In the crypto world, miners are just as influential as the rich in our modern day society.
Based on data from The Block , Bitcoin miners’ income in March 2020 reached 1.734 billion U.S. dollars, hitting a new high. According to the data, about 1,5 billion came from blockchain rewards while mining fee accounted for roughly 230 million U.S. dollars.
In the same period, the income of Ethereum miners in March was US$1.341 billion. Compared with bitcoin, the distinct feature of Ethereum is that over the past two months, Ethereum miners earn as much from transaction fees as rewards.
Before the rise of DeFi, the wealth ranking list in the blockchain industry was predominantly populated by miners. This situation, however, has changed with the passage of time as the industry adjusted to new innovation. Miners still lead in the ranking but the list is also now composed of DeFi miners.
The following list illustrate the drastic changes that have taken place in the industry just within the space of two years. It is interesting to note that DeFi investment institutions account for more than half of the list.
Behind the change is the transformation of mining methods, as reflected by the rise of POW hashrate mining and DeFi liquidity mining.
Hashrate mining is the latest form of POW mining, and EHash represents one of such innovative mining projects. So what are the differences between POW hashrate mining and DeFi liquidity mining?
Guaranteed earnings
EHash mines ETH, the most valuable token in the crypto world. It is fully accepted by the market and has extremely strong liquidity. The price volatility is relatively small. And ETH is about to implement EIP1559, which will will have a huge impact on the supply of ETH.
Liquidity mining currently mines mostly new projects that have just started. The quality of the projects can be high or low, and the liquidity of the tokens mined is also worse compared with ETH. A small amount of funds can cause dramatic price fluctuations. The existence of smart pools and scientists also contribute to the phenonena of mining-withdrawing-selling. During this process, prices of many tokens fall severely, and the income of miners also decreases rapidly as well to the extent that the mining income can not cover transaction fees.
Insignificant mining fee
There is almost no loss in EHash mining, and the only expense is the ETH transaction fee that needs to be paid when receiving the mining revenue.
Although liquid mining seems to bring miners a new token type for free, it actually involves risks. The existence of impermanence loss will make miners lose their money at extreme times, especially in the second pool mining. You must hold the token to mine more of that token. Once the price of the token drops severely, not only will the mining gains see a rapid decline, but most of the liquidity you provide will be exchanged for this token. And if the token price rises quickly, you will have to continue to sell due to the limitation of the AMM model ratio. If the mining speed is not as fast as the selling speed, it may also cause a loss.
Reliable income
The income of liquid mining will change rapidly with the rise and fall of the token price, and it is difficult to judge the actual final income. In the current bull market, liquidity mining seems to be able to maintain a high rate of return, but in the bear market stage, the problem of impermanent losses will be more serious, and the mining rate of return will be very low.
EHash in a bear market will also be affected by the decline in token prices, but because EHash is tethered to ETH hashing power, there is a benchmark price, that is, the current price of hashrate. This means that if the price of EHash is lower than the price of hashrate, the arbitrageur will buy EHash to guarantee its price.
Because POW mining has certain costs such as hardware, electricity, and human expenditure, POW mining is a dynamic balancing process: when the price of ETH falls in a bear market, some miners’ income will not cover the cost and thus withdraw themselves. Therefore, the output of the advantageous miners increases, so that the income remains stable.
At the same time, the advantage of EHash is that it anchors online hashrate, so there are no problems with mining machines getting shut down, or malfunctions, etc. Its income is more stable. Due to the convenience of EHash mining, when the price of ETH rises, the price of EHash tokens will have more room for increase than mining machines and hashrate.
At present, without calculating EHash appreciation income, EHash’s annual mining income is close to 40%. This income is stable and there is more potential: in the bull market, the mining income of EHash will most likely be higher than 40%, and the risk will not increase.
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