Machi Big Brother’s new transaction mining token (ETHcoin) caused Ethereum’s gas spikes

Ethereum gas prices spiked in the past day, breaking out of the usual range. The spike was due to the launch of a new token by Jeffrey Huang, also known as Machi Big Brother. 

Machi Big Brother is reviving an old form of token launching, transaction mining. The new asset led to a brief spike in Ethereum’s gas price.

Briefly, the ETHcoin contract became the number one gas burner, helping bring exposure to the project. ETHcoin (ETHC) is produced in exchange for small ETH payments. In addition to the transactions, there is a lottery principle where competitors aim to be chosen as the next block builder.

The token launched at a time when Ethereum’s future is up in the air, either as a high-cost chain or as a low-fee utility layer. For Machi Big Brother, the recent spike in usage was positive news for Ethereum. 

We are single-handedly saving Ethereum @ethcoinorg pic.twitter.com/SQtWJxiHxl

— Machi Big Brother (@machibigbrother) October 24, 2024

ETHcoin uses a principle of transaction mining, where with each block, more of the new asset will be produced. New users pay ETH to mine ETHC, leading to the spike in activity. 

ETHcoin uses a gamified simulation of mining

ETHC aims to build its popularity through social media engagement. However, the smart contract is no longer the most active on Ethereum just a day after its launch.

Still, Machi Big Brother seems dedicated to the project and is one of the prominent miners on the leaderboard. His address has produced more than 20% of total blocks, along with other miners with high-profile ENS handles.

The clustering of miners also led to suggestions that ETHcoin has been taken over by a cabal and retail miners will become exit liquidity and eventually lose their investment.

ETHcoin has produced a bit above 1,000 blocks, with most going to a few prominent miners. After the initial hype, only 21 miners remain. In each block, the miners bet a small amount of ETH and the winner takes 200 newly minted ETHcoin. 

ETHcoin is also relatively inefficient. Potential miners only injected 17 ETH to produce blocks but generated 147 ETH in fees, which went to validators. The project itself is in its very early stages and questions about its viability have already grown. 

ETHcoin trades as ETHC with limited liquidity on Uniswap V3. ETHC is at $0.81 after an initial stage of price discovery, though its liquidity is just $83K. The token is still valued at a total of $141K for its fully diluted value.

In the coming days, the supply of ETHC will increase significantly, possibly leading to more price pressure. Overall, early miners spent more ETH on the asset than its entire market capitalization days after the launch.

ETHcoin sparks criticism of being a money grab

ETHcoin launched on Ethereum, modeling a similar token on Blast. The big difference is that Blast gas fees are redeemable. On Ethereum, all the ETH spent on gas is non-refundable, and a total loss to buyers. 

Additionally, the ETH paid into the “mining contract” is accrued by Machi Big Brother. He has claimed the asset is a fair launch, and that initially, he could not even produce one ETHcoin block. However, a few hours later, Machi Big Brother was producing more than 20% of the coin’s blocks, reaping the rewards. 

Presumably, the ETH paid to mine the asset will be returned to the community, but it is actually controlled by a handful of early adopters. Machi Big Brother was among the earliest to promote ETHcoin on social media, just minutes after its smart contract launched.

Additionally, on-chain analysts discovered an Ethereum wallet that may belong to Machi Big Brother posting ongoing ETHcoin mining activity. 

Machi Big Brother compared ETHcoin to early Bitcoin mining, as ETHcoin will also be limited to 21M.

Machi Big Brother took an approach similar to meme token promotion, urging the community not to sell, but instead hold for the long term. ETHcoin launches at a time when meme tokens are still gaining the most attention and may require a much smaller initial investment. 

ETHcoin has only produced 10,200 new tokens, with only 492 holders. At this stage, the asset lags behind memes in terms of adoption. The new token may be promoted to the Blur and Blast communities, as well as to BAYC and MAYC holders, similar to other projects linked to Machi Big Brother.