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Why do we need EGL?
The gas limit effectively controls the block size and thus the number of transactions Ethereum can process (i.e. tps). When demand for limited block space increases, the cost to use Ethereum (i.e. gas fees) spikes as users outbid each other to fit inside of the block.
The gas limit is set by Ethereum miners, not Ethereum developers or users. EGL is a coordination token to enable the community to voice their collective desired gas limit and to reward Ethereum miners for listening to EGL holders.
What exactly is the gas limit and why does it matter?
"Gas" reflects the computational power required to run a given transaction. More complex transactions require more gas and simpler transactions require less gas. In Ethereum there is no "block size" (e.g. 1MB in BTC), but rather a "gas limit" - a maximum amount of gas that a block can contain. Thus, the number of transactions included in a block is determined by the sum of all the "gas" that the transactions use. A higher gas limit typically means a block can include more transactions and a smaller one means fewer transactions.
The "gas limit" influences the throughput of Ethereum, often measured as transactions per second (tps).
Who currently controls the gas limit?
Miners (pools) control the gas limit, setting it with each block they produce. A miner can produce a block with a gas limit +/- .1% from the previous block, moving the needle higher or lower by increments. Sometimes mining pools privately agree to change the target gas limit, acting as a cartel, and that's when you'll see the gas limit experience significant swings.
What is the current gas limit?
The gas limit is currently ~15M, up from 10M last year. You can follow the gas limit's movement here.
Is there a "right" gas limit?
There is no "right" gas limit -- it is a moving target as Ethereum evolves and hardware becomes more efficient. However, since the gas limit does have downstream effects, there are certainly numbers that produce more desirable outcomes. EGL allows the community and miners to discover through gradual movements more optimal gas limits. Getting closer to an optimal limit requires the granular knowledge of core devs, which is why we've elevated their voices with EGL.
Can EGL be used for other things?
Yes! While EGL initially is used to express a desired gas limit, it could be used to solve other coordination issues such as rewarding miners for ordering a block based on specific criteria (MEV).
What happens when ETH 2.0 comes?
“The Merge” is the first step in transitioning ETH to PoS, confirming ETH blocks in the ETH2 consensus. This is huge for ETH, but does not mitigate the gas limit issue. Validators will now increase/decrease the gas limit, just like miners are currently doing. Furthermore, the burden to figure out the “right” gas limit will now shift from the centralized mining pools to (hopefully) more decentralized validator operators, increasing the need for a coordination tool such as EGL.
There are concerns about state size. What does this mean?
The state refers to all the blocks in the Ethereum blockchain to date, and the transactions within those blocks. As the number of transactions on ETH grows, so does the state, and thus the speed at which transactions are added influences the speed at which the state size grows. Concerns about state size refer to concerns about a growing history that is so large an average user cannot download it in a reasonable amount of time. Fortunately, this is a solved problem. Ethereum has introduced the concepts of "stateless" clients and state expriry.
As Vitalik explains "Statelessness allows for a class of nodes that verify the chain without maintaining permanent storage. State expiry pushes out state that has not been recently accessed, forcing users to manually provide proofs to renew it. Both of these paths have been worked at for a long time, and proof-of-concept implementation on statelessness has already started. These two improvements combined can greatly alleviate these concerns and open up room for a significant gas limit increase."
How does EGL interact with EIP-1559?
EIP-1559 doesn’t solve “high fees.” EGL actually provides a missing piece to EIP-1559: an incentive for pools to adjust the gas limit as long as it’s safe.
EIP-1559 changes how gas fees are paid to miners. Specifically, with EIP-1559 users will pay a base fee + tip where the base fee will be burned (i.e. the miner does not get it) and the tip is paid to miners when congestion is high to incentivize inclusion. As most people know, EIP-1559 doesn’t solve this whole “fees are high” thing. It does make fees more predictable and works better than the first price auction (FPA). However, when many people try to send their Txs and the capacity is limited, the most valuable Tx will outbid the less valuable (i.e. pay a higher fee). The EGL community helps to collectively signal what capacity (gas limit) they think is right. More importantly, EIP-1559 completely removes the incentive for pools to increase the gas limit, even if everyone agrees it is completely safe. Why should they? Producing larger blocks would only increase their risk of uncle blocks, but would hardly increase their revenues (since fees are burned).
We realized that EGL might be the perfect bridge to smooth the transition to EIP-1559. EGL aims to reward pools substantially, potentially similarly to their expected revenues from fees, thus it might allow for pools to maintain their expected revenues while benefitting users with EIP-1559's superior monetary policy and fee predictability.
EIP-1559 & EGL ❤️
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Which wallets work with egl.vote?
At this time only MetaMask works.
Are gas limit and block size directly related?
Block size and gas requirement tend to be directionally related, but this is not a one to one relationship. Two different block sizes could have the same gas requirement. This is because gas refers to the computational complexity of the code and size refers to the amount of bytes of data a transaction contains.
What are mining pools are who comprises them?
Mining pools are made up of miners who run the hardware to win the block reward, and an administrator who organizes and runs the pool. One's probability of winning is directly related to how much computational power they have. It's pretty intensive right now to win, so a single miner might win once every 2-3 years! Winning is big but you have bills to pay in the meantime. Thus, miners mine in groups - called pools - to smooth out their earnings. Pools are run by mining pool admins who take each transaction and build the block. About 4 mining pools control 70% of the hash. Mining pools collect about 1% on the block reward + fees and pass on the rest to underlying miners who contribute hash power.
How does Layer-2 affect EGL?
Layer-2 solutions such as optimistic rollups, side channels, or even off-chain DEXes use layer-1 as an anchor of trust rather than a generalized state machine which processes everything. However, all of these solutions are only safe under the assumption that any fraud proof can be easily sent on chain — i.e. maintain the anchor of trust. Thus, their success is intrinsically tied to the ability of a blockchain to continually process transactions without congestion and as such are limited by the scalability bottleneck, i.e. on-chain transaction throughput.
Will the smart contracts be audited?
Yes, the contracts will be audited by Halborn.