The central theses
- Vitalik Buterin has proposed withdrawing gas refunds from Ethereum.
- Ethereum’s “SSTORE” and “SELFDESTRUCT” features allow users to store gas while prices are low. By burning the contract when gas prices are high, they can cover the gas fee.
- The proposal would have a huge impact on “gas tokens” like CHI.
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Ethereum co-creator Vitalik Buterin has published a proposal to remove gas refunds in the London blockchain update.
Vitalik Buterin is seeking refund removal
Buterin posted a proposal on Ethereum’s Github page this week called EIP-3298. He proposes to remove the gas refund for the functions “SSTORE” and “SELFDESTRUCT” in the London update of Ethereum.
Ethereum currently allows users to store gas in smart contracts using the SSTORE feature. By using SELFDESTRUCT to destroy a smart contract, it is possible to use the gas stored in contracts to cover the cost of a transaction when gas prices are high. Users are currently taking advantage of this through tokens like CHI, which were launched by the team behind the 1 inch exchange.
While gas tokens can be useful in raising gas prices, gas refunds are believed to help inflate the state as many contracts are added to Ethereum nodes when gas prices are low.
ParaFi Capital investor Nick Chong released a detailed tweetstorm explaining the impact EIP-3298 would have on the network. In it, he noted that the price of GST2, another gas sign, and CHI had dropped that weekend, and argued that the proposal may have been a factor.
Vitalik recently proposed to cancel the ‘SELFDESTRUCT’ related gas refund on Ethereum as part of the London upgrade.
This apparently lowered the demand for gas and brought prices down to double digits.
Let’s explain what’s going on and why this is important for Gastoken ($ CHI, GST) 👇 pic.twitter.com/wsdXUpwqYI
– Nick Chong (@ n2ckchong) February 28, 2021
If passed, the proposal would be included in Ethereum’s London update. planned for sometime this summer. It could also mean the end of gas tokens like CHI and GST2 as they would be of no use without the refund feature.
Ethereum gas problems
Buterin’s proposal comes amid major gas-related issues for Ethereum.
Earlier this month, the fee for using the network hit a new all-time high. Gas charges on February 22nd briefly exceeded 1,000 gwei, which is roughly $ 346 for a simple uniswap trade.
Although they have cooled down a bit Since then, the clogging of the network has continued to be a huge burden.
Ethereum’s problems likely contributed to the success of Binance Smart Chain. The chain run by Binance offers an experience similar to Ethereum in a more centralized format. Protocols such as PancakeSwap recall elements from DeFi to Uniswap, and users of the chain can participate in activities such as yield farming. Centralization aside, Binance Smart Chain is much cheaper to use. It has drawn many users and builders to the platform in the past few weeks. Even 1 inch Exchange was migrated to the network.
The story of Binance Smart Chain also led to clashes between supporters of Ethereum and Changpeng Zhao, the founder of Binance. Zhao went to Twitter to take pictures on Ethereum.
“ETH is now a network for the rich, but soon these people will be poor,” he said, referring to the gas charges. He went on to clarify that he thought Ethereum’s success could inadvertently lead to its demise.
Okay, last thread about ETH and its “killers” for today. Vitalik once said (and there is a video of it somewhere) that ETH killer is ETH. Ironically, I think he’s right.
ETH is mostly successful. But his success (not other coins) can also be his own killer. 1/5
– CZ 🔶 Binance (@cz_binance) February 28, 2021
After Zhao’s comments, it emerged that someone had provided code related to the Tiananmen Square massacre of Binance Smart Chain. It is believed that the code was released to test Zhao’s response. The Chinese Communist Party has endeavored to censor the Tiananmen Square protests for the past three decades.
Despite Ethereum’s ongoing gas problems and the potential threat posed by Binance Smart Chain and other Layer 1 blockchains like Solana, progress appears to have been made in solving the problem. In March, Ethereum’s Layer 2 solution Optimism will be seriously introduced. The update promises to support blockchain scaling through optimistic roll-ups.
Disclosure: At the time of writing, the author of this role owned ETH and a number of other cryptocurrencies.
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