- Market Cap: 14.12 B
- Circulating Supply: 105.10 M
- 52 Week Low-52 Week High: 82.4270 – 877.857
- Current price is $134.40
- Year-to-date performance is +3.26%.
On February 28th, Ethereum executed two major upgrades. Constantinople and St petersburg upgrade. It is notable that both the upgrades are being put into place on the same block number 7,280,000. This is due to a security vulnerability that was discovered in the Constantinople upgrade in January.
The world’s second most valuable blockchain after bitcoin is now ready for the next stage in its evolution. That is expected to make it faster, stronger, and more easily accessible to even more users and developers.
The goal of the Constantinople upgrade was to bring improvements to the platform in terms of efficiency, which will reduce transaction fees for some types of operations on the Ethereum network. In addition, there is a planned decrease in the block reward for Ethereum.
The purpose of the St. Petersburg upgrade was meant to delete EIP 1283 once the proposal was implemented via the Constantinople hard fork. Everything went according to plan and the updates are now live on Ethereum mainnet.
EIP 1283, which contained the discovered vulnerability, will not be activated with Constantinople during this hard fork update. After activation, Constantinople and St. Petersburg will effectively reduce block rewards for miners from 3 to 2 ETH. When the Byzantium hard fork was initiated a few years back, mining rewards had been reduced from 5 ETH to 3 ETH.
Ethereum is planning a switch from Proof-of-Work to Proof-of-Stake in the near future, but to do so, they need to make it impossible for miners to continue to collect rewards. A difficulty bomb would increase the challenge of mining to such a degree that it would be impossible for miners to collect more fees. However, if implemented before PoS, the blockchain would freeze. This is why it was put off for the time being.
- Proof of Stake – In some blockchains, the people/nodes are ranked based on the number of coins they hold. The more coins someone has, the more processing power they have.
- Proof of Work – In contrast to proof of stake, which delegates processing power/authority based on the number of coins held, proof of work is an open competition. In other words, if a miner can successfully prove a transaction before everyone else, they receive a reward regardless of their previous actions
Unfortunately, there was a delay in the upgrade to Proof Of Stake. And the entire point of the Difficulty Bomb was to incentivise miners to switch to Proof of Stake. So the Ethereum team decided to delay the difficulty bomb until Casper was ready.
The delay, however, did not sit well with long term investors. Long term investors were looking forward to the difficulty bomb and Proof of Stake.
Why? Because lower Block Rewards would mean a lower Inflation Rate. This was going to be a very bullish update for long-term investors. Since people Difficulty Bomb was delayed, the Ethereum team decided to add a Block Reward Reduction to the Ethereum’s Constantinople network upgrade!
Ethereum has struggled with some scalability issues which could be a hurdle to the widespread adoption of the platform and Ether.
Ethereum wants to overcome these hurdles with Ethereum 2.0, the Casper Upgrade. The upgrade is expected to arrive in TBA 2019.
It will include concepts like sharding which is expected to make the blockchain faster and more efficient.
Once successfully upgraded, Ethereum 2.0 will then start on its journey moving towards Ethereum 3.0 which will provide the network with security against the power of quantum computers.
The roadmap to Ethereum 2.0 consists of two combined upgrades, which are Casper and Sharding, as is designed to bring scalability and security benefits to Ethereum. It may take several years for these both to be implemented fully and form Ethereum 2.0.
Despite that Casper and Sharding will be combined to form Ethereum 2.0, both are separate projects that will have different phases and implementation and completion times.
The Casper protocol is a proof of stake consensus mechanism that forms a major part of Ethereum 2.0 roadmap. With Casper, validators will have to set aside part of their Ether as a stake. When blocks are discovered by validators which they think should be added to the Ethereum blockchain (validated), they will make a bet on it in Ether. If the block is appended to the chain then the validators are rewarded based on their bet sizes.
As mentioned above it will have built-in mechanisms for punishing malicious actors on the protocol which will ensure that they cannot game the system and that the system remains trustless. Validators acting badly will have their stakes removed.
Sharding, on the other hand, will divide the network into separate shards. Each shard will be designated to process specific transactions, which it can do so on its own.
Currently, the entire network is needed to process each transaction, which is likely an excessive use of the network’s resources. That’s why implementing sharding could significantly increase throughput on Ethereum and enable greater scaling.
This is how Vitalik Buterin explains sharding:
“Imagine that Ethereum has been split into thousands of islands. Each island can do its own thing. Each of the islands has its own unique features, and everyone is belonging on that island, i.e., the accounts, can interact with each other AND they can freely indulge in all its features. If they want to contact other islands, they will have to use some sort of protocol.”
There is no doubt that Ethereum is still a work in progress. It has some issues, especially those related to scaling and the solutions needed will not just come overnight.
The future of Ethereum depends on how widely adopted and powerful the network becomes as well as the creativity and talent of the developers who use the platform. Ethereum indeed appears to be heading in the right direction, gaining the attention of many large corporations and institutions.