By Tobi Loba
Vitalik Buterin, the co-founder of Ethereum (ETH), has recently published an article on his official website, where he estimated Ethereum miner’s block rewards compared to the annual budget of Ethereum Foundation.
According to Buterin, the Bitcoin and Ethereum blockchain ecosystems spend far more on network security, the goal of proof of work (PoW), than they do on every other thing combined.
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Bitcoin blockchain has paid a relatively $38 million per day in block rewards to miners since the beginning of 2021, which represents about $3.1 billion to date.
That’s not all. It also includes about $5 million per day in transaction fees, which makes the rewards that have gone to Bitcoin miners so far this year stand around $3.5 billion.
Ethereum Miners’ Rewards Compared to Ethereum Foundation’s Annual Budget
On the other hand, according to Vitalik Buterin, the Ethereum blockchain has paid a relatively $19.5 million per day in block rewards to miners, including about $18 million per day in transaction fees. This implies that Ethereum miners have received a relatively $3.075 billion so far this year.
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Meanwhile, the annual budget of the Ethereum Foundation stands at relatively $30 million per year. As Buterin stated, this budget covers a variety of expenses such as paying for research, protocol development, grants, among other expenses. He added that non-EF-sourced funding exists too, but it is at most only a few times larger.
The above estimation sums up the need for Ethereum 2.0 that promises to bring scalability, in order to drastically reduce congestion caused by various DeFi and Dapps that run on the network.
Bitcoin and Ethereum Ecosystems Research and Development (R&D)
According to the Ethereum co-founder, Bitcoin ecosystem expenditures on Research and Development (R&D) are likely lower than Ethereum’s. He stated that Bitcoin ecosystem R&D is largely funded by companies with an average of 57 employees. He assumed that if fairly high salaries and many paid developers are not counted, the sum of their annual salaries will stand at $20 million per year.
Buterin thinks that the expenditure pattern illustrated above is a massive misallocation of resources.
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Vitalik Buterin noted:
“The last 20% of network hashpower provides vastly less value to the ecosystem than those same resources would if they had gone into research and core protocol development.”
He thereby suggested that the proof of work (PoW) budget be reduced by 20% and redirect the funds to other important things.
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