Ethereum planned three forks on January which suppose to be very significant to the ETH eco-system Ethereum. The most important one is scheduled to January 16th. ‘Constantinople’, as the system upgrade is called, is set to be implemented at block 7,080,000. Let’s have a look at what this could mean for the network.
Constantinople: What to Expect?
Back on December 6th, 2018, Ethereum core developers voted to move on with the Constantinople upgrade. Keeping in mind an average block time of about 14.5 seconds, the upgrade should take place on January 16th, 2019.
Constantinople will integrate five different Ethereum Improvement Proposals (EIPs). Let’s have a look at each one of them and what it’s intended to bring.
An important thing to consider is that, according to Ethereum’s co-founder, Vitalik Buterin, the community should exercise care with terminology as Constantinople is intended as a “network upgrade” and not as a “fork.”
IMO the Ethereum community should consider adopting @zcashco‘s terminology of calling things like Constantinople “network upgrades” and reserve “fork” for splits that leave 2+ viable chains. Too many people asking me lately where they can dump their non-Constantinople coins…
— Vitalik Non-giver of Ether (@VitalikButerin) January 10, 2019
EIP 1234: “Thirdening” – Block Reward Reduction
Undoubtedly the most highly-discussed EIP in the Constantinople upgrade is the one which will reduce the block rewards from 3 ETH/block to 2 ETH/block, hence, ‘Thirdening’.
This event can impact the Ethereum’s network and ETH’s price. The ‘Thirdening’ will be an interesting development in Ethereum’s network and a step towards reducing inflation in the long term by reducing issuance. Usually when asset’s supply goes down (miners sells less new mined ETH) if we assume the demand will stay the same, the price will go up. The same process happens when looking at BTC price against Halving events.
CryptoPotato recently explored Bitcoin’s ‘Halving’ (as the Bitcoin’s block reward will be slashed in half instead of in third) which is scheduled to happen in May 2020. Correlating Bitcoin’s price and the periods of previous halvings show that after each one of them the price has increased. This backs Cassatt’s statement.
EIP 145 – Efficiency and Speed Improvements
This improvement proposal is intended to add Bitwise shifting instructions to the EVM (Ethereum VIrtual Machine). The EIP is designed to provide 10x cheaper shifts in smart contracts by enabling bits of binary information to move to the right and the left.
EIP 1052: Speed and Energy Improvement
This EIP is intended to enable smart contracts to verify each other by pulling only the hash of the other smart contract.
The main difference is that now (before the hard fork), smart contracts need to pull the entire code of each other to verify. This takes more time and energy to perform.
EIP 1014: 1283: Gas Cost Reduction
This proposal is called “SSTORE”, and it is intended to reduce the gas cost for SSTORE operations. The full name of this EIP is Net Gas Metering for SSTORE Without Dirty Maps, and it can be reviewed here.
The key takeaway, however, is that it enables multiple updates to take place within a transaction a lot cheaper.
EIP 1014: Improving Scalability
This is another important improvement proposal to pay attention to. It’s developed by Vitalik Buterin, and it improves the enablement of state channels – it’s a scaling solution which is based on off-chain transactions.
A detailed blog post published by ConsenSys – a production studio launched by one of Ethereum’s co-founders, Joseph Lubin, and geared towards building decentralized applications, explains the ways Ethereum could scale up its network.
Two are the most discussed approaches it could undertake: on-chain and off-chain scaling. In a 2018 podcast with the team of OmiseGO, Buterin gave brief yet concise explanations of Sharding (on-chain scaling approach) and Plasma (off-chain scaling approach) which could, in his words, scale Ethereum by 10,000X.
Sharding – On-Chain Scaling
According to Buterin, Sharding is considered to be a layer one scalability solution because it builds upon the existing blockchain and it is intended to make it work better.
As it is right now, every node on the Ethereum network has to process every transaction which goes through it. While this validation method guarantees a higher level of security, it also means that the entire blockchain itself can only be as efficient and fast as its nodes.
Sharding, according to Buterin, offers a solution where a condition of the blockchain where the entire network is conveniently split into smaller bits called shards. Each shard contains its independent transaction history.
This way, every individual node would only have to process the transactions for specific shards. This will allow for a higher transactional throughput based on the premise that a single node won’t have to carry out all the work.
Plasma – Off-Chain Scaling
Plasma, unlike Sharding, is intended to serve as a layer two of scalability solutions. This means that it’s not intended to improve on the blockchain itself. Instead, it takes the existing blockchain and creates a designated construction connected to it, thus enabling a higher throughput. Hence, the word off-chain.
Of course, it’s heavily reliant upon the existing, underlying blockchain of Ethereum, which will guarantee its security.
Plasma can also be defined as a “child-chain” which can run entire applications with minimal interaction with the main chain of Ethereum.
Additionally, this “child-chain” can also create its own “child-chains”. Necessarily, it can create a lot of branched blockchains, each one of which is connected to the main-chain.
Operations on these don’t have to be replicated on the main chain, which will enable it to move a lot faster as it will offload a lot of its work, and it will reduce transaction fees.
In short, Plasma aims to enable Ethereum to keep handling thousands of smart contracts while only broadcasting transactions which are completed.
Most recently, a small start-up collaborating with the Ethereum Foundation have launched a Plasma-like scaling solution which enables 500 TPS on the Ethereum Network. The solution is called Ignis.
Buterin expressed his positivity on the progress being made in this regard:
This is NOT technically Plasma (the usual name is “rollup”) but it’s still amazingly cool. I did not expect it to be implemented so quickly. Great job TheMatter team. https://t.co/f6hpAMhwnZ
— Vitalik Non-giver of Ether (@VitalikButerin) January 6, 2019
Now, with just a few days before Constantinople kicks in, all eyes are turned to Ethereum, waiting to see if the upgrade will trigger a price rally.
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Source: Crypto Potato