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Ethereum Hard Fork at Block 7,080,000 in January 2019

Ethereum Hard Fork at Block 7,080,000 in January 2019

The Ethereum development team has come to an agreement to deploy the Constantinople hard fork at block 7,080,000. Currently, Ethereum is near block 6.86 million, so this fork should happen some time between 14-18 January 2019.

The Constantinople hard fork was supposed to deploy in November 2018 but when had failed when deployed on the testnet in October 2018. After the failure on testnet, developer Afri Shchoedon made the accurate forecast that a fork was unlikely in 2018.

Ethereum has declined from USD 1,400 to less than USD 100 during 2018, and numerous companies and platforms launched via Ethereum are facing increasing enforcement pressure from the Securities and Exchange Commission (SEC) for unregistered issuance and trading of securities. This perhaps makes January 2019 a less than ideal time for a hard fork of the Ethereum blockchain, but the developers do not have much of a choice due to the difficulty bomb.

The difficulty bomb is programmed into Ethereum to cause blocks to become exponentially slower after a point, which eventually leads to an ice age where no more blocks are mined. This forces the developers to hard fork Ethereum periodically, and the point of this is to make sure Ethereum keeps on getting updated with the latest technology. The difficulty bomb is not going to be removed in the Constantinople fork, just delayed another 18 months.

The Constantinople hard fork may cause contention between investors and miners since it lowers the block reward from 3 Ether to 2 Ether. On the other hand, investors should welcome a lower inflation rate of Ether supply. However, miners have been struggling due to the collapse of Ethereum’s price and slashing the block reward by a third during this time could be seen as inconsiderate.

Lowering the block reward is already a heated issue but the Ethereum developers are rushing to implement ProgPoW, which would make ASICs incompatible with Ethereum mining. This move is likely to disenfranchise most of the major Ethereum miners.

The debate over this fork will intensify over the next month as the fork approaches and an Ethereum split is not out of the question, since the developers appear to have different views from the miners who are securing the network. Ethereum has already split once due to a hard fork over the loss of the development fund, since some of the community did not agree in reversing any transactions even if it was a hack, and this is how Ethereum Classic was born.

Yet another version of Ethereum could easily be born if a fraction of miners coordinate and decide not to upgrade their nodes to Constantinople. Indeed, miners who use ASICs have nothing to lose by doing this, since if ProgPoW is implemented their hardware will instantly become worthless unless they can succeed at keeping the current version of Ethereum alive.

 

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Ethereum Constantinople Hard Fork Fails On Testnet, Making Ethereum Fork Unlikely In 2018

The Ethereum Constantinople hard fork has been the focus of the Ethereum development community, and it is meant to bring a full suite of upgrades to Ethereum. Constantinople was deployed on the Ethereum Ropsten testnet at block 4.23 million on 13 October 2018, but it failed to work. Due to this failure, Ethereum developer Afri Schoedon thinks the Ethereum hard fork is unlikely in 2018.

no constantinople in 2018, we have to investigate

— 𝙰𝚏𝚛𝚒 𝚂𝚌𝚑𝚘𝚎𝚍𝚘𝚗 (@5chdn) October 13, 2018

After the Constantinople hard fork was implemented on the Ethereum Ropsten testnet it didn’t produce a block for 2 hours, and the first block it produced had zero transactions. At this time on 14 October, the Ropsten testnet is at block 4.236 million, but it is unclear if the testnet simply reverted back to original Ethereum after Constantinople failed.

A couple of different reasons have been given for the failure of the Constantinople hard fork on the testnet. Shoedon reports that there was a serious consensus issue, with a 3-way fork forming between Geth, Parity, and another Ethereum client.

Another reason given for the fork was that miners had simply not upgraded their nodes to Constantinople, so there was no one to mine blocks, explaining the stall at block 4.23 million. Ethereum developer Peter Szilagyi pleaded for other developers to start up a node running Constantinople to get the testnet blockchain moving.

Whether it is true or not that the lack of miners is the reason for this Constantinople testnet failure, it highlights how Constantinople has been very contentious for Ethereum miners. Constantinople lowers the block reward from 3 Ethereum to 2 Ethereum, which is catastrophic for many Ethereum miners that are already struggling. Ethereum’s price has declined from over USD 1,000 to less than USD 200 during 2018, making an intractable situation for most miners. Peer to peer pawning sites like LetGo and OfferUp are filled with Ethereum miners trying to liquidate their rigs since they are no longer profitable, even before this update.

On the other hand, Ethereum investors want Constantinople since it would lower Ethereum’s inflation rate. This creates a direct divide between miners and investors, making a community and blockchain split likely if the Constantinople hard fork included a block reward reduction. Ultimately, the miners get to decide which version of Ethereum is dominant, and in this case, the miners are not in agreement with developers, and there is nothing forcing them to implement this version of Constantinople.

There is a piece of code included in Ethereum which causes mining difficulty to exponentially increase at a point, this is called the difficulty bomb and leads to an Ethereum ice age where no more blocks are mined. This would be catastrophic for both miners and investors. This will force the Ethereum community to reach a consensus before the difficulty bomb goes off, or Ethereum will stop working. So if the Constantinople hard fork is not coming in 2018, certainly in 2019 some version of an Ethereum fork will be necessary to make sure the Ethereum ice age doesn’t happen.

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Will Lowered Block Rewards Cause Ethereum to Split?

Ethereum’s developers have decided to lower mining block rewards to 2 Ether, from the current reward of 3 Ether or a 33% reduction. This was decided during a 31 August developer meeting and will be implemented when the Constantinople hard fork takes effect. The hard fork is designed to smooth the transition from proof of work to proof of stake and when that happens Ethereum mining will become a thing of the past.

Ethereum mining was already quite unprofitable before this decision. Ether’s price has declined from a peak near USD 1,400 in January 2018 to less than USD 300 in August and continuing into September. Simultaneously, Ethereum’s mining difficulty has generally been increasing. The combination of drastically decreased price and increased difficulty is a recipe for Ethereum miners to go out of business, since it costs more electricity than the revenue produced from mining. Ethereum miners have been liquidating their rigs on peer-to-peer trading apps like LetGo.

The decision to cut Ethereum’s block reward at such a time would be welcomed by investors and indeed, price is up nearly 10% since this decision was made. Miners may have been made unhappy, however.

When Ethereum implements the Constantinople hard fork, miners will have the choice to keep mining the older version of Ethereum and this is likely to happen to some extent. It is unknown how many miners will split off and choose not to upgrade when the Constantinople hard fork occurs. The developers are quite explicit with their intentions, which is to eventually get rid of proof of work mining. This would be the time for Ethereum miners to make their stand.

Ethereum is also planning a hard fork every eight months and is guaranteeing this by programming a difficulty bomb into their code. After 12 months, its difficulty will begin to rapidly increase, leading to an ‘ice age’ where no more Ethereum blocks are mined. This forces the Ethereum developers and community to produce another hard fork before that happens.

 

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