Ethereum’s largest mining pools take opposing positions to the EIP-1559 plan

Two of the three largest Ethereum mining pools are the latest to take a public position on the Ethereum Improvement Proposal (EIP) -1559, a proposed protocol update that could reduce miners’ transaction revenues.

F2Pool, currently the third largest Ethereum pool with about 11% of the network’s hashrate, stated in a February 26 post titled “Staying on the (b) right side of history” that it endorses EIP-1559’s proposal .

“Today the general community, along with the core developers, is on the side of Ethereum to include EIP-1559. It’s important to be on the side of the users and core contributors, ”F2Pool wrote in the post.

F2Pool’s stance comes a day after Sparkpool, the largest mining pool with around 24% of the hashrate, said in a tweet that it was against the proposal, highlighting the level of division within the Ethereum mining community.

EIP-1559 was first proposed by Vitalik Buterin in 2018 and is perhaps the most anticipated upgrade in Ethereum history since its inception, aside from the Eth2 move from Proof-of-Work to Proof-of-Stake.

As part of the upgrade, the network would burn some of the transaction fees as profit to the ETH owners rather than the miners. The overall goal is to improve the security of the network and ensure that the network’s transaction fees don’t fluctuate as much as they do now.

As such, miners would lose one of their main sources of income, as The Block Research outlined in a roadmap section here. According to data collected by The Block Research, Ethereum miners have made more than $ 600 million in mining fees since early February.

According to the roadmap, the upgrade is planned for three to six months after Ethereum’s hard fork in Berlin, which is expected to take place by the end of the second quarter of 2021 at the latest.

Opposition party

Sparkpool raised concerns about EIP-1559 earlier this month after raising arguments against EIP-1559’s fee-burning mechanism in January.

“It’s majority tyranny in the name of a better UX (actually not). It’s robbery. Why do we love Ether and BTC? Because it gives us perfect ownership, ”Sparkpool said on February 5 in a Twitter thread. “EIP 1559 will break this. We are sad to see that a lot of people now only care about the price.”

In January, Bitfly, the operator behind Ethereum’s second largest mining pool, Ethermine (which owns about 20% of the hashrate), said in a Twitter post that it was “against adopting EIP-1559 in its current state,” arguing that “Ethereum’s future could be in jeopardy.”

These comments joined those of a group of smaller Ethereum mining pools calling for EIP-1559 to be stopped.

With Sparkpool on board, the side that defies the plan currently has over 50% of the network’s total hashrate. However, the development of the upgrade is still at an early stage, with pool participants having the option of shifting their hashing power to different sites based on their own preferences.

However, F2Pool argued in its contribution that “there is a high probability that the inclusion of EIP-1559 has been priced into today’s ETH price”.

“If the proposal is not implemented, the likely impact on short-term ETH prices will not be favorable as ETH holders include the new non-compliance with EIP-1559 in their thesis for ETH. The unfavorable price action could trigger a sequence. ” of events leading to further deleveraging in both centralized and decentralized financial markets. Ultimately, the miners will also be affected, as their income depends on the ETH prices, “argued F2Pool in his contribution.

© 2021 The Block Crypto, Inc. All rights reserved. This article is for informational purposes only. It is not offered or used as legal, tax, investment, financial or other advice.

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