Developers of Ethereum (ETH), the largest altcoin by market capitalization, have published Ethereum Improvement Proposal (EIP) #1011 on Friday, April 20, to create a hybrid system of consensus that seeks to push the network away from issues associated with crypto mining.
The proposal consists of specifications for implementing the Hybrid Casper the Friendly Finality Gadget (FFG) network update, which will combine Proof-of-Work (PoW) with Proof-of-Stake (PoS) consensus, with the goal of eventually transitioning to PoS.
As the EIP documentation states, one of the parameters of the upgrade reduces the block reward for miners to 0.6 ETH from the current 3 ETH:
“The PoW block reward is reduced to 0.6 ETH/block because the security of the chain is greatly shifted from PoW difficulty to PoS finality and because rewards are now issued to both validators and miners.”
According to Ethereum News, the Casper update is “possibly the most significant” change to the network to date.
In the “Motivation” section of the proposal, Ethereum devs made it clear that the ultimate goal of the upgrade is to move the network from a PoW to a PoS system, stating:
“Transitioning the Ethereum network from PoW to PoS has been on the roadmap and in the Yellow Paper since the launch of the protocol. Although effective in coming to a decentralized consensus, PoW consumes an incredible amount of energy, has no economic finality, and has no effective strategy in resisting cartels. Excessive energy consumption, issues with equal access to mining hardware, mining pool centralization, and an emerging market of ASICs each provide a distinct motivation to make the transition as soon as possible.”