EIP-1559 and Off-Chain Proofs

The Ethereum chain is extremely congested and gas is rising. In the nearly six years since Ethereum was developed, the transaction fees earned by miners have exceeded the block rewards, which is probably something that the original designers of Ethereum did not expect. How to solve the problems of Ethereum's network security and high transaction fees is imminent.

Currently, the Ethereum community is actively promoting the implementation of EIP-1559, but, as expected, this proposal has been strongly opposed by some miners. The main reason is that BaseFee has been burned, resulting in a large loss of income.

EIP-1559 is not a new proposal. In fact, EIP-1559 has been implemented on Filecoin for half a year. So, I suggest that the Ethereum community and miners can refer to the implementation of EIP-1559 in the Filecoin network. Although there are many doubts before implementation, I have also discussed this in the article Chatting about Filecoin's transfer fees. There are indeed many factors that need to be fully considered and considered clearly. But in general, the implementation of EIP-1559 in the Filecoin network is very good. As Juan said: So far, the "basic fee" mechanism of EIP-1559 has done a good job in keeping the network capacity at 100% .

Filecoin boldly took the lead in adopting EIP-1559 when the network was launched. It has no historical baggage and has been progressing smoothly despite some doubts. At present, EIP-1559 has brought very good stability and security to the Filecoin network, as well as network utilization. To summarize:

• Since the Gas BaseFee fee is closely related to the network bandwidth consumption, the BaseFee is adjusted to encourage or inhibit the growth of computing power. Since the Filecoin network was launched independently, it has been in a reasonable high-load operation state , avoiding excessive load operation, ensuring network security and stable operation.

• The adjustment mechanism of Gas BaseFee encourages miners to adopt a more intelligent mechanism to control the growth of computing power. At the same time, it encourages miners to configure mining pools more flexibly from a cost perspective. For example, recently, about 70% of the computing power growth of the entire network comes from 64G sectors, which is an adaptation of miners to the network.

• The existence of the mechanism of burning all the base part of the gas fee and the over-estimated burning makes it meaningless or unprofitable for miners or network participants to manipulate the gas price. People are more concerned about how to save costs, and the channel of raising gas fees to increase revenue is eliminated, making the network more secure.

• The large amount of Gas burning benefits the coin holders of the entire network. At the same time, the burning of BaseFee suppresses private transactions between Filecoin clients and miners.

Currently, one of the main complaints of Ethereum miners is that their benefits have been reduced. However, this is also the case in the Filecoin network. The difference is that Filecoin was originally designed this way. However, from the perspective of network operation and development, the impact of basic fee burning on miners is greater than the benefits it brings. Miners are more willing to accept the benefits it brings. In particular, the improvement of stability is crucial for Filecoin, a chain with mortgages and penalties.

Of course, Ethereum and Filecoin are very different. One important point is that Filecoin includes a mortgage and penalty mechanism, which requires higher stability. In terms of how to avoid community division in adopting EIP-1559, the Ethereum community and miners may need more discussions to reach a consensus.

Although EIP-1559 brings many benefits to Filecoin, there is one thing that still needs to be considered, that is, EIP-1559 greatly reduces the transaction income of miners. After the Filecoin network has been running for many years, without additional issuance, the block rewards will become less and less. In addition to ecological applications, whether transaction fees are needed to support it is still a question. In theory, this is still necessary. Ethereum has an additional issuance mechanism, so this problem is not serious, but Filecoin is not. Of course, that is many years later, and the community can propose new proposals to solve it according to the situation.

The adoption of EIP-1559 has improved the stability and security of Filecoin. However, when Filecoin is only doing basic proofs, the network is already in a high-load operation state. How can we talk about data transactions, real data storage and retrieval? How can we talk about ecological applications? The problem of low TPS has been mentioned many times in the community. So how to increase TPS? One thing that must be done is to reduce the network bandwidth consumption of storage proofs. Filecoin v1.5.0 is the first step to solve this problem: moving the verification of space-time proofs off-chain.

This is another bold innovation of Filecoin. Assuming that most miners are rational miners, the chain security is guaranteed through a reporting mechanism, rather than full network verification. This mechanism has been used in Filecoin, that is, the destruction verification of the consensus mechanism. This time it is proof verification, which is once again a precedent in the blockchain world. Why is this feasible? There are some reasons:

1. Filecoin’s proofs are not transactions and do not directly involve the flow of funds between users; therefore, late detection of false information will not have a direct security impact

2. Strict reward and punishment measures are used to ensure that the cost of dishonest submission of proofs by miners is extremely high, so that miners are unwilling or dare not submit false proofs, thus ensuring network security.

3. There will always be someone to verify off-chain to ensure that no proof is missed

Protocol Labs has promised that they will run at least one node for off-chain verification to ensure that dishonest proofs are discovered as soon as possible; miners in the community have also stated that they will verify every proof-of-spacetime message.

However, there is still a problem here. In a blockchain world, an ideal design should not rely on individual or organizational commitments, but on mechanisms, interest-driven, and incentive-compatible. If the miners who run off-chain verification do not benefit as much as the cost, then the motivation is insufficient. Under the current circumstances, it cannot be proved that the amount of rewards currently designed is attractive enough to carry out long-term verification. In a completely decentralized world, the effect will be greatly reduced. This is still a topic worth studying. But we believe that before a more perfect mechanism appears, even if it is driven by interests, there must be some people in the ecosystem who will verify to ensure the health and security of the chain, thereby protecting the value of the chain.

The upgrade of Filecoin v1.5.0 has greatly reduced the Gas consumption of wdPoSt, but this part does not account for a large proportion of the Gas consumption of the entire chain. Therefore, the improvement of network TPS is limited. Roughly estimated, the optimization of this part (FIP-0010) plus the optimization of HAMT/AMT data structure and access of FIP-0007 may bring about a 15% increase in the TPS of the entire network. This is not enough to reduce the current Gas BaseFee.

Fortunately, as mentioned earlier, this is only the first step to reduce the gas consumption of basic proofs. The next step is two other optimizations that everyone can look forward to:

• FIP-0008: Add PreCommit method for miners to submit batches

• FIP-0013: Add ProveCommit aggregation proof method

In particular, FIP-0013 will greatly reduce Gas consumption through aggregated proofs. According to preliminary estimates, if ProveCommit of more than 800 sectors is aggregated, the resource utilization efficiency of ProveCommit will be increased by nearly 20 times. The theoretical verification of this part has been passed, and the preliminary deduction and plan are in progress. The specific implementation and details will take some time. Please be patient.

You can imagine that if the basic proof efficiency of the Filecoin network is increased by 20 times, then considering the current computing power growth rate, the network will have a large amount of remaining bandwidth for real storage applications, and ecological development is still a top priority.

At the time of this article’s publication, BTC price: ¥305304.15 FIL price: ¥234.76