Filecoin tests pave way for Ethereum fee restructure

FIlecoin has been testing EIP 1559 which aims to tackle high network fees on Ethereum.

A long anticipated Ethereum Improvement Proposal (EIP) which aims to tackle high network fees is currently being tested on the Filecoin network.

A proposal to change Ethereum’s fee structure has been in the pipeline since first being suggested in April 2019. A surge in network fees in recent months has brought the spotlight back on to EIP 1559, and it is being trialled on the digital storage platform Filecoin.

Ethereum co-founder, Vitalik Buterin, tweeted an update as more information and research is piled into the proposed upgrade.

Filecoin software engineer, Jeromy Johnson, said the EIP code ‘appears to be doing its job’ on an ongoing test on the network. He added that there had been a couple of spikes in “base fee”, which is the new network fee architecture, but there was very little delay in messages making it into the chain.

Filecoin is a decentralized storage platform that is in the testnet phase. It has targeted September for the mainnet launch according to its August progress update. Sharing technology with Ethereum makes it a good testbed for EIP 1559.

On August 22, PegaSys developer Tim Beiko tweeted that two Ethereum clients are currently privately testing the code, Vulcanize’s geth fork and Besu. He added that he would personally like to see EIP 1559 implemented on a network with a large state, such as Ropsten, to see if larger blocks are an issue.

A solution to high gas fees?

The proposal introduces the ‘base fee’ mechanism that dynamically adjusts fees based on the current network congestion levels. Currently, Ethereum network fees are calculated in an auction-type system where users ‘bid’ how much they’re willing to pay to have their transaction picked up by a miner. Naturally, the miners prioritize the higher bids first which leads to congestion and high gas prices under heavy load.

Under the new proposal, if the blockchain is more than 50% utilized then the base fee increases automatically, but if it is under 50% utilized, then it would decrease. Ethereum users would still be able to ‘jump the queue’ by paying a ‘tip’ on top of the base fee. All of the fees in ETH that are paid via the base fee are burnt and only the ‘tip’ is paid to miners.

The maximum difference in base fee from block to block would then be predictable because these increments are constrained. This would then allow wallets and dApps to automatically set the gas fees for users more reliably rather than simply estimate them.

It may be a while before EIP 1559 is rolled out on the Ethereum mainnet however. ETHhub founder Anthony Sassano predicted at least 6-12 months in his Daily Gwei newsletter on August 24.

Blockstream’s Adam Back Slams Ethereum as a Ponzi-Scheme

Crypto tribalism shifts up a gear, with Bitcoin pioneer Adam Back lashing out at Ethereum.

Computer scientist and Blockstream CEO, Adam Back, has compared Ethereum and other high cap altcoins Ponzi-schemes in a Twitter tirade today:

“Bitconnect, Charles Ponzi, Ethereum, Onecoin, Cardano, Ripple, Bernie Madoff, Stellar, Dan Larmer. All looking very similar grade to me.”

Charles Ponzi and Bernie Madoff are two of the most famous creators of Ponzi-schemes, while Bitconnect and OneCoin are famous cryptocurrency projects that were revealed to be Ponzis. Back likened such schemes to altcoins Ethereum, Ripple and Stellar, along with ‘Dan Larmer’, which was presumably a reference to Bitshares and Steem creator Dan Larimer.

Back’s swipe came in a dialogue with TV journalist Layah Heilpern. She asked whether he thought Ethereum was a scam or if it added value to the ecosystem in terms of DApps.  Back responded simply:

“Well 70% pre-mined says it all. Which would you say is a bigger scam, Ripple or Ethereum.”

Raging against ETH

It is not the first time that the HashCash proof-of-work inventor has taken a swing at Ethereum. In another tweet exchange in November last year, he compared Ethereum to the now-defunct biotech startup Theranos, which created a fake medical machine. 

Back argued that management went too far into overselling what it could do while misrepresenting the state of the tech, adding that Theranos was “uncannily Ethereum-like”.

The computer scientist has been a Bitcoiner from the beginning and has been linked with Bitcoin founder Satoshi Nakamoto several times. He once reportedly claimed to have had a beer with him in London.

Bitcoiners getting worried?

It’s not difficult to imagine there could be a link between the rapid rise of the Ethereum price this month amid excitement over DeFi project, and a revival of crypto tribalism from Bitcoin true believers.

Since the beginning of the year, ETH prices have more than doubled with the majority of that gain coming over the past month. Bitcoin has also gained in price, but not as much. The momentum for Ethereum has been driven by the hope that the long-awaited first phase of the ETH 2.0 shift to proof-of-stake consensus will be launched within months. If it’s successful, Ethereum will eventually be able to process exponentially more transactions than Bitcoin.