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What is Ethereum’s Uncle Rate and Why Does It Matter?

What is Ethereum’s Uncle Rate and Why Does It Matter?

When the Ethereum network begins to feel a bit congested, it’s not uncommon to see terms like gas limit and uncle rate thrown around. They appear in discussions centered around raising Ethereum’s block gas limit per block (not to be confused with the gas limit you set when sending a transaction). This limit restricts the total gas which can be spent by the transactions contained within each block. Miners collectively have the ability to increase or decrease Ethereum’s block gas limit within a certain range. And theoretically, raising the limit enables the Ethereum network to process more transactions per second.

You may be asking yourself: why don’t the miners just keep cranking up the gas limit? That’s where the uncle rate comes in. Ethereum’s uncle rate, or rather the rate at which uncle blocks occur, plays a big role in the discussion whether the gas limit can or should be adjusted. However, in order to understand the importance of the uncle rate, let’s define what an uncle block is.

What’s an uncle block?

Each block in a blockchain is formed from the one before it, also known as its parent block. When multiple blocks are produced from the same parent, only one becomes part of the blockchain permanently. The other block produced but not included is known as a stale block.

Due to Ethereum’s shorter block times, stale blocks can occur more often. And so, Ethereum is designed to reward miners for producing blocks even if they don’t quite make it into the blockchain. Stale blocks can be included into the chain as an uncle block or ommer block, the gender-neutral term.

An uncle block is defined as “a child of a parent of a parent of a block that is not the parent, or more generally a child of an ancestor that is not itself an ancestor.” In other words, a block produced from the “grandparent” of the current block that is that not the current block’s parent.

Ethereum rewards miners with a small block reward for producing uncle blocks in an effort to combat centralization. Uncle block rewards make mining on lesser hardware or mining outside of the largest mining pools more cost effective.

Why does Ethereum’s uncle rate matter?

Say the miners choose to increase Ethereum’s gas limit. A higher gas limit means more transactions per block. More transactions means more data which means larger block sizes and a larger blockchain state which needs to be stored by miners and nodes.

Overall, a higher gas limit means it costs more resources to run a node. This can reduce the total number of nodes on the Ethereum network. Furthermore, potentially less nodes and larger blocks can affect how fast blocks spread throughout the network. Do you see where this is going?

Stale blocks occur more often if nodes spread blocks slower than they are produced by large mining pools, leading to a higher rate of uncle blocks. All these factors combined gives the Ethereum community a sense of how well the network is handling the load we’re putting on it. If the uncle rate is low and congestion is high, it might be time to consider increasing the gas limit. If the uncle rate is skyrocketing and nodes are falling off the network, the gas limit may be too high, affecting the security of the network.

Although, recent research into faster block propagation technology may change things. Routing blocks through the Ethereum network faster could allow for larger blocks without higher uncle rates.

Join us in our Discord to discuss the latest increase to Ethereum’s gas limit and how it will affect the uncle rate.

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