Thread by @econoar

0/ It’s Friday and crypto twitter is dead so what better way to wake it up than talking about uncle blocks??? I see lots of confusion around this subject so let’s talk about what uncles are, how they are formed, the gas limit impact, selfish mining and the falling uncle rate.

1/ First, let’s discuss what an uncle block is. At any point in time, Ethereum has a block height (how long the chain is) and miners are working to solve the next block. However, it’s possible for two miners to solve the next block at the same time.

2/ Due to block propagation times across the network, miners may be unaware that another has solved the same block. One must win. The block that wins gets added to the main chain and is rewarded 3 (soon to be 2) ETH. The other becomes an uncle and gets ~2.3 (soon to be 1.5) ETH.

3/ Why are miners paid for uncle blocks if they are stale blocks? The simple answer is to promote decentralization. This allows smaller miners who may not be part of a big farm (therefore slower propagation times), a way to still earn rewards.

4/ The uncle rate is how many uncle blocks occur per normal blocks. It’s best to keep this rate low but also consider tradeoffs of raising the gas limit such as more throughput (but larger state size). The uncle rate is currently falling rapidly:

https://twitter.com/econoar/status/1080281325175693312

5/ How does gas limit come into play exactly? Well, gas limit is how much computation can occur within a single block. This then helps limit the size of a block. So, gas limit is a way to keep uncle rate in check. For more details see this thread:

https://twitter.com/econoar/status/1060239653331070976

6/ Since smaller blocks will propagate across the network faster, we sometimes see miners mine empty blocks. This means that the miner is giving up transaction fees in order to take less risk that the block will become an uncle. This is referred to as "selfish mining".

7/ Another factor that contributes to uncle rates are the clients themselves, such as geth and parity. Parity recently put in a fix related to how they handle block propagation which is helping the uncle rate to fall a lot.

github.com/paritytech/par…

8/ So after talking about all of this, what impacts uncle rates?

-Gas used (and transaction count)
-Gas limit rise if max gas is being used
-Client optimizations
-Mining centralization
-Other small factors

9/ With a falling uncle rate and understanding the nuances, we can now begin to discuss potentially raising the gas limit and the impact it would have.

Ethereum 1.x is considering some proposals around this. Here is a great post by @realLedgerwatch: ethereum-magicians.org/t/on-raising-b…