“London” upgrades Ethereum’s “fee to tax”

It is said that Big Cake (BTC) has set the longest consecutive sunshine since 2013 in the past half month. But now it has gone bad, and it has returned to the bottom of 40,000 dollars. Ether (ETH) is even more vigorous. It has maintained a continuous upward momentum since the 7/21 Jedi counterattack. Now it has broken through the line of defense of $2,500 and once stood at $2,600.

The London upgrade is coming. The estimated active block height is 1,2965,000. I took a look at the current block height of Ethereum and it has passed 12948810 (approximately UTC 8/2 23:00). There are still 16,190 blocks short. The Ethereum block interval is 15 seconds, 16190 blocks is about 2.8 days. At present, the time I wrote this sentence is 7 a.m. on the 3rd (time zone UTC+8), so the activation time of the London upgrade can be inferred to be around 2-3 a.m. on August 6th, Beijing time.

This London upgrade of Ethereum (London is just a code name) includes a series of functional improvements. One of the most eye-catching and awaited by many people is the implementation of EIP-1559. The implementation of this proposal is expected to further alleviate the congestion problem of Ethereum on-chain transaction queuing bidding, and due to the destruction of the base fee part of the gas fee, it may continue to reduce the supply of Ethereum and balance the block reward. The additional supply of Ethereum has caused a decrease in the issuance of Ethereum, and even when the destruction exceeds the block reward, it will cause an absolute decrease in Ethereum, which is deflation.

Obviously, compared to giving all the gas fees to the miners, thereby transferring the value from the user to the miner, the destruction model introduced by EIP-1559 essentially achieves a certain degree (according to the amount of money held instead of per capita). The) egalitarian big pot rice.

The block reward is the expenditure of the system out of thin air budget, and the gas fee is the revenue of the system. Cutting off the direct payment of gas fees to miners and replacing them with the system to collect and destroy them is tantamount to a “fee to tax”. The Ethereum system has become more like a “blockchain country” with a central finance collecting taxes on the left hand and a central bank printing money on the right, a decentralized “Leviathan”.

In contrast, the Bitcoin system is just a payment channel, allowing users to pay directly to miners who provide him with accounting services.

After the restructuring, the tax base on the left hand of Ethereum is for all Ethereum users, and the tax will be directly distributed to all token holders in a way that is evenly distributed (according to the amount of currency held).

However, there is no fixed monetary policy for Ethereum’s right-hand money printing, which is very different from Bitcoin’s stable and predictable monetary policy. The printing of money on the right hand (additional issuance of Ethereum) is equivalent to imposing an invisible tax on all token holders, and the recipients of this tax are all Ethereum miners.

If we imagine a pyramid. The top of the tower is a group of miners, the middle is the holder of coins, and the base is a large number of users. Usually a person has multiple roles, then they appear in multiple places. The pedestal generates gas tax income to support the coin holders. This solid line is dominant, pointing from the base to the middle. The central part supports block rewards and feeds miners. This dashed line is invisible, pointing from the middle to the spire.

If the central currency holders expect that the shared system income will lead to an increase in the currency holding income, then more people will be attracted to hold the currency.

In the Bitcoin system, users pay commissions to miners, and token holders support block rewards to miners. Moreover, according to the design, with the continuous halving of block rewards, eventually miners will live on the fees paid by users instead of imposing hidden taxes on token holders. Earlier coin holders were more like investors, and the final target of investment was actually mining, or the entire Bitcoin accounting network.

In the original model of Bitcoin, there is no clear or dark line that users pay to the holder. Because currency holders are “get for nothing” (note the quotation marks here, investment commensurate with the return is not for nothing), they should and should only get a return on investment from their investment in the expansion and development of the bookkeeping network. The direct payment of taxes by users to coin holders becomes a kind of financial involution, a kind of exploitation. Distribution according to work is not exploitation, but reaping for nothing is.

The user pays the miners the consideration for the accounting labor, which is called “fee”, and if the user pays the profit to the coin holder, and this payment is a compulsory mechanism that cannot be evaded, cannot be selected, it becomes “taxi”.

Ethereum’s fee-to-tax reform essentially introduces a Ponzi spiral (not derogatory), which promotes the attractiveness of ETH holdings, and thus further promotes the price of ETH. (vice versa)

The actual effect, we will wait and see.

The merits and demerits, leave to future generations to comment.

 

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/london-upgrades-ethereums-fee-to-tax/
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