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The cryptocurrency ether runs on the Ethereum network. Dado Ruvic/Reuters

Ethereum developers have defended the changes to the network that will come in the summer.

They said the alterations are very popular with users, as they make fees simpler and limit ether supply.

But miners remain disgruntled that their fees will be cut, with debate in the community ongoing.

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Developers on the Ethereum network have defended major changes that are set for the summer that will destroy ether tokens and cut the fees paid to miners, saying they’re popular with users and could boost the cryptocurrency’s price.

The planned alteration to the network, known in crypto jargon as EIP-1559, “is very popular among Ethereum users as it potentially makes Ethereum a deflationary asset,” Ben Edgington, a developer at ConsenSys, a company closely involved in the network, said on Tuesday.

Ethereum developers approved significant changes to the network that runs the ether cryptocurrency earlier in March. They are set to overhaul the current system under which users send tokens to miners to pay for transactions to be completed in a kind of auction process.

The changes have sparked anger among miners, however, as they would reduce the fees they receive. Some have even proposed a form of strike.

Yet developers say users support the changes, partly because the reduction in coins could lead to the price of ether rising sharply. Ether traded at around $1,800 on Wednesday. The token has gained around 145% so far this year.

Dan Finlay, lead developer on popular Ethereum wallet MetaMask, said: “Its purpose is to provide a more predictable transaction pricing system that reduces overpayment, and has some deflationary economics as a side benefit.”

Under the changes, which will likely come into force in July, users will send a base transaction fee to the network that would then destroy or “burn” ether tokens, thereby reducing the number of coins in circulation.

It will move the system away from the current mechanism, in which users have to bid to have their transactions included in blocks by miners, which can make fees very costly at times.

Edgington said these issues are “a significant problem for the usability of Ethereum and a barrier to the broader adoption of Ethereum by non-specialists.”

Lex Sokolin, co-head of fintech at ConsenSys, said the changes will take the network fees “from having an unpredictable and unbounded pricing mechanism to something that is much more predictable.”

The anonymous founder of Pylon, a major North American ether miner, said there was a lot of “turmoil” in the Ethereum world. They said miners had spent time and money building facilities, and now could be faced with heavy losses due to the changes.

“It goes back to the point [that] developers don’t mine, so they could care less about a miner, and miners don’t develop, so they could care less about reducing the congestion,” they said.

Some ether miners threatened to effectively go on strike, or try to disrupt the system in other ways in protest at the changes.

But there are signs of peace breaking out, with miners proposing their own EIP - which stands for Ethereum improvement proposal - that would raise their rewards and gradually lower them.

Yes, Front-Running Will Still Exist on Ethereum 2.0

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Maximal extractable value (MEV) is quickly becoming a buzzword among Ethereum developers and traders alike, given the recent rise of decentralized finance (DeFi).

Congruently, the finish line for Ethereum 2.0’s consensus mechanism swap is within sight. Colloquially called “The Merge,” mining on Ethereum is likely to fall by the wayside within the next year or so in favor of staking. Doing so opens up a host of questions, particularly for those completing complex trades on Ethereum.

While GPU mining is likely to go away, MEV most likely won’t, according to a new report from research group Flashbots. Also called “miner” extractable value, MEV is crypto’s version of Wall Street front-running. Yes, that’s the same front-running strategy that brought a Massachusetts day trader to testify before Congress for his role in shorting big name hedge funds into the ground.

MEV, front-running and the race to be first

On a more technical level, MEV is all about transaction sequencing: who gets to be first in line to settle a transaction on-chain. Being first increases the odds of netting a profit on an arbitrage trade across various DeFi markets. And traders are willing to pay handsomely to be first in line by bidding up gas fees. Indeed, Flashbots data site shows some $40 million in MEV-based extracted value, when transaction fees are included.

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As Flashbots states, under the current schematics Eth 1.x clients will still be in charge of ordering transactions, similarly to how miners order transactions using Eth 1.x software. The Beacon Chain will only finalize these transactions by attesting and validating them via its staking network. Flashbots does state that validators, who act as block proposers, will eventually be capable of extracting MEV from traders as the final arbiter of a transaction.

That simple explanation leaves out a lot of open questions, however. The Beacon Chain processes transactions over a period of time called an “epoch,” which is divided into slots for nestling transactions. Epochs run about 6.4 minutes long and block proposers are given their positions ahead of time.

Searchers – those who look for MEV opportunities – could have a longer time to find profitable trades, given the heads-up block proposers have compared to the current Ethpow blockchain. So, it’s possible the race to outbid other traders becomes more crowded on Eth 2.0 than Ethpow.

Overall, MEV will work nearly the same as it does on Eth 2.0: The more technically inclined remain at an advantage over all others.

Pulse check: How Zelda, our Ethereum validator, is doing this week

(As of 3/30/2021 @ 21:05 UTC) Source: CoinDesk Data Dashboard and beaconcha.in

If you’re new to “Valid Points” and the topic of Ethereum 2.0 in general, be sure to check out our 101 explainer on Eth 2.0 metrics to get up to speed about terminology used throughout this newsletter.

Zelda – CoinDesk’s very own Eth 2.0 validator node – continues to cook up attestations.

Per Beaconcha.in, Zelda is nearing 8,000 attestations of the Beacon Chain. One day these attestations will secure value on the Beacon Chain, but for now they merely signal agreement on a block being finalized with other validators.

Sadly, Zelda has not been chosen in the past week to propose a block. So far, our little validator has proposed only two blocks in return for 0.2354 ETH, worth $433 at time of writing.

Let’s do a little napkin math for CoinDesk to break even. At a current rate of proposing one block per 20 days, CoinDesk needs about 271 block propositions, or 5,437 days, to make back on our initial ether investment.

Of course, those numbers are bound to change as validators join the network – and that’s assuming no malfeasance on Zelda’s part. This quick calculation also doesn’t include attestation rewards which Zelda is also reaping. As a reminder, all profits from Zelda will be donated to charity.

Validated takes

Ethereum Blockspace: Who Gets What and Why (Research, Anicca Research)

Staked Introduces Eth 2.0 Trust for Accredited Investors (Article, CoinDesk)

The Most Important Scarce Resource is Legitimacy (Blog Post, Vitalik Buterin)

Visa Settles USDC Transaction on Ethereum, Plans Rollout to Partners (Article, CoinDesk)

Venture-Backed Ethereum Project Optimism Delays Launch (Article, CoinDesk)

Factoid of the week

Open comms

Feel free to reply any time and email research@coindesk.com with your thoughts, comments or queries about today’s newsletter. Between reads, chat with us on Twitter.

Valid Points incorporates information and data directly from CoinDesk’s own Eth 2.0 validator node in weekly analysis. All profits made from this staking venture will be donated to a charity of our choosing once transfers are enabled on the network. For a full overview of the project, check out our announcement post.

You can verify the activity of the CoinDesk Eth 2.0 validator in real time through our public validator key, which is:

0xad7fef3b2350d220de3ae360c70d7f488926b6117e5f785a8995487c46d323ddad0f574fdcc50eeefec34ed9d2039ecb.

3 Reasons Ethereum Is About to Skyrocket

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GlobeNewswire

TORONTO, March 31, 2021 (GLOBE NEWSWIRE) – G2 Goldfields Inc. (“G2” or the “Company”) (TSXV:GTWO; OTCQX:GUYGF) is pleased to announce that it has received a final order from the Ontario Superior Court of Justice approving the previously announced proposed spin-out of the Company’s Sandy Lake property (the “Sandy Lake Project”) into a wholly-owned subsidiary of G2, S2 Minerals Inc. (“S2”), by a Plan of Arrangement under the Canada Business Corporations Act (the “Arrangement”). Pursuant to the Arrangement, G2 will spin-out all of the common shares of S2 (the “S2 Shares”) it receives under the Arrangement to G2 shareholders on a pro rata basis, such that G2 shareholders will receive one S2 Share for every ten common shares of G2 (the “G2 Shares”) held as of the Effective Date (as defined below), subject to the “due bills” trading procedure of the TSX Venture Exchange (the “TSXV”). S2 will also issue rights (“S2 Rights”) to the holders of the S2 Shares to raise gross proceeds of approximately C$1.2 million (the “Rights Offering”). The G2 Shares are and will continue to be listed and posted for trading on the TSXV upon closing of the Arrangement, which is expected to occur on April 9, 2021 (the “Effective Date”). The “record date” for the “due bills” trading procedure and the Rights Offering is the Effective Date (i.e. April 9, 2021). The TSXV has advised that the G2 Shares are expected to commence trading on a “due bill” basis effective from the opening of markets on April 8, 2021 until and including April 14, 2021. Trades of G2 Shares during this time will have a due bill attached, which will allow the purchaser of G2 Shares, rather than the seller of G2 Shares, to receive the distribution of S2 Shares (and S2 Rights) pursuant to the Arrangement even if such trades are settled after the Effective Date. It is expected that effective at the opening of markets on April 15, 2021, the G2 Shares will commence trading on an ex-distribution basis without any due bill entitlement reflecting that the distribution of S2 Shares (and S2 Rights) has occurred. The due bill payment date is expected to be April 14, 2021. Additional details of the Arrangement, including the Rights Offering, are more fully described in the management information circular (the “Arrangement Circular”) that was mailed to all G2 Shareholders of record as of February 15, 2021 and the Company’s news release dated March 24, 2021. The Arrangement Circular and news release are available under G2’s profile on SEDAR at www.sedar.com. The Company has applied for a listing of the S2 Shares on the Canadian Securities Exchange (the “CSE”). Any such listing will be subject to S2 fulfilling all of the requirements of the CSE. G2 expects the S2 Shares to commence trading on the CSE after the expiry of the S2 Rights and will provide further guidance at a later date on the timing for any listing of the S2 Shares on the CSE. Neither the S2 Shares nor the S2 Rights being offered nor the S2 Shares issuable on exercise of the S2 Rights have been or will be registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”), or any state securities laws and may not be exercised, offered or sold, as applicable, in the United States or to, or for the account or benefit of, a person in the United States or a U.S. Person (as defined in Regulation S under the U.S. Securities Act) absent registration or an applicable exemption from the registration requirements. This news release shall not constitute an offer to sell or the solicitation of an offer to buy any securities of S2 or G2. There shall be no offer or sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification of such securities under the laws of any such jurisdiction. About G2 Goldfields Inc. G2 Goldfields Inc. is focused on the discovery of large gold deposits in the Guiana Shield. The Company owns a 100% interest in two past gold producing mines, as well as a regional portfolio of highly prospective projects. About S2 Minerals Inc. S2 Minerals Inc. is currently a wholly owned subsidiary of G2 Goldfields Inc. and party to the arrangement agreement with G2 pursuant to which G2 proposes to spin-out its Sandy Lake project in Canada. The Sandy Lake project comprises approximately 167,000 acres of contiguous mineral claims in the Sandy Lake Archean Greenstone Belt, located approximately 140 miles north of Red Lake, Ontario. Upon completion of the Arrangement, S2 will beneficially hold a 100% interest in the mineral rights to approximately 137,000 acres, a 50.1% interest in the approximately 15,000 acres of the “Weebigee Joint Venture” claims and a 50% interest in a further 15,000 acres of the Southern Block claims in joint ventures with Goldeye Explorations Limited, now part of Treasury Metals Inc. It is expected that over time, S2 may add new Canadian-focused exploration stage projects to its portfolio. All scientific and technical information in this news release has been prepared under the supervision of Dan Noone (CEO of G2 Goldfields Inc.), a “qualified person” within the meaning of National Instrument 43-101. Mr. Noone (B.Sc. Geology, MBA) is a Member of the Australian Institute of Geoscientists. For further information please contact: Dan Noone CEO +1.416.628.5904 Email: d.noone@g2goldfields.com Forward-Looking Statements This news release contains certain forward-looking statements, including, but not limited to, statements with respect to the Arrangement, including the Rights Offering, the expected Effective Date, the “due bills” trading dates and the listing of the S2 Shares on the CSE. Wherever possible, words such as “may”, “will”, “should”, “could”, “expect”, “plan”, “intend”, “anticipate”, “believe”, “estimate”, “predict” or “potential” or the negative or other variations of these words, or similar words or phrases, have been used to identify these forward-looking statements. These statements reflect management’s current beliefs and are based on information currently available to management as at the date hereof. Forward-looking statements involve significant risk, uncertainties and assumptions. Many factors could cause actual results, performance or achievements to differ materially from the results discussed or implied in the forward-looking statements. These factors should be considered carefully and readers should not place undue reliance on the forward-looking statements. Although the forward-looking statements contained in this news release are based upon what management believes to be reasonable assumptions, the Company cannot assure readers that actual results will be consistent with these forward-looking statements. The Company assumes no obligation to update or revise them to reflect new events or circumstances, except as required by law. Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.