Ethereum Miners’ Revenues May drop 20-30% After London Launch – Expert’s Opinion
In the coming days, EIP-1559 will be activated on the Ethereum network as a part of the London hard fork. Experts from the mining firm Compass fear that this will lead to a decrease in miners’ income by 20-30%.
According to their estimates, the activation of EIP-1559 could increase the share of block revenues. And the reduction in transaction fees will offset the rise in the Ethereum rate.
The EIP-1559 should ultimately reduce gas price volatility and burn off a part of the transaction fees, depending on the network load.
After its activation, it will be possible to freely double the capacity of the block, depending on the load on the previous block. The transaction fee will be set automatically based on the payment of the base fee, subject to the preliminary requirement to include the transaction in the previous block.
Thus, if the block is more than half-filled with transactions, the amount will increase, and vice versa. This is necessary to ensure a level playing field for most blocks.
In addition, additional bonuses are provided for miners who will prioritize adding time-dependent transactions.
In total, miners’ income will now depend on the proceeds from mined blocks, transaction fees and miner extractable value (MEV).
Below is a diagram of the income of Ethereum miners before and after the activation of EIP-1559 (in the second case, when 99% of transaction fees are burned).
Compass analysts believe that after the launch of the update, MEV in dollar terms and in ETH will plummet.
This may be due to a decrease in network activity and a decrease in gas prices after the market crash in May. In addition, lower MEV may increase users’ traffic to Polygon due to the cheaper and faster settlement system on the main network.
At the time of writing, London hard fork is less than two days away from launch.
To date, 66.3% of users have expressed their readiness to launch the London hard fork.