos are absolutely brilliant!
Thank you for this. Very well put together and easily understood.
Thank you for putting this up! Appreciate the effort!
thanks!
EIP-1559 does not directly change the maximum gas limit per block, instead, it introduces a new fee structure to improve transaction fee predictability. Increasing Ethereum's network capacity, which is a separate topic addressed through other EIPs. For example, EIP-3198 proposes a mechanism to query the current gas limit, and EIP-3200 suggests a way to adjust the gas limit dynamically based on network conditions.
Love your videos that aren't defi related as well, helps with getting a more holistic view.
Thanks! Yes, always good to get a more holistic view
Your content is always amazing. Thank you for making this!
thanks!
It happened !!
🔥🔥🔥
High quality explanation, thank you so much.
You're very welcome!
You're really good at explaining things.
thanks! :)
Interestingly enough there doesn't seem to be any attempt in fixing the sandwittch attacks that will still be possible due to miner tips.
Great job man! Your content is one of my favorites.
Would you do a video how insurance in Defi works?
Thank you champ!
Thanks!! Yes, there is a plan to make a video on insurance in DeFi
Interesting. Frontrunning will become more of a gambling toy. Good to know.
This was an amazing video!
Thank you!
Great video!
From this explanation, it seems like it will be easier to predict the gas fee required to trade on the Etherum network but as you said, it will impact the way miners will prioritize their workflow and screw up the whole system, I'm pretty sure if this will happen the Etherum team will try to incentive the miners with maybe portion of the base fee so they will not become cherry pickers. So do we know when is EIP 1559 will be implemented if it will happen at all? when is ETH 2.0 will be implemented?
so does this mean eth would gain value over the years if this is implemented?
The EIP 1559 has been implemented in the latest London release.
Before the EIP-1559, the gas fee is the Miner tip you already pay, and now after EIP-1559 you will have to pay the additional Base fee. I'm not quite sure if this the improvement or deprovement.....
*deterioration
It just went live on testnet today!
11:50 Deflationary?.... Well you says
that ETH would become like that if:
tip + block reward < base fee.
But i think that you forgot the fact that the tip is not printing new ETH.
In my opinion ETH would be deflationary if:
Block reward < base fee.
But yeah, Please correct me if i am wrong.
Yes this! I was thinking the same thing. The miner tip is just the users own ethereum no eth is created.
Awesome content
thanks!
Very informative
thanks
explain solana architecture
Why is volatility for gas prices swapped for volatility in block size,
if block size is affected by either high or low usage of network, which is affected by the gas price? (aka previous block's price)
please cover pooltogether !
the concept of dai-saving-lottery will kill everything - governance in hands of community
This is fantastic, thank you. I'm binging all of your videos. Blockchain technology and Defi is a real rabbit hole and the more I learn, the more excited I get.
I'm not a stupid person, but I still don't get the concept of Fee vs Miner tip and how changing it would solve any issue of congestion at all. Basically you take money away from miners to make ethereum less valuable, but the network still keeps congested, miners get less money and angrier and stop mining, thus the network will get even more congested. That doesn't make sense withint a Proof of Work system... I'm a miner, if ethereum stop being profitable I'll just ditch it for the next coin. Don't see how this is any good at all.
Miners will make more money from the price rising much higher due to more people willing to buy Eth. Lower gas prices will create MUCH higher demand. Also regular users who aren't buying new coins won't be effected by these crazy rushes to buy into these new projects..
@@Snide01 It may increase the prices, but in no way It will increase the price 2x to 4x as it is nowadays. Also let's be honest, nobody will use "miner tip" because of the nature "Why should I spend more when nobody forces me to?"
@@DangelGames People are already using a miner tip so to speak, people will pay extremely high fees to get their transaction to go through first. Seconds can be the difference between a 10 times gain or 100 times gain.. Whales don't care whether they pay 15 or 150 dollars when they are making tens of thousands..
@@DangelGames 2x would be possible if the block size would increase 2x too. Increasing the block size means means more transactions in it. Assuming that the number of transactions posted on ethereum per secound will be the same, it will cost miners 2x longer waiting to mine a block. And this may set the price 2x larger.
AMAZING
9539 Friesen Harbor
Time to switch to ethereum classic. ETC just upgraded with the Magneto fork.
Have fun staying poor
How is that a good system? Wait to use the contents of your wallet until you can afford to? Seems like its just moving the problem instead of fixing it.
@@catmaxi2599 Yeah its just moving the problem up in time, it doesn't fix the problem, is my point. It will make it better for a small time period.
@@catmaxi2599 All I said was its not a good system, and it isn't.
i dont know about anyone else but the fees seem 100 times higher than the old way at least to me i use to get a transaction done for under 10 at times if i wanted for the right time and now i cant get one done for less than 100
Did EIP1559 work as intended in terms of keeping ETH deflationary and ensuring that the value of ETH does not drop? Is there research showing the effect of EIP1559 on ETH price stability?
Perfect video !! Even if I don't like the idea of eip 1559
miner detected lol
Miners should like what this does for eth in the long term. Both for their current ETH holdings price, and future of the chain as the competition in the market for increases
@@tuanha6843 Tbh EIP 1559 doesn't benefit us miners at all, the only thing it dose is make the rich richer. Miners get paid less (significantly less) and ETH whales make more money as the currency increases In value solely because they are burning ETH out of circulation. In the long run I see this hurting Ethereum since when we mine, we mine whatever is most profitable. If miners move away from ETH because of the new EIP it just becomes a low value joke currency.
@@epiksarcasm1028 And when ETH 2.0 is implemented and mining switches to proof of stake, the whales will have majority control of the mining network because they will have the most available to stake. So they will be getting richer from deflation and richer from staking. The more you have, the more you get. This will lead control of the ETH network to become centralized around the major ETH holders, which defeats the purpose of crypto currency.
@@SafetyLucas facts bro, lowkey when the eip hits, unless profitability magically increases or they brick all etherium asics then I'm moving on and selling my rigs and building new ones based on a better coin
There is a small mistake at 11:45 not trying to be pedantic, but it is an important concept. You state that eth could become deflationary if "the block reward plus miner tip is lower than the base fee burned".
This is not accurate. The tip has no bearing on deflation, it is if the aggregate block rewards are lower than the aggregate base fee burnage. The tips are merely service fees, and the eth represented by them is only being transferred, not created or destroyed.
I love your videos man. You're doing a really great job. If only more people knew about crypto you would easily have atleast 100k
Thanks!! Appreciate your comment!
How does reducing Eth supply (thus Increasing prices) mean deflation though? Is that not called inflation
Inflation is the increase in the money supply, deflation is a retraction of the money supply. Inflation directly leads to rising prices of goods and services and falling prices of currency as more people have more money to bid for those goods and services.
Even though the other reply somehow explains the idea, as a statement it is false (because of the egg/chicken problem), so I'll add a reply.
Inflation is decrease in the value of a currency. It is not increase in the money supply. The value of currency of course can be from the increase in the amount of money, but it can as well be not. The amount of money has increased in our societies all the time, but we still have seen deflation, e.g., during the corona crisis. Also, the amount of ETH has increased and we have seen increase of the value at the same time (deflation). There is of course general correlation between inflation and increasing amount of currency, and there is the same general correlation between deflation and decrease in the amount of currency, if demand stays the same. The latter one is of course rarely tested in usual currency markets, because it is usual for the amount of currency to increase, but it can be seen, e.g., in the price of goods (e.g., oil) (demand/supply). If the oil supply is less, usually it increases the value... and therefore decreases the average value of currency (basically deflation for oil, inflation for the currency). Of course lowering the supply doesn't necessarily increase the demand or even keep it the same. We have seen this many times with oil. That is anyway the basic idea behind saying that burning the ETH is deflationary.
Less ETH -> less ETH to sell/less sellers -> more expensive in terms of other currencies if someone wants it.
Great video keep up the great work
thanks!
I don't understand why they burn the fee instead of giving it to the people doing the work, i.e. the miners. The only reason I can think of is that this proposal was made by large holders of etherium in the hope of getting richer, to the detriment of the defi community.
Fees are high on eth BSC is better
Because miners will most likely collute to artificialally increase the base fee for their own greed and profit. So no one gets it. Did you not watch the video? It says so right here 8:42
I dont see how EIP 1559 will limit the number of overpaid transactions due to the concept of tipping the miners. It seems that with tipping, miners will just take transactions with the highest tips and neglect those without tips when the block size fills up, so we will still be in a state where transaction costs are highly variable.
Of course, with this proposal the block size is doubling, but couldn't that have been implemented in the current protocol? I dont see how this is solving any problem. It seems like there is some other motivation with the proposal; I am guessing with burning the ETH to either de-incentivize miner collusion (but still can happen with tipping) or simply to make ETH deflationary as was mentioned.
It's an interesting one ! Now if im correct this is backwards
250 upvotes and 0 down. I call this a #flawlessvictory
Hah thanks! There is always someone to downvote sooner or later so I better enjoy this ratio now :)
nice video and animation
Can you make a video about EIP-969`?
But Like Wouldnt this disturb the amount of miners Because Like it is money motivating miners To Mine Ethererum yes this will solve the problem But I Will Just End Up Creating An Even Worse problem So Sha it has already been implemented lets see
I really don't understand why EIP 1559 increases the predictability of transaction fees. The user is still subject to a highly volatile miner tip.
Soooooooo will ethereum go up in the upcoming years? good to keep buying?
Yes. The BASEFEE is burned so the more transactions go onto the network the less ETH there is in the world.
That's the million dollar question :)
Nobody knows. There is just belief that it goes up, when you decrease the amount. However, the changes might have very surprising effects, because the biggest reason that Ethereum is so popular at the moment, is because mining it is so profitable. If the miners disappear, it could as well be that the demand disappears.
But I'm sure they have backup plans if the change has very negative effects. Of course if the drop is too heavy, the backup plan might go down the drain.
Jamie Light
Is that mean if miners earn money monthly 1000$ when eip1559 relesease that miner earn %30 loss ?
Very ver good explanation man, i like the idea of burn eth and predictable gas price
Great video as usual!
Thanks! :)
When will EIP 1559 be implemented?
it was activated on the 5th of Aug 2021
Wouldn't miners be disincentivized by the cut in mining fees causing them to jump ship? How would EIP-1559 mitigate from that happening?
Market forces should take care of that, if miners move on its an opportunity for new investors to come on board as there will be money to be made.
@@bkkavila8029 If profitability goes down for miners then there will be less miners.
@@bkkavila8029 Nobody's going to jump into a market to make a loss or break even . . .
Go watch a video on economics or somethings.
@Tiger Fang
There is nothing stopping it from happening and nothing stopping a 51% attack in retaliation. Vitalik doesn't give a crap about miners anymore since he's only interested in expanding his own wallet for short-term benefit. That's the real reason behind forcing deflation and the move to POS; to fatten the whales.
They should just a flat rate fee…jeez. Knowing how popular ethereum is. That base fee is going to be up the roof. Starting at square 1 again…
With the tipping opting, they are creating same problem. The tipping opting will cause more harm than what we already have. Miners will send transaction based on how much you tip and will result into a bigger problem, if you don't tip enough they won't send.
no duh, fee burning is already gonna fuck over profitability. All its doing is making ETH whales richer becuase they dont want to pay the people keeping the currency alive
great
Wow, excellent explanation.
Glad it was helpful! :)
@@Finematics Yes, thank you !!
amazing explanation, well done
thanks! 💛
I'm still confused as to what this will do to Eth. Will this cause it to go down?
if it becomes deflationary, overall ETH supply will be lowered, in other words.. ETH value would go up
If eth price will going up, is it means that it will be better if we hold every eth coin we already have today?
Excellent video, Thanks
Glad you liked it! 💛
Great explanation, thx
thanks!
Will this apply only to ETH 1.0? I assume sharping will eventually make this moot?
Can be in either ETH 1.0 and 2.0 or just 2.0 depending on the timeline
I don't like eip 1559, but you were super explicit, I love this video. Perfectly great explanation
Why dont you like EIP 1559?
@@N-A762 he’s a miner i guess
i like it.
gold level stuff
thanks!
And then you realize that
1. High gas prices won't be solved
2. Mining will likely become unprofitable ==> people will mine way less, which means greater network congestions, which means higher fees
3. The deflationnary model will make the ETH just like BTC or gold : for rich only, and at some point there won't be enough to simply sustain the system
For now, at most (assuming all blocks have lead to an uncle), there are "only" 3.75 ETH created ex-nihilo at each block.
Considering the average mining time of 13.5s, that's 6 400 blocks per day, which means 24 000 ETH created per day, AT MOST (2ETH for the main block, 1.75 for uncle)
Assuming a classic 2 ETH per block, that drops the actual daily production to 12 800ETH.
And then you go on etherscan, and you see that extremely often, the average transaction fees of a block are above the fatal 2 ETH.
Once again, if mining profits are divided by 2 basically, many miners will move to another currency to secure, and network will see higher and higher congestion, which means, according to EIP-1559, higher gas prices. And Higher gas prices is toxic to everyone, except those who hold the most, who wait for deflation to make them richer than ever.
EIP-1559 was made by, and for, rich holders of ETH who just can't wait for ETH 2.0. Most pools already stated they were against EIP-1559, and still they are not listened to. ETH is no longer a community project, it's no longer democratic. It's become what it was supposed to be : an ever centralizing currency, not governed by states, but by its creators.
Laws were never made to protect people, they were made to protect those who made them. Vitalik, and Beiko are the ones at the origin of that. Would they do that if they were miners? Hell no!
Do they do that to see their fiat currencies account grow bigger as time passes? Hell yeah!
I started mining in January 2021 on ETH, thinking it was going to be THE currency of future.
As soon as EIP-1559 will be deployed, I'll stop mining, as I can't ethically support a system that centralizes resources, power, and decisions in the hand of the grand rich of this world.
I didn’t really understand the video but you seem to know what you’re talking about. Was this proposal implemented yet? Instead of mining, investing in ether is a good idea, isn’t it? It still has growth potential?
@@EXPLOSIVEXPLOSION The EIP-1559 will be implemented around July 2021.
Miners who are against threatened to do a 51% attack, so in response, ETH will get rid of miners way earlier than what was planned (october 2021 instead of august 2022).
Investing now in ETH could be a good idea and profitable, but I can't say anything precise or accurate, I'm not an oracle.
I think the peak of ETH 1.0 will be reached in July, after what it may suffer from the loss of many miners who will start to mine other currencies. For after, I can't say. It'd the first large crypto currency to move onto a PoS consensus, so we'll see.
@@Rockefeller157 thanks for the input
Yes it is disappointing, it is a proposal made by greedy people it seems to me.
1. Yes. This proposal is about giving a chance to make ETH deflationary or inflationary, i think.
2. But miners/validators are those who recieves the created eth first (2ETH per block as i know). And becouse of this, they are the ones who dictates the prices. If they will notice that it is harder to get the reward from block, they will sell less ETH (price will go up becouse of it).
3. It is true that it is a nonsense that all the EIPs are dictated by the creators of ethereum. The only thing that we can do with it is to use seprate blockchains (but rather with bridges between old blockchain and new blockchain, and "natural selection" will kill unused cryptos) or use other ethereum clinets, as an act of using the diffrent protocol/system (83% of nodes are using geth).
Thanks . Great video . Do you think Ethereum will go into ice age ?
ligma balls
This guy draws really fast.
FIRST!. cheers mate. :)
well done! :)
I think its a manipulative system. i also think its blackmail to the miners to an unassured future. Its a very limited temporary patch.
0777 Heaney Rapid
if he didnt want it like this why did he make it like this
isn't burning the base fee a risky move? seeing all those feedback loops, I think there're more ripple effects to it. Anyone?
Its a good mechanism for maintaining equilibrium
❤❤❤
i understood nothing
Congrats HEX ... Greatest innovation in crypto & DeFi. Success is the best revenge.
screw eth, EIP1559 and PoS is made for centralization, vitalik wants the control on a few hands forget eth
Who is here from freecodecamp
tldr: hodl
Exactly. Looks as though eth is the new oil
HHOODDDLLLLLLL
This channel is a goldmine of DeFi information. As a noob in crypto trading, I find these videos incredibly useful.Thank you for making these.
Thanks! :)
Do you mine any Ethereum Classic? ETC just did their Magneto upgrade yesterday.
I love your voice. You're like the Two Minute Papers of crypto.
Haha nice observation
Hahaha True
Patrick Collins students attendance, mark present here...
present
ETH so rare its only found on the moon.
🚀🚀🚀
There seems to be a fundamental mistake - EIP 1559 proposal makes it Deflationary, in general. irrespective of whether the following equation you mentioned holds - "Block Reward + Miner Tip < Burnt Base Fee". In simple the total supply is shrinking, because of which there would be shrinking in the total supply of ethereum in general. In a way better to logically consider - "Block Reward < Burnt Base Fee", cause the Miner Tip is actually in Eth circulation.
Why does the base fee need to be larger than the block reward AND the tip to make ether deflationary? Wouldn't it just need to be larger than the block reward? I'm no expert, but from what I understood the miner fee is paid by the user making the transaction which means the ether supply isn't increasing.
I agree.
Well done video though 👍🏽
First off I have to say this is the best explanation of EIP 1559. However as a miner this concerns me. This seems like it will be a 50% reduction in profits. Also if price drops enough it could become unprofitable and become an attack vector to the network itself. I wish they had increased the block reward to offset the losses.
I've read analysis capping the reduction in profits to 30%. Also, this is the right thing to do on the road to 2.0. The fact EIP 1559 makes ETH deflationary, should by all accounts affect the price in a positive way, amortizing these reductions. I commend F2Pool for being on the right side of history here, as they put it. You'll be OK! ;)
@@vojin7video it’s not about being on the right side of history. If enough miners decide to stop hashing it will negatively effect the network. You and the devs are assuming you can effectively predict future price action. Most miners have a vested interest in Eth increasing its utility. Most miners don’t mind loosing profits just increase the block reward by 1 is all. The current model is we would lose 30-50% a lot of this depends on the tip and network usage which is unpredictable
@@codyswartz997 I think the only people who could possibly attack the network are Ethereum miners themselves and they would suffer financial loses. 30% reduction can be compensated by a 30% price increase. Not to mention all the huge fees earned on a packed blockchain.
@@davycrockett8886 I completely disagree. Someone with a lot of money or wants eth to loose dominance to say Dot. They would be the ones to pay for the attack via nice hash
I made the switch to Ethereum Classic. ETC just upgraded with the Magneto fork.
First time someone has actually properly explained this to me, thanks
If you come from FreeCodeCamp's course video, you're doing great! Keep on learning ;D
As a new crypto person, I am mining. This change will cause me to mine something other than eth. Not sure what that means to all of this but, I would be discouraged to point my miners at eth.
I will prob stop minning. Only reason I am doing it now (I only mine on my single gpu gaming rig) is that it is so stupidly lucrative. Last week I was making 0.003 eth a day which should not be ok on a gpu I bought for 500 dollars 1 year ago (2070s). Let's be honest, gas fees are holding back eth so there needs a change. We'll wait and see i guess
If you plan on mining long term (which is the only way it's really profitable from what I understand), then ETH seems like a bad choice anyway since ETH 2.0 is Proof of Stake and does away with miners completely. If you wanted to continue as a validator for the Ethereum blockchain, you could always stake your ETH and become a validator node.
I made the switch to Ethereum Classic. The Magneto upgrade happened yesterday.
EIPs are not only inspired by BIPs. All governance proposal processes (including non crypto ones, e.g. PEP - Python Enhancement Proposal) are inspired from Internet Engineering Task Force (IETF) Request for Comments (RFCs) which have been used since the first days of the internet.
Of course! That would be too much detail for this video, so I skipped that :)
good, i am glad the fee structure is so simple and straighforward.:p what are these guys thinking? hey lets make it MORE confusing than other payment methods? dead in the water... overthinking this will result in people getting upset or confused...
I imagine the actual implementation and UX of it all will be much simpler. This video is just explaining what will be happening behind the scenes.
good video thanks!
Here from the Patrick's blockchain course lol
Nobody can guess what it will cause. Miners can move away or simply miners can stay with ETH because ETH would yield less ETH but more $ per ETH balancing the chance. Nobody knows what it will mean for miners.
It's happening today😁👏🎉