- A hard fork is a common term in the open source software world for when there’s a radical split in the underlying code that takes the project in a different direction.
- Miners aren’t happy because EIP-1559 means a significant reduction in fees sent their way. However, users have been adamant that Ethereum’s gas fees have gotten too expensive and something needs to be done.
Today is the day that EIP-1559, a form of ‘rent control’ on gas fees that comes at the expense of miners, is set to be implemented via the Ethereum blockchain’s London hard fork. However, considerable opposition remains to the proposed change.
What is a hard fork?
A hard fork is a common term in the open source software world for when there’s a radical split in the underlying code that takes the project in a different direction.
For blockchains, a hard fork means a collective of nodes (or miners) reject processing new transactions on an existing blockchain, and instead begin processing transactions with the modified code, creating a permanent divergence from the old path.
Miners aren’t happy because EIP-1559 means a significant reduction in fees sent their way. However, users have been adamant that Ethereum’s gas fees have gotten too expensive and something needs to be done. Indeed, miners are stuck between a rock and a hard place with the London hard fork. They could reject the changes, but they might be mining on a very lonely blockchain.
At the same time, the transition to ETH2’s proof of stake (where the emphasis on miners as transaction validators is eliminated) will be finished by 2022. If they chose to fight EIP-1559, miners would be in for a battle that only results in a pyrrhic victory.
Hard fork history
For Ethereum, a hard fork has happened before. In 2016, when Ethereum was just over a year old, hackers discovered vulnerabilities in the code of The DAO, a blockchain-based investing cooperative organized as a decentralized autonomous organization, and stole $60 million of ether.
In response, the Ethereum community proposed a hard fork of the blockchain that would effectively rewind to a point prior to the attack and invalidate the transaction.
Ultimately this went through but it wasn’t without controversy; those against the rollback argued that a blockchain wasn’t really censorship resistant or immutable if transactions could be simply cancelled. A collective of support formed around the original Ethereum blockchain, and as a result Ethereum Classic was born into existence.
The Bitcoin blockchain also went through a series of hard forks based around a debate regarding what constitutes an appropriate size for each block on the blockchain. Should each block be larger, transactions would be processed in a faster, expeditious manner. As a result, there are currently two active forked versions of Bitcoin: Bitcoin SV and Bitcoin Cash.
Who is opposing EIP-1559?
“Ethereum developers initially needed miners for their coin but once successful, they’ve thrown them under the bus. They cared about miners when Ethereum lacked mining support, and once they received it, they started to mistreat them,” the group wrote in an open letter. “Miners are no longer vital to the Ethereum developers or big mining pools because they’ve made their money, and now miners are an embarrassment. The developers and big mining pools had forgotten where they came from and supported them when they started out.”
Despite this vocal opposition, it doesn’t necessarily mean that miners will reject EIP-1559. In fact, users seem much more supportive of the hard fork because they are lured in by the promise of more predictable gas fees.
A count of the number of clients — the software used to interact with the chain — connected to the Ethereum blockchain shows that around 67% of clients have done the necessary prep work to be ready to upgrade to the London hard fork when the time comes.
Time will tell if miners will accept the London hard fork or try to obstruct it. Should they obstruct it, there’s no telling if users will join this alternative version of Ethereum because client data shows they are ready to vote with their feet.
What about ETH2?
For better or worse, the writing is on the wall for mining. With the coming transition to ETH2, proof-of-stake miners know that their days as the all-powerful stakeholders will be soon coming to a close.
In proof-of-stake, large holders of the token validate transactions, whereas in proof-of-work, miners take on this role.
With ETH2, the process of mining will be separated from transaction validation. The Ethereum blockchain will still need miners, but the role of transaction validators will shift to large token holders. This shift will eliminate a key revenue source for miners — but also lessen the energy required overall which downplays the argument that Ethereum is an earth-melting energy hog because of its reliance on miners to run the network.
Ether is currently trading at $2,600, according to CoinGecko, up 7% on-day.
The London hard fork is set to be implemented today, August 4, between 13:00 UTC and 17:00 UTC. Stay tuned to Blockworks for updates on its progress.