Ethereum miners oppose EIP-2878 proposal to reduce overall block rewards by 75%

The new EIP-2878 will reduce block rewards by 75% and has been heavily criticized by miners who say it will harm the security of the Ethereum network.

Miners have strongly criticized a new Ethereum Improvement Proposal (EIP), whose authors are less interested in the security of the network and more focused on the interests of investors.

EIP-2878 proposes to reduce the block reward by 75%, from 2 ETH per block to 0.5 ETH. The principle behind this EIP is to bring Ethereum's inflation rate closer to Bitcoin (BTC) and maintain the purchasing power of ETH.

The proposal was made on August 11 by ConsenSys Managing Director John Lillich, and Ledger’s Global Head of Customer Success Jerome de Tychey, with an in-depth explanation and description of its effectiveness that was shared on the Ethereum Magicians forum, where developers and miners alike can discuss.

Miners, especially those using GPUs, were quick to call out the EIP because the drop in block rewards was more than double the percentage of the network’s previous reduction and suggested a 51% attack was possible.

“Given that our block reward ratio dropped from 5 to 3 (-40%), then from 3 to 2 (-33%), and now it’s going to drop from 2 to 0.5 (-75%),” believes Time Beiko, product manager at PegaSys.

“I believe the biggest consideration should be the security of the network (i.e. how do we ensure the likelihood of a 51% attack remains low, how do we keep a diverse group of miners on the network, etc.)”

Another user responded to this suggestion: “ASICs are highly profitable compared to GPUs. Any reduction in block rewards without an algorithm change would remove the remaining GPU miners from the network, allowing ASICs to completely control the network.”

Jimmy Thommes, CEO and co-founder of Bit Capital Group, explained that Ethereum should not attempt to increase Bitcoin’s inflation rate because it is an older network that is trying to achieve different goals. Not to mention, the proposal makes miners feel like they are being exploited:

“Reducing mining rewards is a crime, it would be really bad to have as little reward as possible to incentivize us to keep our lights on long enough to make the transition to 2.0 work.”

Since Ethereum does not have a built-in halving mechanism like Bitcoin, most people do not object to the block reward drop in principle, so they rely on EIP to control inflation through the proposed reward reduction. But most people think that a drop to 1.5 or 1 ETH is more reasonable. A Reddit user said that although miners made a lot of money in 2017, this will not affect current income:

“Did Ethereum make miners too much money in 2017 and 2018? I really don’t think so.”

Another user added that the timing of the proposal was ill-timed since Tether’s transition to OMG would “dramatically reduce fees paid to miners.”

The proposal is still relatively new and has little community support, but according to developer Hudson Jameson, ethereum should prioritize EIP-1559.