Gauging Community Expectations and Developer Readiness as Ethereum’s Constantinople Launch Date Approaches
Difficulty bomb delay, mining reward decrease, ETH price change — What else is to be expected by the community ahead of the Constantinople fork?
The next attempt to implement the Ethereum (ETH) hard fork is expected to come in the interval from Jan. 14 to Jan. 18 — or according to Afri Schoedon, the release manager for the Parity Ethereum client, Jan. 16. At that point, the 7,080,000 block will be extracted, and the Constantinople upgrade will be activated.
all-core-devs call: constantinople upgrade for ethereum mainnet activation suggested for 16th of january 2019, block number to be confirmed on black friday in a fortnight— Afri 🌩️ Jan 16 (@5chdn) November 9, 2018
To be on the safe side, the Ethereum Foundation also added an emergency switch that will delay the activation of Constantinople in case something goes wrong. Initially, the hard fork was planned for November 2018 but was postponed after Ethereum clients failed to reach a consensus during the launch, as reported by Cointelegraph on Oct. 15. While Ethereum developers are going over the final details, investors, miners and decentralized application (DApps) operators are discussing the fork’s pros and cons, and analysts are forecasting Ether’s price change.
Once again about Constantinople
Originally planned for November, the Constantinople hard fork contains a number of changes and code optimizations designed to turn the current Byzantium into a more progressive Constantinople. Most of the improvements are aimed at reducing the costs of work or simplifying the process of creating DApps. In particular, they include a 12-month delay of the so-called “difficulty bomb,” which contributes to timely upgrades, and also suggests a decrease in the mining reward from 3 to 2 ETH for each mined block. Such changes are provided by the roadmap and are necessary for the gradual transition of the network to a proof-of-stake (PoS) algorithm and further improvement of scaling.
What turns Byzantium into Constantinople is five major Ethereum improvement proposals (EIPs), which are needed to soften the transition from the current proof-of-work (PoW) algorithm to the more energy-efficient PoS algorithm.
In particular, the EIP 145 proposal will allow DApp developers to optimize particular operations, which will allow the reduction of gas costs necessary for work. EIP 1014 will provide an opportunity to interact with addresses that have not yet been initialized on the blockchain, EIP 1052 introduces new operational codes for generating address hashes. EIP 1283 includes new features that will also reduce gas costs, and EIP 1234 will delay the “difficulty bomb” for 12 months and will reduce mining rewards.
In the future, the transition to a pure PoS (the Casper upgrade) will be made as part of the next phase of improvements to the Serenity code. Once the innovations are implemented, large holders of the third-largest cryptocurrency will join miners in the process of transaction validation. Such a scheme will reduce the likelihood of a 51 percent attack and increase the network’s security, since such validators can lose investments in case of abuse. To make the network more technically stable, the size of the mining block reward will be reduced from 3 ETH to 2 ETH, and the announced launch of the so-called "difficulty bomb," which will gradually complicate the extraction of Ether and make it unprofitable (“Ice Age”), will be postponed for a year.
The difficulty bomb is a gradual increase in the complexity of cryptocurrency mining, which makes mining unprofitable for the miners. This is necessary when switching from PoW to PoS.
The PoS consensus algorithm, in addition to improved security, will bring cheaper transactions and faster production of new blocks. Sharding will also become possible, which, together with the additional solutions of second layers like Plasma and Raiden, is supposed to significantly increase Ethereum’s scalability.
The concept of sharding can be represented as the work of a client of torrents. The blockchain breaks up nodes and transactions into smaller independent components called shards and each has its own transaction history log that processes only its own transactions, thereby taking a load off of the network.
Scalability has been Ethereum's Achilles' heel, and after the implementation of these solutions, it will be hypothetically increased by thousands of times, which will make the platform suitable for widespread commercial use.
9. Blockchains of the future with proof of stake and sharding will be thousands of times more efficient, and so the efficiency sacrifices of putting things on a chain will become more and more acceptable.— Vitalik Non-giver of Ether (@VitalikButerin) December 10, 2018
Vitalik Buterin’s idea to achieve the same throughput capability as the Visa payment system, which handles 24,000 operations per second, is also planned for future upgrades. In its current state, the Ethereum network is able to process a maximum of 25 transactions per second (TPS), while many “Ethereum killers” in this regard have stepped far forward. For example, EOS is able to manage 1,200 TPS and Tron can already handle 2,000 TPS. Ethereum developers hope that their blockchain will become more competitive, and, in addition to a large number of operations, will offer working smart contracts and tremendous experience in solving technical problems. Hudson Jameson, a developer relations officer at the Ethereum Foundation, expressed his expectations to Cointelegraph with respect to the Constantinople’s main mission:
“The Constantinople network upgrade paves the way for cheaper smart contracts for a variety of use cases, especially state channels that can help scale the network.”
Novelties from the developers
On Jan. 4, during a regular video call, Ethereum Foundation members discussed the introduction of the ProgPoW code, which is aimed at countering ASIC miners. Until the last moment, it hadn’t been clear whether this new algorithm would be introduced in Constantinople. Things changed after the Ethereum developers meeting, during which the team decided to postpone the transition to ProgPoW until Istanbul, the subsequent network upgrade, as reported by Cointelegraph on Jan. 4.
Among other novelties being discussed by developers is the Ethereum 1x update, which implementation is scheduled for 2019. Several working groups shared their achievements, stressing that the decision was still at the earliest stages of development.
The list of innovations does not end there. Recently, new promising developments have appeared. Among them are solutions based on Snark (in which transaction data is converted into constant “compressed evidence”), which will allow reaching a significant level of network bandwidth without using Plasma and Raiden. Furthermore, this technology will increase data privacy. Another possible evolutionary path could be Turbo Geth, which will reduce the amount of stored history of all network computing by 80 percent and increase its throughput.
Meanwhile Parity Technologies is already preparing for the transition to Casper. Developers have added an additional version of Substrate, which was released on GitHub on Oct. 14 as an experiment. The code contains a mechanism of transition to the “Shasper” upgrade, which combines the platform’s in-house scaling solution, sharding, with its PoS consensus switch, Casper.
New coins expected, but not officially recognized
Despite the fact that no new coins are expected during Constantinople, most of the major exchanges have already announced support for possible forks and airdrops. Poloniex, Bittrex, Huobi, Binance and OKEx warn users of the need to transfer funds to the exchange in advance to get possible coins, and projects supporting the fork are asked to contact for cooperation.
Update: @BittrexExchange has completed the Ethereum (ETH) Constantinople hard fork upgrade scheduled for block 7,080,000.— Bittrex (@BittrexExchange) January 8, 2019
The news about the upcoming hard fork is being used by three projects at once to issue new coins. The founders of two of them, Ethereum Nowa (ETN) and Ethereum Classic Vision (ETCV), under the guise of forked ETH airdrops, are appropriating users’ private keys. For this purpose, malware tools replicating official wallets are being used, as reported by Cointelegraph on Jan. 11, referring to Guarda Wallet development reports and users’ complaints.
A special thread has been created on BitcoinTalk forum, where users exposed the former. Apparently, the project used ShutterStock photos on its website to mislead users, who were promised to exchange 1 ETH for 1 ETN.
The website of the second one, Ethereum Classic Vision, appeared to appropriate private keys as well, as Guarda Wallet informed:
“The analysis on the code performed by our team has shown that the piece of code provided actually sends your private key data on the Ethereum Classic Vision servers, masking it as an API token.”
On Jan. 12 the project’s website has been suspended and is unavailable at the moment. The ECV developers promised to implement the hard fork on Jan. 11, when users were supposed to get 3 ETCV coins for each 1 ETH they have.
Another project, ERC-20 Blue, has been spotted using the name of the Ethereum Foundation in Medium posts to mislead people. The account was deleted soon after being exposed.
Meanwhile, users are being warned about possible scams:
Many people are still confused about the upcoming #Ethereum upgrade. The #Constantinople hard fork is not contentious. Exchanges are announcing support for the upgrade NOT support for other forks. Be careful there are already scams around promising airdrops or free coins. $ETH— Alex Saunders (@AlexSaundersAU) January 6, 2019
Expectations from the new Ethereum
Users expect that, with the release of Constantinople, the work of DApps will become simpler and more stable. Gas costs will be significantly reduced, and the technology itself will take another step toward scalability, which should increase 1,000 times in the final stage. This, in its turn, may mean a positive sign for blockchain projects and ICOs, according to Evan Luthra, an investor that Forbes included in its “30 under 30” list of entrepreneurs:
“Constantinople is being considered non-contentious, hence we can expect a major shift in the market to this new protocol. ICOs and airdrops will also benefit greatly with the lower costs. A lot of the ICOs I am advising are already talking about the benefits they will get for future airdrops and I am quite confident we will see more of the same.”
Once Constantinople completes the Metropolis cycle, the interest of developers and investors in the Ethereum platform and decentralized projects will become even greater, according to Artem Popov, co-founder of Roobee, an investment platform for retail investors. He shared with Cointelegraph his thoughts on the possible influence of the upcoming upgrade on the investing industry and ICOs:
“Many associate Constantinople with a certain Rubicon during the transition of Ethereum from the PoW to PoS algorithms, which hundreds of thousands of ETH holders and crypto investors around the world have been waiting for. Ethereum holders will finally be able to earn ETH, simply by keeping it in their wallet and ensuring the operability of the network. All this can increase the number of ETH holders and reduce the number of sellers, thereby increasing the demand and price for Ethereum.”
However, the new ICO wave won’t likely be seen immediately after the Constantinople release, as claimed by Popov:
“To create it [the wave], we also need such factors as the overall growth in the capitalization of the cryptocurrency market, the successful development of projects that carried out ICOs in 2017-2018, positive regulatory changes in this area, etc.”
In 2018, when the Ethereum blockchain saw an influx of active users and daily transactions — as was demonstrated by CryptoKitties — making it apparent that Ethereum’s PoW consensus mechanism wouldn’t stand the test of time.
However, the final transition to PoS may be delayed, according to some users and analysts. Ethereum’s proponents may need to play the waiting game, as some of the project’s skeptics are afraid that deadlines won’t be met or will be postponed. The Block’s Mike Dudas recently claimed:
“Ethereum is starting to remind me of the software vendor who never quite meets their deadline or quality promises.”
In case developers will announce a long-term delay of the fork, the Ethereum price may be impacted significantly, according to Chris Matthews from Hacked:
“A short delay probably wouldn’t have a major impact on price, but a delay of any meaningful length could lead to a selloff. Traders looking to initiate a short-term trade may want to make use of stop limit trades.”
Alex Krüger, a cryptocurrency analyst, believes that the Constantinople upgrade will change the game for Ethereum.
1/ #Ethereum's Constantinople fork is coming on block 7080000, around January 16, 2019. Constantinople will reduce the block rewards from 3 to 2, decreasing new $ETH supply accordingly.— Alex Krüger 🇦🇷 (@Crypto_Macro) December 24, 2018
On the long run, this is decidedly bullish. https://t.co/4bbgAHMz7Z
According to him, the 90 percent increase ETH experienced during the last month may be connected with the Constantinople hard fork. The ETH price spiked once the date for the upgrade release was announced, but later fell against the United States dollar.
Krüger also suggests that other Ethereum upgrades had a different effect on the price of the coin. Thus, it can be difficult to predict what will happen after Constantinople is released. According to Krüger, after the fork, Ethereum miners who spend more than $0.075 per unit on electricity will be operating at a loss in case the ETH price remains at about $155. However, there will still be those miners who may continue their activity even if this happens.
Arthur Hayes, CEO of cryptocurrency exchange BitMEX, hopes that ETH will revive when the ICO market comes back to life. Hayes believes that the ICO market will start to gain momentum once again in the near future and will have a great influence on ETH. He explained:
“The use case for Ether is primarily ICOs. That market is dead right now. Once there are new issues, then Ether will rebound aggressively. When the ICO market returns, Ether will quickly test $200. The timing of the ICO rebirth is 12 to 18 months out.”
What if the fork fails?
In general, judging by the table tracking Ethereum clients’ readiness to upgrade and coordinated work of developers, problems with consensus will probably be eliminated. All new versions of Ethereum clients have already received updates, which will automatically start working on Jan. 16. And users will automatically receive new ETH for use in the new network.
The security manager of the Ethereum Foundation, Martin Swende, noted that the new version of the go-ethereum client will contain a kind of “emergency switch” that will postpone the upgrade if the its release fails.
In general, the Ethereum Foundation team is positive and confident about everything regarding the readiness for the upcoming fork. “We are on track to have a successful network upgrade,” Hudson Jameson emphasized.
Additionally, the developers have provided a whole road map for the subsequent protocol upgrade, which will allow planning and tracking of all the iterations necessary so that the transition to PoS is completed on time.
The crypto space is awaiting the first — and one of the largest — forks of 2019. While the investors’ eyes are fixed upon ETH rates, and the developers are finalizing all the iterations to be prepared for a smooth upgrade, the share of nodes ready for the switch remains small. Though Afri Schoedon assumes an overall upgrade rate is about 44 percent, according to the current statistics provided by Ethernodes, only 15.8 percent of all Ethereum clients have upgraded to the latest version, despite there being only one week left.
Despite the fact that the developers haven’t announced any possible forks, the appearance of new coins and airdrops cannot be excluded. As demonstrated by 2018’s Bitcoin Cash (BCH) fork, things may change at the last second.