Disappointed and disillusioned with EIP 960, how it’s been received and lack of discussion into the potential effects.
Controversial and maybe emotional post here.
So pretty much as the title says, I think EIP 960 is a bad and vague suggestion and I think the way it's been handled so far has been a failure. But especially I'm disappointed with the lack of critical thinking and arguments against it.
I find it a bit unsettling that the 3 year old "clearly defined" goal and central aspect of inflation seemingly goes out the window from one day to the other without any real discussion, without really presenting models or analysis or research into the positive or negative long term effects of this, but just sort of on a whim as a result of a failed April Fools joke. Also the numbers seem completely arbitrary, if we can't make 120 million then we'll make it 144 million just because. Shouldn't more thought go into this?
I've been reading arguments presented by Vitalik and Vlad and the rest of the community, but none of them seem persuasive to me and I'm astonished that no one except for Nick seems to have thought of arguments against it.
It is of course entirely possible and maybe even likely that I'm too stupid to understand the implications or that there are some great arguments out there I haven't heard. And I sort of do hope that is the case, because otherwise to me this seems like a major step backwards, towards centralisation and oligarchy.
Anyway so the pro arguments I've heard so far seems to be:
1 – ETH will increase in value, this will attract more speculative investors and arguably this makes the chain more secure.
In reality however there's already going to be an upper limit on security and most proposed scaling models will impose just 'enough' security, so this seems like a poor argument to me.
2 – ETH becomes a better store of value, this will attract more speculative investors and now you can tell Bitcoiners ETH has a supply cap as well.
Even Vitalik used the store of value argument today at the dev meeting, but since when was this ever a goal? ETH has been branded as 'gas' since the very beginning to illustrate how it was different from Bitcoin, how it actually serves a role as a utility token on the platform for fuelling decentralised applications. So what just happened here? Is ETH supposed to be a store of value now? If not, why is this argument used?
3 – Some arbitrary ERC20 token could in theory become a better store of value than ETH.
And so what? Unless you can pay gas, deploy contracts, stake and pay rent with another token, ETH has an irreplaceable role and intrinsic value so long Ethereum is being used. If some other token manages to become a better store of value than ETH, it has to be as a result of its value in relation to an app of some special utility or mechanic it offers, something that will be decided by the free market and not something EF should concern themselves with. Unless EF wants to be the central bank and regulate the market now?
4 – Currency must be deflationary, there must be a sink reducing the supply to keep up demand and price.
This is a conclusion Vitalik arrived on in his blog in relation to other tokens, and somehow this was bridged and used as an argument for ETH supply, but given ETH has "intrinsic" value on the platform, and ERC tokens have value only in relation to a particular function/dapp, this seems like a really bad argument.
It also doesn't seem to take into consideration the increased demand as a result of Ethereum's growth. The conclusion that a currency must be deflationary in order to retain or increase its value is obviously flawed. Considering that ETH is worth $400 today and not ¢20, it clearly is possible for an inflationary currency to increase in value.
Maybe this wasn't the argument, but on the twitter comment Vitalik just pointed towards that particular blog post and stated part of the argumentation was to be found in there.
5 – Maybe because Bitmain has ASICs and in a strange way EIP 960 will limit the potential miner centralisation? This hasn't been clearly communicated, but is this also a factor in the reasoning?
These seem to be the main arguments for a hardcap I've encountered, with a clear emphasis on argument 1. What I haven't seen is any convincing arguments or models that will show a positive long term effect, that will ensure Ethereum remains decentralised and a fair market place where new actors can enter on fair terms.
So why am I in favour of keeping the inflation? It's really simple, because I believe that's more in line with the ethos of decentralisation and frankly it's more fair.
If ETH becomes deflationary you'll create a small elite of 'untouchable' holders (or hoarders) and Ethereum essentially turns into a pyramid where the first adopters become increasingly rich and wealthy fuelled by the new adopters who must contribute 1,000,000x to obtain the same share of resources. That's great for the first 20,000 – 50,000 investors, and I think a large part of the reason this suggestions receives major support, but it really sucks for the remaining 8,000,000,000 people if they want to participate.
With a controlled level of inflation, you can gradually over the years mitigate for the 'unfair' initial distribution of ETH and Ethereum can become decentralised, but without inflation there's no mechanic like this in place and wealth/power is guaranteed to remain centralised. Great if you want to maximize your personal wealth, but shit if you want to create a decentralised economy.
It was always my impression that big part of the goal of Ethereum was to enable a more fair distribution of wealth and power, by creating a more transparent and decentralised economy, but I think EIP 960 goes against that. I realise I'm outnumbered by the majority on this matter so it's pretty clear that maybe I just have it all wrong. Nonetheless I feel and think like this is hasty, like it hasn't been thought* through at all and is likely just meeting support because people perceive this as the way they personally will benefit the most economically, without really considering how it affects the long term viability of the platform.
Submitted April 06, 2018 at 03:51PM }
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