This week’s top story — ETH Constantinople – Circle Research – Medium
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Ethereum’s next major update (Constantinople) will occur via a hard fork at block 7,080,000, estimated to take place on Jan 16, 2019. Constantinople is step two of the Metropolis phase, with step one, Byzantium, taking place in 2017. Constantinople is an anticipated Ethereum upgrade and part of the regular maintenance of the network. Thus, it is not expected to result in two chains, though it is difficult to predict what will happen at the time of the upgrade.
Constantinople includes five updates (EIPs) that mainly aim to optimize performance. The hard fork was originally slated to take place at the end of Nov 2018, but was delayed due to technical problems in the testnet phase. The five EIPs to be implemented are as follows:
- EIP-145: This proposal plans to make information processing (bitwise shifting) on Ethereum more efficient to optimize gas costs.
- EIP-1014: This proposal was created by Vitalik Buterin to move one step closer to state channels (like Lightning Network on Bitcoin) and their off chain transactions. Technical terms: introduce CREATE2 opcode for state channels.
- EIP-1052: This opcode (EXTCODEHASH) aims to optimize contract code verification.
- EIP-1283: This introduces gas metering (to the SSTORE opcode) to improve the cost/complexity of contract storage.
- EIP-1234: This delays the difficulty bomb by 12 months and reduces block reward from 3 to 2 ETH per block. This is likely the most contentious piece of the upgrade.
Digging into EIP-1234
The reward is being reduced in response to the delay of Proof-of-Stake (aka Casper) and Ethereum’s high inflation rate (6.2%), which has pushed its supply over 100 million. The update, which reduces block rewards from 3 to 2 ETH, is expected to reduce inflation to 4.5% (and thus reduce dilution). The argument against reducing the block reward has been that miners could leave because their revenues will fall (unless the price of ETH rises to offset the decline in block rewards). If miners leave (hash rate falls), the network would be less secure.
The difficulty bomb is an update where the difficulty would become so high that it would be impossible (and unprofitable) to mine blocks. The intention of the difficulty bomb was to motivate the Ethereum community to transition to PoS more quickly. If the difficulty bomb was implemented too far in advance of the switch to PoS, Ethereum would enter an “ice age” where the difficulty would be too high, preventing transactions from being processed and making the blockchain unusable.
According to this thread, the reward reduction and difficulty bomb delay were likely bundled into a single EIP to increase the chances of its success as one component (reward reduction) is not in the interest of miners and the other component (difficulty bomb delay), is in the interest of miners. A key reason that the chain is unlikely to split in two is that there is no incentive for miners to stay on the current chain with a difficulty bomb programmed in.
Additional Ethereum hard forks
Ethereum Classic Vision or ETCV (Jan 11): ETCV claims that it maintains true decentralization like ETC, while implementing performance and scalability upgrades like PoS and sharding faster than ETH. ETCV also proposes no reduction in block rewards, intended to win over Ethereum miners. However, it is unclear how ETCV intends to realize these and other goals, and who the team behind ETCV is.
Ethereum Nowa (Jan 12): According to the Ethereum Nowa website, the changes vs Ethereum include faster transition to PoS and scaling to 20,000 transactions per second, though no timeline is given. Ethereum Nowa initially detailed the team behind the project, but it was later discovered that pictures of the individuals on the team were stock photos. Nowa has since taken down the Team section on its website.
The legitimacy of the claims made by these hard forks is vague and questionable, and thus far, most exchanges have not announced support for them. This could change if either of the chains get sufficient traction/turn out to be legitimate.
Read the full weekly crypto recap here.