A protest is scheduled for April 1, which is planned by miners who disagree with the update of the Ethereum network. They promised to redirect computing power to one mining pool – Ethermine and hold it for 51 hours and get 51% of the hashrate of the entire network. Thus, miners want to challenge the decision to implement the EIP-1559 update in July this year.
The update will completely change the system for calculating commissions within the Ethereum network, reducing the income of miners. A portion of the fees they currently receive as payment for processing transactions will be burned. On information about the planned protest of miners, the quotes reacted with a decrease. Over the past day, Ethereum has fallen in price by 4.3% from $ 1.86 thousand to $ 1.78 thousand, writes RBC Crypto.
Potential Network Threats and Benefits for Traders
A short-term drop in quotations was made by the head of the fintech company Exantech Denis Voskvitsov. He claims that miner protests pose a threat to the Ethereum blockchain by disrupting its decentralized nature. According to the expert, the actions of miners can reduce the network to a centralized system.
“With 51% of the network hash rate and more, certain miners can decide which transactions to take to the blockchain and which not. In this case, it is they who will decide how this blockchain will work, ”explained Voskvitsov.
The merger of miners will have a temporary effect, Sergei Troshin, head of the Six Nines data center, is sure. According to him, those who disagree with the EIP-1559 update will sooner or later have to leave the market, and their place will be taken by players who are ready to work according to the new rules. Denis Voskvitsov added that it is for this reason that a possible drop in Ethereum quotes will not last long.
The expert also believes that developers have leverage on miners, for example, increasing the complexity of calculations. This will simultaneously “put in place” the miners and lead to the fact that there are fewer of them. According to the expert, after the upcoming update, Ethereum mining for many market participants may become unprofitable anyway. Philip Modnov, CEO of LAZM, predicted a large dynamics of cryptocurrency rate fluctuations. He believes that this can play into the hands of traders.
Market reaction
In the long term, Ethereum will only increase in popularity especially for the DeFi community, said Jahon Khabilov, CEO of Sigmapool. He suggests that the value of the cryptocurrency may adjust locally as miners start selling more to cover operating costs.
Ethereum will not lose its attractiveness for investors, despite recent events, says Nikita Vassev, founder of Terracrypto.icu. In his opinion, the new update will become a round of development of the project as part of the blockchain’s transition to the Proof of Stake protocol. Vassev noted that the reduction in commissions will create more comfortable conditions for the development of DeFI and other projects based on Ethereum.
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