Ethereum ETH Fees at ATH's, Miners making $$$, WHAT ABOUT EIP 1559?

Transcript

[Music] all right david let's talk about miners for a second eth miners are making bank right now it's insane they made a total of eight 830 million in january dude and 40 of that was fee revenue right so again miners make revenue on any blockchain including ethereum or bitcoin in two ways one is uh issuance so they get a reward based in ether every time they mine a block successfully so that's issuance reward and they also make fees on the gas that you pay or the transaction costs that you pay on the bitcoin network these two fee structures combine to form the total miner revenue

and what's amazing here is now transaction fees compose 40 of total miner revenue on ethereum so what do you make of these high numbers and that proportion of uh fees being minor being transaction fee revenue yeah this is just a very strong signal as to what the longevity of ethereum could be right the way that you understand a blockchain to be able to live long into the future is demand for block space and ryan if you click on that image it'll blow it up a little bit bigger look at that bar on the right that that red part on top of the blue part that's the fee revenue and the blue part is the issuance right

they're almost equal they're almost equal in fee revenue to issuance and what that tells us is that uh if you take that fee revenue side of that that bar chart it's larger than all of the revenue that niners made in like the bear market for for almost an entire year like the fees that miners made in the last couple months match the entire fee the entire issuance and feeds that they got in like 2018 and 2019. and this is really important this is super super important and the reason why is because if your blockchain can collect fees if the validators can collect fees you don't have to issue as much currency to fund security that means that your asset will be having less issuance which means your

asset will be more scarce will be more hard the more fees that are collected the less you have to issue and so the whole narrative around like this this bitcoin hard cap is still thrown into question because we do not see this same minor revenue from fees in the bitcoin network the whole narrative around bitcoin is that at some point issuance will be replaced by fees yet we are already seeing this in the ethereum blockchain we are seeing a 40 out of the 100 of total revenue 40 percent of that is fees paid to miners in ether i don't know what the bitcoin fee percentage is i think the last time i checked it was like 10 to 15

but ether ether and ethereum is already out competing bitcoin in long-term sustainability ether's ultrasound money it's so ultrasound we're gonna talk we gotta i wanna talk two things about this too david just said to add on to what you're saying it is the case that if all of the bitcoin were issued as is the plan right and let's say all of the ether were issued that ethereum would be a higher security network than bitcoin today if they were both based on just transaction fee revenue which means ethereum's blocks are more valuable than bitcoin's blocks which is interesting because bitcoin is the one switching to a hundred percent transaction fee

revenue which is not its strength its strength is a meme store of value its strength is not the value of its block space and its network so it's kind of switching from its strength to its weakness in its issuance policy and again issuance policy is also security policy so these are trade-offs that uh you know people often confuse the other thing i wanted to say is all of this this red section that you're pointing uh at on on the graph guess what happens to this red section guys eip1559s means it starts to to go to holders this red section a large proportion of it starts to get burnt when eip 1559 is active which means it actually decreases the ether supply so i

don't know how much we're looking at here david but like 829 million right in january 39 of those were fees let's say it's like 300 million or so something to that effect um the large proportion of that would be burnt under eip 1559 say 200 million 250 million of fee burns that's a de-inflationary pressure on ether and the scarcity of eth so this chart is well gas fees suck right like it is long-term very bullish for the health and security and the product market fit of the ethereum uh blockchain for all the visual learners out there and for those on the podcast you should

check out the youtube because there are plenty of things to to look at take that red section and then take that an equal amount of the size of that red section and like delete it from the blue section right and so like all of that red feels that you're seeing you can actually remove the issuance right and so if you remove the red part from the blue part that is actually the issuance of ether and the if the red part continues to go up and up and up the blue part will continue to go down and down and down under an eip1559 paradigm and just like that this whole roll-up turned into an eip-1559 episode yeah we could go on for 10 or 15 more minutes about this david but we've got to move on it's so cool it is awesome

revolutionary part about this whole entire industry right now yeah and it's so underrated like most people don't understand this this is not the popular main street narrative this is the stuff that like you're hearing from bankless because you know people in the bankless community are actually looking at this stuff anyway we've got to move on david let's talk about support eip1559.org this is how governance works in ethereum and in crypto can you talk about this and why this is important and they kind of relate it to uh to governance yeah this support eip1559 campaign is a response to a bunch of miners that are uh collecting themselves together to do the opposite where they're trying to nix eip1559 because obviously that's bad for

straight up bad for minor it's like there's less minor revenue if eip one five five nine goes in all those fees that we were talking about earlier that that we under an eip one five five nine paradigm that gets burned instead of going to the minor so miners don't like that uh if you want to listen to a really really good rant listen to uh anthony suzanne and eric connor on their into the ether podcast that they did where they talked about this like the the mind the the minority of miners by the way and what's interesting about this is the support side of eip1559 is is also led by miners but the the anti-eip1559 also another a different set of miners different pools of miners like honestly those guys because they are making the most amount of money

that they have ever made ever and they are just trying to say like no eip1559 is gonna like destabilize ethereum we're not gonna make any any money even with eip1559 miners are making the most money that they've ever made ever like try me a river like this is why proof of stake is so important because miners are not aligned with ethereum as much as ether holders are so this this website is a website it's basically an advocacy type website where you can you know tweet your support you click a button you tweet your support and uh just go on record as saying you support eip1559 and basically the entire community does support eip 1559 with a few very small exceptions except for minors but let's talk about this because

i think this is interesting what um i guess weapon what tool do what what leverage do miners have over the rest of the community so let's say i'm a miner i don't want to lose my revenue here and i i start saber rattling what's my threat to the ethereum community what am i going to do if you guys go forward with eip 1559 yeah the the minority of miners would be able to fork off their chain and i i guess they it would actually they wouldn't fork where like when eip1559 comes in that's going to be a fork and so the miners that don't want that are just going to continue on in their own chain but like good luck convincing the rest of us to go with you right this is the power of community consensus if

there's two forks the community will choose the one that they want to go with and from what we can tell eip1559 with overwhelming support everyone's going to choose the fork with that support so you know go go fork ethereum and like go play in your like non-eip1559 playground have fun with your like one dollar eth fork the apps aren't coming there the community is not coming there the users aren't coming there i guess the upside is we might get an extra token out of this that we can we can go sell it right like so this is like an ethereum classic classic type of situation so they really don't they're not they really don't have the leverage here which is super interesting but if you're an ether it's kind of all upside right

because you you basically get you know both forks uh in in this types of situation but this is also an example of how governance works right this is this is kind of the counter forces at play and ultimately community consensus is the engine here is the governance layer that layer zero everyone together deciding which fork they're going to download and support is the community and that's what ethereum is works the same in bitcoin and it's a brilliant i think mechanism for for governance that's as credibly neutral as it can be well i'll actually be uh push back on that and be the devil's advocate here so for anyone that wants to call me an eath maximalist here's my critique of this i

don't want in the long term any sort of like i support this fork versus i support this fork because the whole point of ethereum in the long term is no governance right we were talking earlier about rye and how it's like a money god because it's autonomous and free from human intervention this is like this is you know support eip1559 that's the same like messages i see when i see like the billboards or the the road signs about like in seattle where i live where like there's political movements about like let's you know add in taxes onto soda or gas that's not what we want for ethereum to be so like the fact that this is even here is a little bit concerning i don't want ethereum to be a politically engaging thing it's supposed to be

autonomous there isn't supposed to be any sort of like political rallying to try and change the direction of ethereum the direction of ethereum should be the direction of ethereum which is autonomous and takes its own course again we are in this early research and development phase of ethereum so that's why i'm okay with it but over the long term i don't want any sort of this activity at all yeah and i think i would agree with you right so the only answer to uh can we completely neutralize all political decisions basically is to to solidify your base protocol and don't make any further changes and at some point that will happen to ethereum i think actually some point soon in the next like three to five years we'll get all of the the core changes we need into ethereum uh in the same way that bitcoin

is kind of like codified it's it's solid there are no further changes although there's probably one coming down the pike once issuance gets to zero and security drops maybe ooh spicy spicy but like but yeah i agree with you ultimately um this has to happen with ethereum but in the meanwhile we have this nice kind of fork choice rule that lets the the community and social consensus ultimately decide anyway hey we hope you enjoyed the video if you did head over to bankless hq right now to develop your crypto investing skills and learn how to free yourself from banks and gain your financial independence we recommend joining our daily newsletter podcast and community as a bankless

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