Has Eth1.0 died in the London upgrade?

With the launch of EIP1559, the fate of the Eth1.0 chain is therefore determined.

On August 5th, Ethereum was upgraded in London. With the successful deployment of the upgrade, 5 EIPs including EIP-1559 began to be used.

After activation, Ethereum started destroying ETH for the first time, and the beginning of this behavior represented the death of the Eth1.0 chain in a sense.

Previously, when EIP1559 was proposed and it was not determined when it will be implemented, the author has inferred that the best state of EIP1559 is to be directly activated on the Ethereum 2.0 chain, rather than on the Eth1.0 chain that is currently running, because of this The issue of miners and community stability will not be involved, but with the confirmation of the London upgrade, the author believes that this is a highly targeted choice.

Among them, because of the beginning of ETH destruction, the logical closed loop of resource sharing on the PoW chain and token capture value has been broken.

Whose ETH is burning Ethereum?

According to data from watchtheburn.com, as of 1 o’clock on August 11, Ethereum has burned 22,555 ETH, so whose ETH are these ETH?

We need to disassemble EIP1559.

EIP1559 is a proposal to adjust the Ethereum gas fee. Its EIP name is “Fee market change for ETH 1.0 chain”, but this seems to be a proposal that is not suitable for the Eth1.0 chain.

Originally, in Eth1.0, the gas fee pricing was based on the bidding of the transaction execution order in the network. Because the bidding model will have “the highest price”, so we execute the transaction in the metamask, and we can choose high gas. However, because the execution of gas fees has a unit price and a function price, after the transaction is executed, sometimes the miner who packs the transaction receives as much as the executor bids.

However, it is obvious that in this case, it is difficult to predict how much transaction gas fees will be used. We can only adjust the price as high as possible.

But in EIP1559, for gas fee, it defines a basic fee + tip, and the basic fee is determined according to the degree of network congestion. It sets a gaslimit for each block, and how many transactions are packaged in the previous block , How much gas is used represents a certain degree of congestion, so the basic cost of the next block can be predicted.

However, what is terrible is the basic cost gasbase, which is set to be destroyed.

What we can see is that whoever pays for gas will have gasbase+tips. The ETH burned by Ethereum comes from the ETH in the user’s transaction wallet, and these are ETH in circulation, which are calculated by miners. Instead, the transaction changes hands in the secondary market, and finally circulates in the wallet of the transaction executor, and is destroyed in the new transaction.

Does burning ETH conform to the value logic of PoW?

Although the above process makes sense, from the hash calculation of the mining machine, to the amount of resources on the chain defined by its token, to the transaction value carried in the secondary market, the ETH that captures various values ​​is destroyed , Is it reasonable?

Obviously this is extremely controversial. If these destroyed ETH enter the new asset pool to reward future developers, wouldn’t it be good?

When the destruction started, we seemed to have a deviation in the understanding of the PoS chain for the ETH generated by the PoW.

How the Ethereum PoW tokens are generated.

The Ethereum PoW token is a block reward obtained by hashing, then packaging blocks, storing blocks, and broadcasting blocks. Here we will find that the block reward is part of it, because there is no transaction in time, the block is also Must be produced. The transaction will also include the gas fee for executing the transaction. This is because the execution process occupies the resources of the network and also allows the miners to do their work and verify the general ledger.

In comparison, the BTC generation process of Bitcoin is more difficult because there are some differences between the calculation of BTC generation and ETH generation. The algorithm of BTC is SHA256 (verification block generation), while Ethereum is an improved version of PoW’s Ethash, based on Dagger- Hashimoto.

Because Bitcoin introduces ASIC, it is difficult to calculate, and the competition among mining machines is particularly fierce. When calculating the cost of BTC due to calculation, the cost of the whole process of generating blocks is very high.

Although there is no PoS enough to omit resource operation, Ethereum’s Ethash also has consumption conversion after resource sharing. The process is because the Ethash process is complicated. In addition to random numbers, it also requires a lot of other calculations. However, because it mainly uses GPU The calculation cost is much lower than that of Bitcoin, but the logic is unchanged.

The miners’ mining machines share computing and storage resources. Each ETH corresponds to the miner’s computing power, storage, and bandwidth and space used when performing transactions.

Are the resources shared by PoS miners also defined in this way?

Here, we should compare how destruction is done in the PoS ecosystem. This is because the destruction must neither become obscure nor affect the change of its own value logic.

The destruction of Ethereum means that users conduct transactions, and each transaction will degrade the assets produced by resources, which will bring a complete sense of waste. Because the destroyed ETH does not go back and forth in other forms.

In the PoS ecosystem, destruction items are usually designed actively, and there are some principles for the design of these destruction items.

For example, the destruction of BNB on BSC originally represented repurchase destruction. After it becomes on-chain, its destruction is an ecological way of controlling circulation.

However, from the perspective of BSC’s operating model, the resources shared by its nodes, or the calculations that its nodes perform to verify the block generation, are far less than PoW. Compared with the reward, it can be ignored.

And because of the huge amount of tokens and inflation, it is necessary to introduce a virtuous cycle of destruction mechanism.

But the concept of destruction and reward halving are different. Destroying means destroying what is in circulation, which has already captured part of the value, while the reward halving is a block-based reward change, which is not in circulation.

So on the whole, the basic value of PoS tokens and the basic value of PoW (Bitcoin, Ethereum) tokens determine whether the destruction process is suitable for appearing in the economic model of PoW tokens.

But what is ridiculous is that after the destruction of Ethereum, the market is concerned about whether ETH can enter deflation in the future, just like Bitcoin, because the price of deflation has skyrocketed.

The price performance of the secondary market may be able to subvert the judgment of the original token value in the market. However, the change in the circulation of Ethereum after the future transition to PoS is substantial. EIP1559 can only provide an expectation for the secondary market. The price will ultimately be determined by the trading market, and the ecological logic is only a basic judgment.

However, because destruction is not compatible with PoW, the author is more inclined to, because of the London upgrade, the fate of Eth1.0 has been defined. The value brought about by deflation is expected to replace the sentiment brought about by the destruction of Ethereum.

Disclaimer: Golden Finance is a blockchain information platform, and the content of articles published is for information reference only, not as actual investment advice. Please establish a correct investment philosophy and be sure to raise your risk awareness.

 

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/has-eth1-0-died-in-the-london-upgrade/
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

Leave a Reply