Ethereum Improvement Proposal (EIP) 1776 has just been proposed, with a governance vote set to take place next week.
If the vote goes in favor of EIP 1766, it would represent the single most important change to Ethereum’s policy since the range of updates constituting Ethereum 2.0 was voted in.
So what is EIP1776?
Following on from the Luna Foundation Guard’s recent buying spree, EIP 1776 would see the Ethereum Foundation begin building its own Bitcoin Reserve to back ETH, with ambitions to amass $12 billion in BTC in a series of $130m increments.
Should the reserve be achieved, this would allow Ethereum to introduce another Improvement Proposal, which would see the burn rate (first introduced with EIP1559) dramatically increased, which would see ETH become truly deflationary faster than otherwise expected.
Even more importantly, a Bitcoin Reserve could mitigate against a possible sell-off when ETH 2.0 staking unlocks. As stated in the proposal, in the case of wide-scale selling, the Ethereum Foundation would be able to sell a portion of the Bitcoin Reserve to buy back ETH and stave off prevent a cascade-like event, not unlike what we’ve been seeing in the Luna Foundation Guard, whose Bitcoin Reserve is intended to ensure UST maintains its peg.
EIP 1776 has been met with fierce criticism by some members of the Ethereum community account of Bitcoin’s energy-exhaustive Proof-of-Work consensus mechanism, not least in the build-up to Ethereum’s incoming merge to Proof-of-Stake, which will dramatically cut the energy demands of running the network.
Clearly, this is a huge development and one we’ll be following up on in due course. Not only does it prove that Do Kwon’s conviction continues to transform the space, but also shows a shift in the Ethereum community’s willingness to embrace change.