Topic: [2018-08-02]Before the 'Bomb' Hits: Why the Race Is on to Alter Ethereum's Econo (Read 124 times)

The proposals just keep piling in.

At press time, a total of six ethereum improvement proposals (EIPs) have emerged, each hoping to alter the project's code ahead of an upcoming software update (scheduled for October).

Driving the debate is ethereum's so-called "difficulty bomb," a piece of code locked into the $45 billion platform that makes it so a steadily increasing amount of computing power is needed to mine its blocks and unlock its rewards. As designed, the code would eventually push the blockchain into an "ice age," where no further blocks can be formed – that is, if left untouched.

Originally added to ease a transition in which ethereum would change how participants on its [Suspicious link removed]e to agreement – migrating from bitcoin's pioneering proof-of-work algorithm to an alternative called proof-of-stake – the difficulty bomb is set to reactivate in early 2019.

With no proof-of-stake migration in sight, steps must now be taken to delay the bomb — as well as reconfigure how ether rewards are released so as to ensure incentives are aligned to properly secure the blockchain.

But delaying the bomb brings its own problems.

For one, it will make blocks easier for miners to find, meaning ether rewards (currently at 3 ETH) must be decreased along with the delay to ensure that the cryptocurrency is produced at the same rate.

However, because ethereum lacks a formal agreement on its rewards model — unlike bitcoin, whose code caps its creation at 21 million units — there are differing perspectives on how much supply should be reduced, with many calling for a further reduction (and some for an increase) of the quantity of ether that is distributed to miners.

Further, having such a debate in a decentralized network brings added obstacles.

Users, for example, could vote according to how many coins they own — a popular signaling method, but one that has been criticized as too informal a metric. But miners (the individuals dedicating computing power to the software) aren't guaranteed to support a vote.

It's worth noting that debates concerning ethereum's undefined issuance model, as well as the difficulty bomb, have emerged several times throughout ethereum's three-year history.

As detailed by CoinDesk, it's a difficult topic because when it comes to monetary policy, miners and investors are pitted against each other, each calling for the opposite outcome in many cases.

As Lane Rettig, an ethereum developer, told CoinDesk:

"The postponement of the bomb isn't particularly controversial, but the issuance is controversial. But for that reason the whole thing is controversial, you can't have one without the other."

See more: https://www.coindesk.com/before-the-bomb-hits-why-the-race-is-on-to-alter-ethereums-economics/