This issue’s summary: In the short term, the regulatory storm effect will have a huge impact on the cryptocurrency market. In the long term, ethereum still has potential.
The Ether “difficulty bomb” originally scheduled to be launched this summer has been postponed to December again ……
As we all know, Ether is currently mined based on the proof-of-work (POW) consensus mechanism. In order to keep Ether at a relatively stable block-out speed (now about 13 seconds/block), the mining difficulty will be constantly adjusted. For example, if blocks come out too slowly (more than 20 seconds), the difficulty will be reduced; if blocks come out too fast (10 seconds), the difficulty will be increased. This is the normal mining difficulty adjustment mechanism.
But in addition, Etherpad has introduced another mechanism to adjust the mining difficulty, and this mechanism has a higher priority than the normal difficulty adjustment, namely “difficulty bomb”.
Difficulty bomb = miners’ nightmare?
The “difficulty bomb” is a piece of code embedded by Ether developers in 2015, which aims to gradually increase the difficulty of blockchain mining, thus artificially slowing down the speed of Ether distribution. When the difficulty bomb is set to “detonate”, it will be exponentially more difficult for miners to obtain rewards through mining.
So the question is, why go through the trouble of setting a difficulty bomb when there is already a regular mining difficulty adjustment? After all, an increase in the difficulty of mining means a slowdown in the rate of block production, and this really affects the earnings of miners. For this reason, some people even compare the difficulty bomb to miners’ nightmare.
In fact, this is precisely how the developers of Ether are trying to encourage miners to complete the shift from PoW to PoS, and thus complete the major upgrade of Ether 2.0.
But this vision seems too idealistic. Because the POS mechanism is not ready yet, if the difficulty bomb is not stopped, it will seriously affect the development of the ethereum ecosystem. The “difficulty bomb” has to be postponed again and again.
The three difficulty bombs postponed throughout the development of ethereum
When it comes to the postponement of these difficulty bombs, we have to mention the many upgrades in the development of Ether.
Since the birth of Ethernet, the development team has set four development stages for it, namely Frontier, Homestead, Metropolis, and Serenity. The transition between different stages requires a hard fork to achieve, but not all hard forks mean the completion of the stage transition, community disagreement, their own iterative improvement, etc. will also carry out a hard fork upgrade. At present, Ether has entered the “Serenity” stage, that is, Ether 2.0.
The difficulty bomb starts with a block height of 200,000 and increases every 100,000 blocks thereafter, and never decreases. At the beginning, the difficulty bomb is very small and has little impact on the block release time. However, the growth of difficulty bombs is almost close to exponential, which means that at a certain point, the network difficulty will suddenly increase and the block exit speed will plummet.
In the six-year-long development history of Ether, the difficulty bomb has been delayed three times before and after, in October 2017, February 2019 and January 2020.
(Image source: Ethereum screenshot)
In October 2017, Ethereum mining difficulty rose to a maximum of 30.31 seconds, but the POS protocol was not perfect at that time, and Ethereum had no choice but to adjust the mining difficulty formula so that 3 million was subtracted from the current block number each time a difficulty bomb was calculated. This eased the mining difficulty to a certain extent.
But the good times did not last long. Since then, the Ether difficulty bomb has been postponed two more times, and in January 2020, Ether also deliberately carried out a round of “Muir Glacier” hard fork, and this upgrade ended with the postponement of the difficulty bomb by 4 million blocks.
These are all fundamental solutions to the problem, and the Ether difficulty bomb has now developed into a “weakness” in the development of the entire Ether ecosystem. For this reason, there are also proposals to abolish the difficulty bomb.
Afri Schoedon, the former developer of the ethereum wallet Parity, has suggested abandoning the difficulty bomb altogether and removing the mechanism from the protocol, thus eliminating the need for constant extensions. However, this argument was immediately countered by outsiders that eliminating the difficulty bomb would result in less frequent updates to the ethereum network and a lack of incentive for miners to upgrade their miners.
With the controversy, it had to be constantly postponed.
On May 14, Ethercore developers conducted a conference call, mainly to discuss the final details of resolving the London upgrade. It is understood that the London upgrade will incorporate EIP-3541 and EIP-3554, of which EIP-3541 prevents the deployment of contracts starting with “0xEF” and lays the foundation for a large-scale EVM review (EIP-3540); EIP-3554 proposes to delay the difficulty bomb until December. December.
What is the impact of the new round of difficulty bomb postponement on Ether?
According to OKLink data, the current difficulty of Ether has reached 7.96P, and it continues to rise. In other words, if this difficulty bomb is not dealt with, it will definitely start to slow down the speed of the Ethernet network this summer. This, in turn, will add to the already congested Ethernet network.
Therefore, the need for this difficulty bomb postponement is also very important.
As a matter of fact, the proposal of London to upgrade and postpone the difficulty bomb has, to a certain extent, eliminated the fear of some people, especially miners, about the imminent explosion of the difficulty bomb, and for such a positive expectation, Ether will most likely continue the upward trend since this year.
CoinGecko data shows that since January this year, the price of Ether has continued to move higher, with a peak of nearly $4,400 on May 12, up nearly 300%.
But plans can’t seem to catch up with changes fast enough.
The crypto market as a whole has seen a pullback in recent week. Yesterday evening, China Internet Finance Association, China Banking Association and China Payment and Clearing Association jointly issued another announcement on preventing the risk of speculation in virtual currency trading. The market was in a state of mourning for a while, with Ether falling below the important $3,000 mark and now at $2,934.
In front of the drastic regulatory storm, some previously mentioned benefits such as difficulty bomb postponement and hard fork seem to be insignificant.
In this regard, the researcher of Euclid Cloud Chain Research Institute analyzed and pointed out, “In the short term, the regulatory storm effect will still have a huge impact on the cryptocurrency market. However, in the long term, Ether still has potential. On the one hand, the status of Ether as the basis for the normal operation of all distributed application applications (as Gas fuel fee, pledges, investment and financing) cannot be replaced yet. Take distributed finance as an example, 90% of DeFi is now concentrated in the Ethernet network; on the other hand, the recognition of traditional finance for Ethernet is also increasing , since this year, CME and Canada have launched Ethernet futures and four Ethernet ETFs, not only that, European investment banks also spread the news to issue digital bonds on Ethernet.”
In fact, Ether 2.0 has been upgraded continuously since its launch in December last year, and in less than half a year, the Muir Glacier and Berlin hard forks have been completed, and the London and Shanghai hard fork upgrades are now on the agenda. Perhaps after this round of regulation, this expected good will have a chance to be released.
Looking into the future, it is certain that with the increasing popularity of blockchain technology, the applicability of Ethernet will continue to broaden, the consensus will become stronger and stronger, and its value will naturally be recognized by more and more people.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/with-a-difficult-bomb-delayed-and-a-regulatory-storm-on-the-horizon-how-will-the-ether-follow-on-script-play-out/
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