With Ethereum rates up, Vitalik Buterin tweeted a warning about how this trend could result in a security risk for the platform
With the decentralized financial sector growing and the use of the Ethereum Network on the rise, transaction fees on the platform have increased as the total number of transactions reaches values similar to those of 2018.
Revenue from Ethereum's transaction fees is now almost as high as half of the bulk reward revenue, which, according to Ethereum co-founder Vitalik Buterin, could jeopardize network security in the future.
Buterin suggests that Ethereum's Improvement Proposal (EPI) # 1559 could potentially solve this problem by changing market rates in the ETH 1.0 chain.
Transaction fees are reaching 100 Gwei
Ethereum's transaction fees have already reached 100 Gwei, equivalent to 0.00000010 ETH, as personalities in the cryptocurrency sphere like Ryan Sean Adams and Buterin call for changes.
This increase in rates has already had an impact on the network, affecting niche sectors such as blockchain games and Dapps, which saw reductions in activity. For games running on the network, higher rates affected business models that depended on low-value, high-volume transactions.
The network congestion resulted in an increase in the price of gas from 10 Gwei in June 2020, when it increased from 30 to 40, only more than double in the next month and a half.
Buterin is linked to an article from Princeton University that disputes the concept that miners who are paid by block reward or transaction fees have no impact on blockchain security.
EIP-1559: simplifying software needs and improving price efficiency
The change proposed by Buterin and his team would replace the “first price auction” fee model with a mechanism that adjusts a base rate, depending on network demand.
This mechanism would allow an increase in the network's capacity to 16 million gas, with the fee price increasing after the demand reaches the 10 million mark. It would also allow users to provide tips to the miner, while the base rate would be burned to prevent miners from manipulating the rates.
The implementation of this change would be carried out in two phases, according to the proposal. The first phase would consist of a gradual decrease in the existing gas and an increase in the new gas, while the second phase would consist of not accepting any previous transactions by the network.