Constantinople: Ethereum's Network Upgrade to Reduce Mining Rewards By 33%

Omar Faridi
  • Ethereum's Constantinople hard fork upgrade will aim to make processing information on its blockchain more efficient.
  • Mining rewards for Ether miners will be reduced from 3 ETH to 2 ETH (per block).
  • Several Ether miners have complained about the reduced incentives for mining ETH. 

Constantinople, the Ethereum network’s upcoming hard fork upgrade, will involve the implementation of five distinct ethereum improvement proposals (EIPs). The backward-incompatible update, scheduled tentatively for October, will make permanent modifications to Ethereum’s existing codebase, which are aimed at improving its network efficiency and fee structure.

Additionally, the Constantinople upgrade is intended to make the necessary (and incremental) changes required for the Ethereum blockchain to scale effectively. Addressing the smart contract platform’s severe scalability issues, Ethereum co-founder Vitalik Buterin has said that the world’s largest DApp network will eventually be able to process 1 million transactions per second (TPS).

"Difficulty Bomb" Delayed For 12 Months

Moreover, the Constantinople hard fork is expected to make adjustments to Ethereum’s economic policy, which partly focuses on delaying the difficulty bomb (for approximately 12 months) - often referred to as the Ethereum Ice Age.

As covered on CryptoGlobe, 14 Ethereum developers agreed during a video conference (on August 31st) that they would support EIP1234. According to Ethereum’s Github repository: 

The average block times are increasing due to the difficulty bomb ... slowly accelerating. This EIP proposes to delay the difficulty bomb for approximately 12 months and to reduce the block rewards with the Constantinople fork, the second part of the Metropolis fork.

EIP 1234

The overall response to postponing the difficulty bomb has been well-received (mostly crypto traders) by the Ethereum community, even though it will likely making mining the cryptocurrency less profitable. Notably, a number Ethereum’s Ether (ETH) token miners expressed their frustration regarding significantly declining rewards for mining ETH.

$0.05 Mining Reward, $150 Electricity Costs

Redditor Macrnonut revealed that he had switched to mining Ethereum Classic (ETC) because he claims only making 0.5 cents from mining ETH after paying $150 in electricity costs. Meanwhile, another reddit user said “it’s time to start selling (mining} rigs.”

Despite concerns regarding reduced incentives for mining Ether, Ethereum’s developers are moving forward with the Constantinople upgrade. The hard fork will reduce the payout to miners from 3 ETH to 2 ETH for every block mined on the Ethereum blockchain.

At present, the Constantinople codebase is in its final stages of review and testing, and an exact block number for when the Ethereum chain will fork has not been determined. The following interdependent EIPs will go into effect with Constantinople:

  • EIP 145 - more cost-effective and efficient approaching to processing information
  • EIP 1014: better approach to accommodating network scaling solutions such as off-chain transactions
  • EIP 1052 - an improvement on how contracts are processed
  • EIP1234 - 12-month delay of difficulty bomb; reduce mining rewards from 3 ETH to 2 ETH
  • EIP 1283 - a better way to monetize data storage changes (made by smart contract programmers)

 

Jimmy Song Questions Buterin's Claims Regarding Ethereum's Progress

Prominent Bitcoin (BTC) developer Jimmy Song recently questioned Vitalik Buterin’s claims that the Ethereum (ETH) project made the “research breakthroughs” required in order to launch the set of upgrades associated with Ethereum 2.0.

Recently, the Ethereum Foundation, a non-profit organization focused on supporting the ongoing development of Ethereum, the world’s largest smart contract-enabled platform for deploying decentralized applications (dApps), revealed its plans regarding how it intends to spend the allocated $30 million to support the ETH ecosystem.

“Can Money Buy Scientific Breakthroughs?”

In response to the Foundation’s report, well-known crypto influencer Tuur Demeester stated via Twitter:

Responding to Demeester’s comments, Buterin explained that adequate research had already been carried out in order to successfully transition from Ethereum’s current proof-of-work (PoW)-based consensus model to proof-of-stake (PoS). The Russian-Canadian programmer also mentioned that the blockchain network’s developers carefully drafted the specifications for the major upcoming Ethereum 2.0 upgrade.

Promising Innovation For Years, Not Delivering

However, blockchain educator Song claimed that Ethereum’s developers had been promising innovation for the past five years. The University of Michigan computer science graduate added that it would be quite challenging to implement, or code, the research and specifications for Ethereum.

In May 2018, renowned economist Dr. Nouriel Roubini, one of the most vocal critics of cryptocurrencies, also argued that Ethereum’s creators had been promising groundbreaking innovations for over five years. Expressing views somewhat similar to Bitcoin developer Song, Roubini said that Ethereum would not be able to scale effectively and that distributed ledger technology (DLT)-based systems would eventually fail.

Roubini, whose comments came during a live debate with Ethereum co-founder Joseph Lubin, also previously accused Buterin of engaging in criminal behavior by “premining” large amounts of ETH.

$500 Million DeFi Ecosystem Built Mostly On Ethereum

However, Buterin clarified that premining was not a crime and that he never held more than 1% of ether’s overall supply at any point. He also revealed his cryptocurrency holdings (at that time) and noted that he no longer holds 1% of the cryptocurrency's circulating supply. Furthermore, he confirmed that at no point did his net worth come close to $1 billion (a claim Roubini made).

Despite the recent criticisms of Ethereum’s ongoing development, there have been a relatively large number of useful dApps launched on the smart contract platform. In fact, nearly the entire half a billion dollar decentralized finance (DeFi) ecosystem has been created on Ethereum’s technological infrastructure.

Notably, Uniswap, an Ethereum-based peer-to-peer (P2P) exchange protocol, recently processed over $20 million in trades and contracts in the past week. This, only after being launched just six months ago.