FairETH — The Case for a Non-Profit Ethereum Mining Pool
With EIP-1559, Ethereum will take the first step towards finally making gas fees more affordable, but it will only do so much. Since users can still include a tip on top of their base transaction fee, this will likely start yet another bidding war for getting a fast inclusion in the next blocks. On top of that, miner extractable value will become a growing problem.
Already, there has been widespread opposition against EIP-1559 from large commercial mining pools. After all, a large part of the total block rewards (including transaction fees) will suddenly disappear once the EIP goes live. There clearly is a conflict of interest between miners and the wider Ethereum community. I believe that we can solve these problems by launching an independent non-profit mining pool.
The mining pool (I will tentatively call it FairETH for now) would not allow miners to accept tips. Instead, all tips will be deducted from the distributed block rewards and will be used for the pool’s own upkeep. This would allow FairETH to distribute the fixed block rewards at a reduced pool fee or even no fee at all. Since FairETH operates on a strict non-profit basis, any excess income the pool generates must be distributed to the community somehow, for example, by supporting infrastructure projects, charitable donations, or token (see below) buybacks.
The result would be that neither FairETH nor any of the independent miners on the pool have an incentive to oppose important and sensible improvements to the Ethereum protocol that would lead to lower gas fees. Furthermore, miners on FairETH do not have an incentive to order transactions by the tip amount. In effect, FairETH could give a higher priority to older transactions in the mempool, which in turn reduces the burden of having to pay excessive tips on top of the base fee, just for the chance of seeing a transaction being executed in a reasonable amount of time.
Instead of distributing the gas fees to miners, FairETH could furthermore distribute its own governance tokens, based on the amount of ETH each miner would have received through the gas fees. These tokens can then be used to vote on proposals for FairETH, such as changes to transaction ordering or how to distribute the pool’s excess income not needed for upkeep.
The result would be a fair and democratic mining pool that has a dampening effect on Ethereum’s gas fees, with the opportunity to truly be a benefit to the whole Ethereum community instead of trying to extract as much value as possible out of users. Independent miners of the world unite!
