Ethereum core developers have agreed to reduce block rewards by a whopping 33 percent to reduce inflation rate. In a YouTube meeting held on August 31, 2018, the developers reached consensus to delay the activation of the difficulty bomb by about 1.4 years and incorporate it into the Constantinople hard fork next year.
No Ether Bomb for now
According to a Github post by the Ethereum community, the EIP 1234 which was created on July 19, 2018, and aimed at delaying the difficulty bomb for roughly one and a half year and reduce block rewards with Constantinople fork, has been accepted.
“The Casper development and switch to proof-of-stake is delayed, the Ethash proof-of-work should be feasible for miners and allow sealing new blocks every 15 seconds on average for another 12 months,” wrote the Ethereum team.
With the latest development, the block reward has been slashed from 3ETH per block to just 2ETH.
Some Ethereum enthusiasts like Eric Conner firmly believe that the move by is a welcome development as it would drastically reduce Eth inflation rate from its current 7.4 percent to about 4.7% after EIP-1234 is fully implemented.
“After reviewing community feedback, the core Ethereum developers have agreed to implement EIP-1234, which reduces block rewards to 2 (and uncle rewards proportionally) and delays the difficulty bomb. Great decision,” he tweeted , adding “In summary, a lot of unnecessary selling pressure is now out of the market and inflation is around 4.7%.”
Difficulty Bomb Explained
Just like bitcoin, ether currently uses the PoW algorithm to reward miners for generating new coins on its Blockchain.
However, the Ethereum Foundation have been considering migrating to the Proof-of-Stake algorithm which is more energy efficient and puts power into the hands of investors and users of the Ethereum blockchain.
The Ethereum development community created the “Difficulty Bomb” as part of measures to make the transition from PoW to Proof-of-Stake algorithm a smooth one.
As the name implies, the Ethereum Difficulty Bomb increases the difficulty of puzzles on the network and makes mining far less profitable for miners.
The entire scenario is to prevent some miners from continuing using the PoW algorithm, a situation that could trigger another fork in the Ethereum Blockchain.
The news seems to be having little or no effect at all on the price of ETH. At press time, the price of ethereum is at the $289 price region, with a market cap of $29.47 billion.