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Ethereum Developers Move to Alter the Blockchain's Economics

A proposal that, if enacted, would change how much new cryptocurrency is released on the world’s second-largest blockchain was finalized Friday, with developers agreeing to include the code for such a change as part of ethereum’s upcoming October upgrade, Constantinople.

Speaking on a video call, a group of 14 developers agreed to support code that would reduce the amount of new cryptocurrency introduced on ethereum to 2 ETH per block, down from 3 ETH today, by implementing an updated version of an ethereum improvement upgrade named EIP 1234.

Notably, investors and miners who attended a meeting on which upgrades should be included in Constantinople last week were not invited to this week’s meeting and did not attend.

But while this week’s meeting featured a more limited number of attendees, those present agreed that the difficulty bomb — a piece of code intended to add time pressure to upgrades, and that has influenced discussion of Constantinople’s code — will be delayed for a 12-month period.

Yet another hard fork, or network-wide software upgrade, will be planned to occur 8 months from the upgrade to Constantinople, developers agreed.

With controversy building on the issuance change – and multiple parties arguing for different outcomes – a reduction to 2 ETH was positioned as the conservative choice.

Depending on the perceived outcome of the change to ethereum’s code, security researcher Martin Swende suggested revisiting the question after the 8-month period.

“I think we also need to be conservative with changes and make changes incrementally, and not dictate changes against the will of the community, but apply conservative measures in doing changes but trying to keep with the intent of the community,” Swende said during the call.

Speaking in the meeting, Casper developer for the Ethereum Foundation Danny Ryan echoed this point, stating that because issuance is likely to drop considerably in an upcoming upgrade that will find ethereum making a dramatic changes in how the network is secured, a decision in the interim should be seen as “incremental compromises until we get to the vision.”

“Everything I view in the issuance discussion is an incremental compromise to encourage the community and move things sanely until we move to proof-of-stake, which will bring issuance down to the range of 0.5 or 1 percent per year, and at that point I think the community will certainly be happy. These are incremental compromises until we get to that goal,” Ryan said.

A decision has yet to be made on an algorithm change that would to restrict the use of ASICs, a type of specialized mining hardware, from the platform.

Speaking in the meeting, several developers argued that research should continue in this direction, while Ryan said there might be potential funding from the Ethereum Foundation.

“There’s a potential for a grant here,” Ryan said.
Several further non-contentious upgrades were also confirmed for the upcoming hard fork.

As detailed by CoinDesk, these include EIP 145, EIP 1014, EIP 1052, and EIP 1283, which work to increase efficiency and scalability.

“Those are all accepted and we are all on board with those being the four Constaninope EIPs,” ethereum developer Piper Merriam concluded.

Mining hardware via Shutterstock

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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Ethereum's Next Upgrade Could Be the $29 Billion Blockchain's Biggest Test Yet

Hard forks are never easy.

By definition, such system-wide upgrades require every software user to upgrade to new rules near-simultaneously, meaning there’s coordination difficulties that need to be overcome to ensure the code continues to operate as designed. Still, in a upcoming October upgrade named Constantinople, ethereum is faced with a unique challenge — how to find a balance between a web of diverse stakeholders, each battling for different outcomes.

Making matters more complex, there’s a hard deadline for the upgrade, currently set for October. Predicted sometime in early 2019, a piece of code known as the difficulty bomb is scheduled enact, thereby making ethereum’s blocks steadily less time efficient to mine.

If no action is taken, the difficulty bomb will push ethereum into what is known as the “ice age,” a period wherein the difficulty is so high that transactions can no longer be processed, making the blockchain unusable.

Because delaying the difficulty bomb also impacts ether inflation (the time it takes to mine blocks is directly correlated to the quantity of ether distributed on the platform), ethereum is under pressure to upgrade its code before the bomb hits.

But, at present, a path forward remains unclear.

With a total of four ethereum improvement proposals (EIPs) currently under discussion, many are arguing that in delaying the difficulty bomb, Constantinope should also reduce the amount of ether that is currently paid out to miners, the entities that run specialty computing hardware to secure transactions.

However, miners are warning that too great a decrease in profits will reduce the security of the network, effectively forcing miners to secure other cryptocurrencies. (Concerns are especially great for GPU miners, which are now currently competing with ASICs, machines specialized for cryptocurrency mining and little else).

While an exact timeline for Constantinople has yet to be finalized, developers are pointing to late October or November as the likely timeline for the upgrade (any later could risk intersecting with the difficulty bomb). As such, in an upcoming meeting on Friday, developers are likely to finalize the EIPs to be included in the upcoming hard fork.

Communications officer for Parity Technologies, Afri Schoedon, told CoinDesk:

“We are moving toward a decision with fast steps now.”

Balancing act

At the time of writing, there are three EIPs to be included in the upcoming hard fork that aren’t controversial at all, and have already been implemented in code and are currently undergoing testing.

These include EIP 145, EIP 1014, and EIP 1052, which respectively, seek to add new flexibility to ethereum’s operations, facilitating scaling measures such as state channels and increasing the speed at which contracts can be verified.

Aside from these however, other proposals require careful coordination.

As reported by CoinDesk, much of the current division was aired last Friday, when developers initiated a public discussion with several representatives of the platform’s key stakeholders.

While no consensus was reached, several stakeholders have since taken to social media to layout their concerns.

In a blog post published Monday, CTO of a mining startup named Atlantic Crypto, Brian Venturo, warned that “the security of the ethereum network is NOT something to compromise over.” He championed EIP 1295 as the only proposal that doesn’t potentially lower security.

EIP 1295 does not reduce issuance, but rather reduces the amount of ether that is rewarded to uncles, a kind of block that speeds transactions but isn’t included in the blockchain itself.

“If you reduce the block reward you’re going to price out a large proportion of hardware,” Venturo told CoinDesk, stating that such hardware might instead become available for attacks if the reward for malicious services is higher.

While miners are pushing back against the issuance reduction, at the same time, ETH traders are pointing to the dropping market valuation of ether, stating that steps must be taken to preserve the value of the currency by limiting issuance.

In a Twitter thread that compared current bitcoin’s current issuance rate to ethereum, a trader named Eric Conner remarked that if the reduction is pushed down to 2 ETH, it doesn’t slip lower than bitcoin’s current rate.

According to Conner, such a reduction is necessary to preserve the value of the network.

“Fun fact! In the past 365 days, the ethereum network has paid $6.6 [billion] to miners,” Conner tweeted.

The compromise

Adding to the criticism is that founder of ethereum Vitalik Buterin has pushed back against EIP 1295, writing on Github that it could result in the further centralization of mining pools.

“I’m scared of this,” Buterin wrote.

An investor and fund manager named Spencer Noon also pushed back against the proposal.

“I’m completely unsupportive of EIP 1295 and I question the motive of its author (Atlantic Crypto Corp),” Noon tweeted, “ACC is a mining company run by former hedge funders. This has nothing to do with ‘network security’ — a block reward reduction would hurt their bottom line.”

Several Reddit posts have followed a similar tone, and in response, the mining company has retracted its current proposal in favor of arguing that the issuance reduction should remain at 3 ETH.

“We agree that the ETH denominated issuance may be too high, but we also believe that adjusting it under the current market conditions will put undue risk on the security scale of the network,” Venturo wrote on Github.

Speaking in a developer meeting Friday, Casper developer Danny Ryan said that a reduction to 2 ETH seems like a “reasonable compromise” that could balance the interests of both traders and miners. Similarly, because GPU miners are struggling to compete with ASICs, a removal of the hardware from the platform through a proof-of-work change would be another “reasonable compromise.”

Toward this, a GPU miner and enthusiast named Kristy-Leigh Minehan is championing an code fix to be implemented in Constantinople.

Still, some feel it’s unlikely it will make the cut.

“This would be a lot more work to implement than the other EIPs,” Michael Hahn, of ethereum wallet MyCrypto, told CoinDesk.

High stakes

All this means, there could be difficulty ahead of October. If a certain proportion of ethereum nodes chose to run different software, it could lead to a split in the network (not unlike what occurred when ethereum classic emerged following a disagreement on technical direction in 2016).

Still, there’s way in which existing ethereum code could actually help protect the network when it comes to splits.

For example, due to the presence of the difficulty bomb, an ethereum researcher named Andrew Bradley said opportunistic fork attempts without developer support are unlikely to win out.

“It reduces the likelihood of stale chains being picked up with little effort and sustained by exchanges or precarious parties without real development support,” Bradley told CoinDesk.

Still, the complexity Constantinope has unearthed between competing miner and trader interest have sparked a wave of community engagement in the discussion.

“We’ve had a lot of community enthusiasm for the forks,” Hudson Jameson, a communications officer for the Ethereum Foundation, told CoinDesk, “It’s weird hearing about people watching and participating in discussion around the bi-weekly core developer calls.”

Speaking to CoinDesk, Schoedon from Parity echoed this point, stating that Constantinope is unique in that it has widened the doors of involvement when it comes to tough decisions.

“In the past, contentious proposals were either accepted straight away or stalled forever,” Schoedon said.

However, in this case, decisions had a wider set of stakeholder engagement, which while makes it makes the coordination process more complicated, it takes the pressure away from the core developer team.

“Off-chain governance is difficult, and that’s probably a good thing,” Schoedon added.

And while the developers still have the last call – expected to be finalized on Friday – many stakeholders expect them to uphold the technical stability of the network above all else.

Brian Venturo told CoinDesk:

“They understand this stuff better than everyone else and I think they’re going to make the right decisions.”

Science experiment via Shutterstock

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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Ethereum Meeting Leaves Open Questions Ahead of October Upgrade

A phone call that brought together a broad representation of the ethereum community to discuss critical code changes on which decisions need to be made ahead of a software upgrade scheduled for October, failed to produce immediate results Friday.

The bi-weekly developers call, which this week included a majority of the network’s miners and some prominent investors, had the goal of forging consensus on changes to ethereum’s underlying economics, the speed of its upgrades and the mining methods it supports, as well as establishing an order in which concerns might be addressed through future upgrades.

However, despite nearly two hours of dialogue, the meeting ended with the resolution that the discussion continue, with a follow-on meeting scheduled for August 31.

Adding necessity to the talks is that the so-called “difficulty bomb,” a piece of code that, in seeking to encourage quicker updates to the protocol, must be delayed or removed.

The presence of the deadline, set for early 2019, has complicated the question of whether to implement a proof-of-work change to remove specialized mining hardware, or ASICs, from the platform, whether its rewards are being distributed fairly and whether such changes should be made together.

But, since miners, developers and investors are all impacted – some could gain or lose money, depending on the decision – the conversation might be best seen as a difficult first step in making such choices.

Chairman of the decision Hudson Jameson said:

“I honestly don’t know how to make a decision. I don’t know how we’ll go from here.”

Issuance debated

A lack of firm decision-making aside, significant time was spent discussing how much ether is created and distributed with every transaction block that is mined.

Two participants in the call – Brian Venturo, CTO of mining facility operator Atlantic Crypto, and software developer Matthew White – called not only for an issuance reduction, but went as far as asking developers to commit to limiting the total amount of ether that can ever be created.

That move would deviate from previous roadmaps, in which a cap wouldn’t be added until an anticipated change to a proof-of-stake consensus method that would remove the need for mining hardware entirely.

Others sought to frame the question as one that is in the interests of all parties who use ether – even developers who may not necessarily earn rewards.

“Getting the issuance under control will have good effects for price which is important for developer salaries and projects and funding new projects,” White said.

Speaking at the meeting, Xin Xu, the CEO of an ethereum mining pool named Sparkpool that supports over 20 percent of the ethereum hashrate, warned about the consequences of lowering the issuance rate or block reward too substantially.

“There is a tipping point and when we get there everything will break down and we cannot get back. In my opinion the change of issuance will be a big impact to the security.” Xin said.

ASIC resistance

And even though ethereum’s proof-of-work mining is expected to be replaced later in the roadmap, stakeholders faced another contentious topic: whether to block the use of specialized chips that could crowd out many of today’s GPU-dependent miners.

At issue is the recent release of specialized ASICs designed to maximize miner profits and push out those who have less-competitive miners – or are unable to buy the latest hardware.

Given that the issuance reduction would effectively amount to a cut in pay for miners, ethereum developer Danny Ryan suggested that blocking ASICs from the network might constitute a “reasonable compromise” for GPU-dependent miners.

Jameson said that such a code change could be implemented in a subsequent hard fork, eight months after Constantinople has activated — however, the testing required might be too substantial for it to be included in October’s planned hard fork.

And while there was broad consensus from the miners present to keep ASICs off the platform, several developers pushed back against the code change proposal, stating that they were “skeptical” that it could accomplish its aims.

Others warned that a change that is too substantial could actually be damaging to GPU miners, who have optimized their equipment for ethereum’s code.

In the end, Jameson urged participants to continue the discussion on social media, remarking:

“Between now and next Friday there will be more community comment about the EIPs and the different perspectives here.”

Blackboard image via Shutterstock

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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A Phone Call Could Impact Ethereum's Future – And It's Happening Today

Miners, investors, developers and more.

That’s a summary of the diverse set of ethereum stakeholders that will be in attendance at an upcoming developer call, according to Ethereum Foundation communication officer Hudson Jameson. Set to take place at 14:00 UTC Friday, the live-streamed meeting aims to address some of the platform’s most challenging questions ahead of its system-wide upgrade planned for October.

As part of that upgrade, there are several non-contentious ethereum improvement proposals (EIPs) already ready for testing, but also included are others that have stirred up controversy.

In particular, three concepts – the difficulty bomb, ether issuance and ASIC resistance – are at the heart of the debate, since each could have a lasting impact on how the blockchain operates. For instance, these code proposals could alter the regularity of ethereum upgrades, change the network’s economic policy and prevent specialized hardware from mining on the blockchain.

As such, core developers that usually attend the meetings have called for a larger set of voices, namely ether miners and investors, to be present to discuss a way forward.

“There is a strong community sentiment toward delaying the bomb, to reduce the block reward and to introduce changes to the hashing algorithm, however, it’s unclear how we proceed from here,” communications officer for ethereum software provider Parity Technologies, Afri Schoedon, told CoinDesk.

In the run up to the meeting, debate has been building on social media, with many of the platform’s stakeholders holding incompatible view points. And because the outcome will impact stakeholders in conflicting ways, Jameson has invited a number of people to the call to give their positions on the proposals.

“We have multiple miners, including nearly 50 percent of the ethereum hashing power (46 percent) either attending the call or making statements that will be read during the call,” Jameson said.

He told CoinDesk:

“Our aim was to have a variety of voices collaborate on this issue.”


Adding urgency to the current discussion is the so-called “difficulty bomb” – a piece of code locked into the platform that makes its blocks steadily less efficient to mine over time.

Because delaying the bomb also impacts issuance, there are a total of six conflicting proposals, each offering slightly varying methods for moving forward.  

Two proposals on the agenda for Friday’s meeting seek to reduce issuance — something some ether holders believe is too high. (Currently, the inflation rate is fixed at 3 ETH per block — down from 5 ETH since last October.)

While there’s a host of ethereum investors who have yet to publicly comment on the matter, several investors have taken to social media to call for a reduction in ethereum issuance, contending that the current inflation rate is an unnecessarily high tax on the holders of the cryptocurrency.

For example, some are pointing to a quote attributed to the creator of ethereum Vitalik Buterin in 2017 that states: “In the foreseeable future, the supply will not go far above 100 million,” a figure which as now been surpassed.

Others are going so far as to blame the inflation rate as the reason for ether’s market value decline, which hit a 2018 low of less than $300 earlier this month.

“Ether issuance is wildly over where it should be,” one user wrote.

Still, because it decreases the quantity of ether that miners are awarded to mine blocks, there’s a risk that too high an issuance reduction with be harmful to miners, forcing them to move their equipment onto another network.


That said, some are arguing that despite high issuance, miners that rely on general purpose hardware are already suffering.

“There is basically zero profit right now for normal GPU miners,” one user claimed on Github.

As detailed by CoinDesk, while ethereum was previously thought to be a GPU-friendly, ASIC-resistant cryptocurrency, the specialized mining chips have been available for use on the network since March. Leading advocates of GPU mining argue that efforts should be made immediately to remove the hardware from the platform.

In the past few months, the questions of ASIC resistance largely fell quiet, but questions around tweaking the difficulty bomb and underlying issuance model have caused the arguments to reactivate. And that’s because proponents argue that a reduction in issuance could push the last remaining GPU miners off the network, that are already competing against a rising hashrate.

Several stakeholders are pointing to a proposal named EIP 1057 as a method for ASIC resistance, that uses a randomizing, ASIC-resistant proof-of-work algorithm originally designed for monero to remain resilient against ASIC hardware manufacturers.

Speaking to CoinDesk, Peter Pratscher, the founder and CEO of Ethermine, an ether mining pool, said that among the company’s miners, the question of ASIC resistant eclipses all other concerns.

“We have reached out to our miners and from their response, it is clear that the most important point for them is to include a [proof-of-work] change to obsolescence ASICs,” Pratscher said, adding that the attitude around issuance was “somewhat ambivalent.”

Still, it’s a question that has proven to be divisive, with some users taking to Reddit to warn it is “not the answer,” and could impinge on valuable developer time in the run up to proof-of-stake.


Of all the platforms stakeholders, developers are perhaps the most difficult to pin down – especially as many avoid taking a position in polarized debates, preferring instead to focus on delivering code.

Still, among this group, there’s a general tendency to be less interested in the question of issuance — in part because there’s an attitude that the high valuation of ether reduces its usefulness within the platform.

For many ethereum developers for example, the question of ASIC resistance is also of important ideological importance, because it relates to the underlying decentralization of the network — and therefore its resilience to attack.

Others hold the inverse position, believing that by raising the cost of attacking the network — ASICs are comparatively much more expensive than GPUs — the hardware is good for security.

That said, there is a topic that remains of particular interest to the developers – the difficulty bomb.

“Delaying the bomb is the easiest part, everyone pretty much agrees we should do that,” Schoedon told CoinDesk.

And while it’s true the consensus roughly is that the bomb should be delayed, there’s some disagreement about whether to remove its code entirely or to keep it embedded in the software. Because it was installed to prepare the network for the change to proof-of-stake, some argue that it is now irrelevant given the delay in that change’s timeline for execution.

Still, others believe that it has developed an entirely new function — forcing ethereum to come together and find consensus on complicated problems, just like these.

Speaking to this, because of the difficulty bomb, core developer Nick Johnson told CoinDesk:

“People are welcome to stick with the status quo, but they have to make an affirmative decision to do so, rather than letting inertia do the work for them.”

Phone via Shutterstock

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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Analyst: Crypto Mining Giant Bitmain Losing Its Edge As Demand Dwindles

Chinese tech conglomerate Bitmain has been the dominant force in crypto mining for the past year. However according to analysts at Sanford C Bernstein & Co. it may be losing its edge as rival firms enter the market and demand dwindles as markets continue to decline.

In a report by the SCMP it was suggested that the company may have to write down the value of its inventory. According to the analysts the company which produces the chips designed by Bitmain, Taiwan Semiconductor Manufacturing Co (TSMC), should ask the firm to make full prepayments and refrain from adding capacity solely for cryptocurrency-related demand.

Bitmain currently controls 85% of the market for crypto mining hardware and has a planned a multi-billion dollar IPO in the near future. However the firm is facing growing competition from rivals such as Canaan and Ebang International Holdings, which are also working on Hong Kong IPOs. In recent days a number of companies and investors have denied participating in Bitmain’s fund raising efforts earlier this year.

Following a crypto market decline of over 70% this year demand for mining hardware has also fallen. As a result speculation regarding Bitmain’s finances has risen and unverified investor documents regarding its business have appeared online. This has prompted concern over the company’s resilience to tumbling cryptocurrency prices.

According to Mark Li at Bernstein “Bitmain has likely been acquiring large amounts of Bitcoin Cash, posing a “major risk” as the bitcoin offshoot’s value declines.” BCH has lost almost 70% since its early May price of $1,730 according to Bitcoin conversely has only dropped around 30% in the same period.

Regardless, the company has made a fortune in the past year to the tune of $3 to $4 billion according to Bernstein. Its ASICs hardware still dominates the top mining pools making Bitcoin extremely Bitmain reliant, the closest it gets to centralization. According to Trustnodes it almost achieved 51% of the hashrate in June as and Antpool, both owned by Bitmain, approached the critical level.

If markets continue to fall companies that profit from them will undoubtedly lose their edge. However crypto is still in its infancy and a market recovery in 2019 could see Bitmain and other crypto focused companies flying high once again.


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Coders Renew Efforts to Fork Mining Giant Bitmain Off Siacoin Blockchain

New code is set to be released that would make obsolete the mining hardware designed by chip maker Bitmain for the decentralized storage protocol siacoin.

Revealed in an email obtained by CoinDesk, Obelisk, a startup that aims to offer alternative mining equipment for the protocol, has proposed code would give those running the software the option to exclude Bitmain’s ASICs by changing the rules so the machines are no longer compatible.

“This will give the sia community the ability to fork and could invalidate all non-Obelisk siacoin ASIC miners on the forked chain,” the company writes.

The news is notable as it showcases how cryptocurrency communities are responding to the expanding business interests of Bitmain, the China-based mining giant that CoinDesk revealed last week is seeking to raise one of the largest-ever initial public offerings (IPOs).

As detailed in investor documents, part of Bitmain’s pitch is the extensibility of its expertise and acumen in designing hardware for bitcoin to other protocols, including siacoin. Founded as a producer of hardware for bitcoin exclusively, Bitmain now supports the alternative cryptocurrencies bitcoin cash, litecoin, dash and ether.

Still, while siacoin, valued at $170 million, is the smallest addition to the company’s portfolio, it’s also proving one of the most problematic due to the fact that users aren’t keen on the idea they would effectively need to purchase Bitmain’s products, or similarly powerful equivalents, in order to secure the protocol and compete for its rewards.

Of note also are the credentials of those backing opposition movements that share this sentiment.

Led by siacoin core developer David Vorick, Obelisk is a community-funded ASIC manufacturer that was beaten to market by Bitmain — an event that caused conflict within the siacoin community. Indeed, Obelisk’s code was designed with the ability to remove competing ASICs from the network, however, it wasn’t activated due to the fear that it could result in a blockchain split.

That said, with the specter of larger corporate interests on the horizon, grassroots sentiment appears to be shifting, at least according to Vorick.

“As of today, all Nebulous (the company employing sia’s core developers) and Obelisk employees are supportive of a fork,” the email concludes.

The code will be available in “the coming weeks,” according to the message. Plus, the mining hardware is also “almost complete” and the company “expect[s] to begin shipping units this week.”

Should siacoin be successful it wouldn’t be alone in its efforts to curtail Bitmain’s expansion. One of the world’s largest cryptocurrencies, the privacy-oriented monero, implemented code to remove Bitmain ASICs earlier this year.

For its part, Obelisk is seeking to position itself as a more developer-friendly alternative to Bitmain, in that it could allow developers to enhance the security of their blockchains without worrying about the motivations of hardware makers.

As detailed by CoinDesk, Obelisk intends to provide ASICs for a wider array of cryptocurrencies – to be built in secret and later released for use by members of those cryptocurrency communities.

Read the full email below: 

The Plan
Dear Obelisk Customers,

Production is progressing, firmware is almost complete, and we expect to begin shipping units this week. We now have approval from our team, board, and counsel to share our plan.

First, we will compensate Batch 1 customers with expected mining revenue. Since we missed the estimated shipment date for Batch 1, we will compensate all Batch 1 customers with the mining revenue that you would have received between June 30 and the day your order ships. As of today, this is approximately $90 for each SC1 unit and $250 for each DCR1 unit. If we miss the estimated shipment dates for Batches 2-5, this policy will also apply.

We will begin sending out this compensation to customers sometime after Batch 5 ships. Obelisk will calculate your expected mining revenue based on a hashrate of 800 GH/s for SC1 and 1500 GH/s for DCR1. Compensation will be in USD, and will assume that you exchanged your mined coins for USD on a daily basis and that your electricity cost is $0.

In the coming weeks, we will put together a more complete guide to receiving this compensation and publish our official calculations so that they can be reviewed by the community. Depending on Obelisk’s financial position after delivering Batch 5, it may take several months or more to compensate all customers.

Second, we will release the SC1 alternative Blake2b algorithm in the coming weeks. This will give the Sia community the ability to fork and could invalidate all non-Obelisk Siacoin ASIC miners on the forked chain.

The Sia core developers are currently considering community member FaustianAGI’s proposal and will soon be issuing an official response. As of today, all Nebulous (the company employing Sia’s core developers) and Obelisk employees are supportive of a fork.
There are still many details to solidify, but we pledge to provide additional information in the coming weeks. We are working tirelessly to deliver your orders, and will continue to update you with our progress.


– Team Obelisk

David Vorick image via CoinDesk archives 

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Before the 'Bomb' Hits: Why the Race Is on to Alter Ethereum's Economics

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 blockchain come 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.”

Together or separate?

Speaking in a core developer meeting Friday, the communication officer for ethereum, Hudson Jameson suggested a solution could come from separating the two mechanisms.

In a sense, he wants to settle each debate in isolation, tackling one problem before the other.

“I think decoupling them would help us create priorities, where we have one thing which is an economic and technical change and the other which is a pure technical change that isn’t as controversial a thing,” Jameson said.

Several developers pushed back against this, though, stating that the two issues are intrinsically bound together and necessitate a combined solution.

Still, several EIPs target the question separately — impacting either the bomb or the reward schedule – while others bind them together.

Currently set to activate in 2019, two proposals seek to remove the difficulty bomb completely: EIP 1240, which simply removes the bomb, and EIP 1276, which seeks to remove bomb and alter ethereum’s reward structure, lowering the current issuance of 3 ETH per block to 2 ETH.

Two proposals want to delay the bomb: EIP 1234 and EIP 1227, though each takes a different approach to raising and lowering the issuance total.

A further two proposals simply target the issuance rate: EIP 858 does not impact the difficulty bomb but reduces the reward to 1 ETH, and EIP 1276 wants to change the reward to 2 ETH.

Paying for security

Complicating the discussion is the differing views on how much ethereum users should pay for security (in effect that’s how developers see blockchain rewards to begin with).

That’s because, while the inflation rate of ether ensures its resistance against attacks — preventing the ability of malicious hash power to overwhelm the network — it’s essentially a tax that comes from ETH holders directly, as inflation slowly decreases the value of their ETH over time.

Plans to limit the overall issuance with the upcoming consensus switch to proof-of-stake, an upgrade called Casper, have been under discussion for several years, however, that plan is now in question given the consensus switch is still several years away.

“If you rewind way back two or three years ago when this difficulty bomb was first installed, the plan was we will be on Casper by now, by 2018. If that had happened then the bomb would never have been an issue,” Rettig told CoinDesk.

Similarly, the supply schedule has yet to be formalized.

Retting said: “Even with Casper, the issuance schedule, the rewards, the inflation, all that has never been worked out. It has never been finalized, this is called the parameterization of Casper and it’s still very much a work in progress.”

Concerns from everywhere

To complicate matters further, there are developers on complete opposite sides of the difficulty bomb debate.

For instance, several developers argue that the difficulty bomb should remain permanently – even though it was only originally planned to last until Casper took effect.

“It lessens the default effect of inaction being the most attractive option,” ethereum core developer Nick Johnson said in the meeting.

Yet, Augur developer Mical Zoltu’s proposal (EIP 1240) suggests the complete opposite – the removal of the difficulty bomb altogether. Discussing the proposal on a related forum, Zoltu argued that developers should fight against so-called “planned obsolescence”  – or when software is programmed to become obsolete after a certain time – of the ethereum chain.

“As a consumer, I have been bitten many times by planned obsolescence and now it is a business strategy that I actively try to avoid,” Zoltu wrote.

The contention surrounding the difficulty bomb and ETH issuance has also led a group of miners to also speak up about their concerns.

Miners using GPUs, a class of mining hardware that risks being made obsolete due to the emergence of ASICs, are calling for developers to use this opportunity to change ethereum’s underlying mining algorithm. According to GPU miners, in the absence of Casper, such a change would restore the blockchain to a more decentralized state.

As Casper developer Danny Ryan said in the developer meeting Friday:

“They need to be talked about at the same time. A lot of people in the community want them to be talked about at the same time.”

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