The Ethereum network has been busy lately. With over 3,070 Dapps, 215 DeFi projects , 4,962 Initial Coin Offerings , around 20 internal stablecoins, and over 1.3M of transactions per day, there’s no wonder that the blockchain speed has started to slow down.
As a consequence, the average transaction fee has reached almost $40, and some crypto-projects have taken the path of migration to other blockchains. Despite all this, the use of Ethereum has been steadily increasing since the last year. The ether (ETH), its native currency, is still the lead altcoin, with over $195b in market capitalization.
That’s why their developers are working so hard on the improvements and functions that will head Ethereum into a better place. Let’s check them out quickly.
An “Easter egg” of the next updates (forks), so to say, is that they’ll have the names of cities. That’s basically because the devs weren’t sure how to name them, so, they’re picking the Devcon cities for the upgrades. Berlin was the first place in which the biggest Ethereum event was held.
This upgrade is already running in some testnets, and it’ll reach the mainnet around 14 April 2021. The Ethereum Improvement Proposals (EIPs) included, for now, are four: EIP-2565, EIP-2929, EIP-2718, and EIP-2930.
The first two will modify the gas prices. EIP-2565 will introduce a new algorithm for calculating the gas costs (generally reducing them) and improve the security; while EIP-2929 will increase these same costs for some complex operational codes (opcodes) inside the smart contract programming. That’s because they’ve been underpriced till now.
As for the EIP-2718 and EIP-2930, they’re about new types of transactions. EIP-2718 will implement a compatibility function to add more types of transactions in the future (like multi-signature).
For its part, EIP-2930 will bring a new type of transaction “which contains an access list, a list of addresses and storage keys that the transaction plans to access”.
The next stop is the London upgrade, planned for July 2021. This is a polemic one since the main proposal to implement is the EIP-1559. The goal is reducing for good the high gas prices by implementing a new “base fee”, which amount is adjusted by the protocol based on how congested the network is.
The base fee will be burnt (put out of circulation). So, there will be fewer and fewer ETH over time. The cryptocurrency would become deflationary then and could increase its value significantly.
The polemic part is for the current miners. Most of them don’t agree with the proposal because their earnings will be highly reduced. Since the base fee will be burnt, the part for them will be only an optional “Miner tip” from the users to accelerate their transactions. Besides, that tip is meant to be fewer than the base fee.
That’s why powerful mining pools have threatened to attack the network if the EIP-1559 is implemented.
The developers are trying to make amends with them, so, London would also bring the EIP-3238: Difficulty Bomb Delay to Summer 2022. The Difficulty Bomb will increase the mining difficulty and was designed to aid the transition from the Ethereum Proof-of-Work (PoW) network to Ethereum 2.0, which works with Proof-of-Stake (PoS).
Other EIPs are likely to be included, but the number and functions have yet to be decided.
The developers still have a lot of work and discussions ahead, but a tentative date for Shanghai, the next upgrade after London, is October 2021. And it’s not decided yet, but they’re considering implementing the Docking/Merge with Ethereum 2.0 by then. This would mean the end of the mining era in Ethereum and the beginning of the PoS era.
Last December, the Ethereum developers launched the “Beacon Chain”. Basically, this a whole new blockchain that uses PoS instead of PoW, and it’ll work for the governance of the entire system.
The next step for Ethereum 2.0 would be the implementation of the “Shard Chains”: 64 new chains (shards) that will split and distribute the huge load of the entire database to gain more speed and reduce hardware requirements.
Finally, it would come “The Docking” or “The Merge”. At this point, the current Ethereum mainnet will merge with the Beacon Chain, becoming another shard and bringing with it the full Ethereum history and the ability to write smart contracts and make faster transactions; all verified with PoS.
The developers describe it this way:
“Imagine Ethereum is a space ship that isn’t quite ready for an interstellar voyage. With the Beacon Chain and the shard chains, the community has built a new engine and a hardened hull. When it’s time, the current ship will dock with this new system so it can become one ship, ready to put in some serious light-years and take on the universe.”
It appears that the recent threats from miners have prompted this change to come more quickly. But the Ethereum devs have a long story of delaying upgrades, so, we’ll need to wait and see if Ethereum is ready to go to space this year.
Thanks for contributing to the article to Isabel Pérez.
Isabel is literature professional in the crypto-world since 2016. Writer, researcher, and bitcoiner. Working for a better world, with more decentralization and coffee. You can read more of her articles in Alfacash blog.