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The dilemma of the incentives: because the defect of Ethereum may not be so bad after everything
When Bitcoin emerged for the first time in 2009, its creator, Satoshi Nakamoto, introduced a protocol designed to ensure that the network has remained decentralized and safe. One of the key characteristics of this protocol was the concept of “blocks of blocks”, which encourages miners to validate transactions and add new blockchains blocks.
For a long time, the Bitcoin block reward system seemed to be an excellent way to maintain the honest network and encourage miners to invest their computational power in protecting it. However, as we have seen with Ethereum, this system can also create incentives for miners who may not be ideal.
The halving enigma
In 2012, the first halving event took place, when the reward of the Bitcoin block was reduced by 50 BTC per lock to 25 BTC. This has marked a significant change in the dynamics of the network and led to an increase in transaction commissions. As you said, many believe that this has created an incentive for miners to transmit transactions rather than validating them.
To understand why, we break down the economy of the system:
* Blocks
Blocks: The block reward is designed to encourage miners to validate new blocks and add them to the blockchain.
* Transaction commissions : as the transaction commissions increase, they become a significant part of the revenue of the network. Miners receive a smaller fraction of these entries due to high commissions.
* Model of Ethereum : The transition of Ethereum from Proof Of-Work (POW) to Proof-Of-Stake (POS) has shifted attention from blocks to the transaction commissions.
The defect
While the halving event of Bitcoin may seem like an intelligent attempt to create more incentives for miners, it also creates an incentive for them to transmit transactions rather than validating them. This is because the reduced block reward makes less attractive for miners to invest their calculation power in guaranteeing the network.
On the contrary, the Ethereum POS model is designed to encourage validators (miners) to maintain their mining equipment and maintain the safety of the network. The transition from blocks to blocks to transaction commissions has moved this incentive from the validation of transactions and towards maintaining the stability of the network.
Conclusion
While Bitcoin’s Halving event may seem like an intelligent attempt to create more incentives for miners, in the end it creates an incentive for them to transmit transactions rather than validating them. This is a defect in the system that must be faced.
To maintain the integrity of the Ethereum network, we must guarantee that the transaction commissions are incentivized correctly and that miners have a strong interest in validating transactions rather than transmitting them. Only then can we create a safer and decentralized network.
Future directions
While we go on with the development of blockchain technology, it is essential to carefully consider these problems. We must design systems that balance incentives for miners with the needs of the network as a whole.
Some potential solutions include:
* Incentive of validators : instead of reducing blocks of the blocks, we could encourage validators by offering a higher reward for the validation of transactions or the maintenance of the stability of the network.
* Improvement of transaction commissions : we can improve transaction commissions through changes to the network consent algorithm, such as increasing the block size or introduce new types of transactions.
By facing these problems and giving priority to the needs of the network, we can create a safer, decentralized and sustainable blockchain ecosystem.
