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Ryan Berckmans Profile picture
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26 Feb, 4 tweets, 2 min read
1/ EIP-1559 is huge for ethereum and coming soon

EIP-1559
- likely launches in July
- is now estimated to reduce miner revenue by 20% to 35% at most, not 50%
- would have burned ~$16M in ETH yesterday

Here are some updated EIP-1559 resources 👇
2/

- EIP-1559 is most likely to launch in July in the "London" hard fork

- Today, there was an EIP-1559 community call with miners. Great to see many different stakeholders on the call, including miners that are pro EIP-1559
3/
- EIP-1559 is now estimated to reduce miner revenue by 20% to 35% at most, not 50% as previously thought. The new approach to this estimation is based on community efforts to help miners capture ETH that's currently paid to arbitrageurs and liquidators
4/ imo, miners will accept that launching EIP-1559 as specced and on time is their best option, without any need for the community to offer extra incentives such as increasing the block reward

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Ryan Berckmans Profile picture
24 Feb
1/ EIP-1559 is huge for ethereum

But, miners are upset that EIP-1559 reduces their revenue by ~50%. Who wouldn't be?

imo, miners will accept that launching EIP-1559 as specced and on time is their best option

Here are five reasons why👇

(Reason #2, ETH pays miners 5x vs. BTC)
2/ Reason #1

Ethereum paid block rewards to miners for years when fees were negligible. If fees dry up for any reason, we'll still pay block rewards. We've also always paid miners 100% of our revenue (fees). EIP-1559 reduces this to ~20% of revenue. imo, it's reasonable.
3/ Reason #2

Last week, ethereum paid miners 5x more than bitcoin after normalizing by market cap. If EIP-1559 had been live, ethereum would have paid miners 2.5x more than bitcoin.
Read 8 tweets
Ryan Berckmans Profile picture
8 Feb
1/ Ethereum's fees are a sleeping giant

Ethereum's fees
- are currently worth ETH at $2500
- grew 150x over the past fifteen months
- begin accruing to ETH holders when EIP-1559 launches later this year

imo, fees will soon greatly help us get to ETH at $20k. Here's how 👇
2/ Ethereum's fees grew 150x over the past fifteen months. The net present value of the run rate of last week's fees is worth ETH at $2500 (using a 3% discount rate), a 50% premium over today's ETH price. However, currently these fees accrue to miners, not ETH holders.
3/ Last week, ethereum's daily fees were $24M, and total miner compensation (fees + block rewards) was $47M in ETH. On average, miners must sell all that ETH to pay for their hardware and electricity. That's $47M of ETH sell pressure from yesterday alone.
Read 5 tweets
Ryan Berckmans Profile picture
30 Oct 20
1/ ETH/BTC flippening explained at a mechanical level.

Compared to ethereum's proof of stake, bitcoin's proof of work is too expensive. Here's why.
2/ If we think of ethereum and bitcoin as "corporations", then their "corporate revenue" is equal to transaction fees.

That's the money coming in. Can't pay transaction fees without first owning ETH or BTC.
3/ In PoW, that fee revenue doesn't stay on the "corp balance sheet". 100% of fee revenue, along with 100% of issuance, is paid to miners. Then the miners *necessarily* pay ~100% of their revenue to hardware and electricity suppliers...
Read 13 tweets
Ryan Berckmans Profile picture
29 Oct 20
1/ The ETH/BTC flippening reminds me of the movie Moneyball.

Everybody in baseball "knew" the Moneyball approach would fail.

In reality, the Moneyball approach worked so well that the Red Sox used it two years later to win their first World Series since 1918.
2/ It was a fuzzy belief, not rigorous argument, that drove baseball's common knowledge that the Moneyball approach would fail.

Similarly, flippening deniers have never (that I've seen) rigorously argued as to how bitcoin's proof of work wins vs. ethereum's proof of stake.
3/ Flippening deniers, how does bitcoin's proof of work stay "cheap enough" to keep BTC #1?

The fact is, if both bitcoin and ethereum had a $250b market cap, BTC costs an extra $4b per year just to stay *equal* with ETH.
Read 5 tweets
Ryan Berckmans Profile picture
4 Oct 20
1/ imo, the ethereum community has been galvanized and is becoming aligned around the new rollup-centric roadmap recently described by @VitalikButerin.
2/ With the new rollup-centric roadmap, developers can now confidently expect their dapps to scale on ethereum, more or less immediately and into the future.
3/ Before the new rollup-centric roadmap, I think the extended community of ethereum developers felt a general sense of ambiguity around scaling. Should we just wait for sharding? Do we have to wait until sharding? Are people looking seriously at other base layers?
Read 8 tweets
Ryan Berckmans Profile picture
7 Sep 20
@armaniferrante, in the linked thread, asks great questions about why I think ETH will be a cash-producing asset.

Here are my answers, discussing fee growth, the usefulness of decentralization, whether buying ETH is a consensus bet, and more.

Thread 👇

> But how confident are you [that eth will grow and sustain its fees over the long term]?

Today, we know that a mechanical relationship exists between fee growth and Ethereum's success.

The proliferation of L2s and the success of other L1s won't prevent eth's fee growth, because the L2s use large amounts of gas and/or L1 financial apps will pay huge fees for composability in "city-like DeFi shards", as popularized by @hosseeb.
Read 16 tweets

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