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Ethereum miners’ income has dropped significantly recently, and compared with the beginning of January, the income in terms of currency has dropped by as much as 50%. Many miners are speculating why the mining income has dropped so significantly. Today we will talk about this. It is well known that the currency-based income of Ethereum mining is basically determined by the computing power of the entire network and the transaction fee (Gas fee). With the support of the DeFi ecosystem, the proportion of Gas fee in miners' income cannot be underestimated. The following article will show you the changes in the Ethereum mining ecosystem in recent months from these two aspects. The total network computing power doubled and the mining income was halved Ever since the price of Ethereum broke through $700 at the end of December last year, Ethereum mining has once again set off a round of graphics card mining craze with an extremely short payback period. Based on the cost of 25,000 yuan for a 2660S 8-card machine at the time, the static payback period was only 6 months. However, with the subsequent surge in the price of Ethereum, the actual payback period could even be shortened to three months (including the increase in the price of the mining machine). Therefore, a large number of miners continue to invest despite the rising prices of graphics cards. The consequence of this is that from the beginning of January this year to now, the computing power of the entire Ethereum network has increased by 88.2%, jumping from 306TH/s to a maximum of 575TH/s. This may be a major reason for the sharp decline in Ethereum miners' cryptocurrency earnings. The new low of gas fee accelerates the decline of miners’ income If it were only the computing power that increased, the decline in miners' cryptocurrency-based income might not have been so sudden, but the sudden new low in Gas fees has made miners feel that their income has indeed decreased. This may be related to the following three aspects: 1. Ethereum "Berlin" upgrade, block space increased Due to the recent Ethereum "Berlin" upgrade, the block space has been increased from the original 12M to about 15M, which means that the same block can accommodate more transactions than before. The expansion of block space has improved the transaction congestion on the Ethereum chain to a certain extent. The unit gas price has dropped, and the Gas fee for the same transaction has naturally decreased. Ethereum Average Gas Price Table 2. Flashbots alleviate the MEV crisis Another important reason for the new low gas fee is that the large-scale application of Flashbots technology has kicked out arbitrage robots in the Ethereum ecosystem, resulting in a large number of malicious MEV arbitrage activities that were previously conducted through gas fee bidding being unable to continue, thereby reducing the Gas fee. Flashbots was founded at the end of last year and is dedicated to the development of MEV-related research, data analysis and solutions. So far, there have been many research results, such as MEV-Inspect, which can scan Ethereum blockchain data and identify MEV activities, MEV-Explore, a MEV visualization real-time data platform built on MEV-Inspect, and Flashbots Alpha, a solution that can mitigate MEV problems. In the design principle of Flashbots Alpha, the main participants in the MEV activities of the Ethereum chain are arbitrage transaction seekers and miners, and both must use the MEV-Geth client. As the initiator of on-chain arbitrage activities, the former is also responsible for finding arbitrage transactions with higher profit value in the network, sorting them and packaging them into bundles (transaction packages). These "searchers" will then give a Gas Fee based on the transaction package and ask the miners to pack the bundle into the block. Miners select bundles to be packaged in a sealed-bid auction mechanism. Under this mechanism, transaction searchers actually help miners complete the pre-packaging of a block, which produces the following benefits: Since the seekers of MEV transactions are arbitrageurs themselves, they certainly do not want the trading opportunities they have been searching for to be captured by on-chain arbitrage robots. Under this bundle's trading model, the arbitrage robot cannot capture arbitrage opportunities by monitoring the Mempool, so there will naturally be no Gas Price bidding problem, and the Gas price for general users to send transactions can also be effectively reduced. Arbitrage traders can avoid the dilemma of having to pay mining fees when transactions fail, and they no longer need to pay extra Gas Fees to bid, so they can keep more profits for themselves. After the miner selects the transaction package and successfully uploads it to the chain, he can get an additional tip bundle tip from the searcher. So everyone discovered that Flashbots completely lit up the dark forest of arbitrage robots in the Ethereum Mempool, restoring the normal state of MEV arbitrage, which naturally effectively reduced the Gas fee, and the miners' income naturally decreased. For more information about Ethereum Dark Forest and MEV, please refer to: https://mp.weixin.qq.com/s/OBzNHgKT9eZnzyeBB0HUqA 3. The rise of BSC and Heco ecosystem At present, DeFi has become an indispensable part of the Ethereum ecosystem, and many transactions packaged by Ethereum miners also come from the DeFi world. However, congestion on the Ethereum chain and high gas fees have hindered Ethereum users' on-chain operations, which naturally limits the further development of various DeFi projects on the Ethereum chain. However, looking back at the recent DeFi projects on other public chains, led by BSC, their locked-in volume and popularity have once surpassed Ethereum's momentum. Those heavy participants in the original Ethereum DeFi project have also turned to Pancakeswap, DODO, Venus on the BSC chain and Mdex on the Heco chain. Therefore, without the moat of Defi, it is only natural that the gas fee income of Ethereum miners will decline. Therefore, the Ethereum community has recently expressed the idea of solving the current dilemma of high gas fees through layer2 and PoS2.0 as soon as possible. In addition to considering the development of Ethereum's own ecosystem, it is also a response to challenges from other public chains. |
