Ethereum Constantinople, the planned Ethereum network upgrade is important due to several reasons. The fork, or upgrade, will improve the readiness of Ethereum for the important changes that are coming.
Ethereum Constantinople was scheduled for January 16th, however, it has been postponed now. Nevertheless, the Ethereum community will do well to sufficiently understand this upgrade for its’ long-term significance.
Ethereum is working on improving the network scalability. The lack of scalability and the low transaction throughput need improvement. Ethereum uses the ‘Proof of Work’ (POW) consensus algorithm, which is energy-hungry. It’s the same algorithm that Bitcoin uses, causing a high electricity use.
The good news is that the Ethereum project team knows that they have work to do. They are working on transitioning to their proposed ‘Casper’ protocol. It will use the ‘Proof of Stake’ (PoS) consensus algorithm. This has no POW mining, therefore, Ethereum will reduce its’ energy use.
Their transition to PoS will also enable them to implement scalability measures like Sharding. The work on transitioning to Casper is progressing. The Ethereum project team is serious about it, as we can see from their collaboration with Parity Technologies.
The transition to Casper is easier said than done, though! Casper is still a work-in-progress protocol, and Ethereum developers are still trying to tie in a few loose ends. Then, you have the Ethereum ‘miners’. Ethereum is a distributed community, and miners have a say in the decision making. Miners are invested in POW mining for years now. The transition to PoS requires lowering incentives to mining.
Ethereum Constantinople is important in these contexts. It’s a fork, however, there are no contentions. There will not be two different kinds of Ethers (ETH) after this fork. Existing holders of Ether needn’t take any action. We can call it a network upgrade.
Ethereum Constantinople is a collection of a few ‘Ethereum Improvement Proposals’ (EIPs). EIPs are proposals for changes to the Ethereum code. The Ethereum community collectively decides whether to implement an EIP.
There are 5 EIPs in question here, namely, EIP145, EIP1014, EIP1052, EIP1283, and EIP1234. Two of them are important in the context of this article, and I will explain these two. These are EIP1014, and EIP1234.
EIP1014 will enable Ethereum network participants to communicate with Ethereum addresses yet to be created. Many crypto enthusiasts might remember the ‘Distributed app’ (DApp) game CryptoKitties. The creators of the game had launched it on November 28th, 2017, and it soon went viral.
Within the first week of December 2017, it had clogged the Ethereum network. Well, EIP1014 will enable DApps to use ‘state channels’, therefore, they will not create congestion in the main Ethereum network.
EIP1234 will gradually disincentivize the Ethereum miners. Miners earn fees when they solve a new Ethereum block. This involves solving a cryptographic puzzle. It’s an asymmetric puzzle, where solving is the puzzle is hard, but verifying the solution is easy. Miners require brute computing power to solve this puzzle.
Ethereum has a ‘Difficulty bomb’, which progressively increases the difficulty of the puzzle. It progressively makes the work of miners harder. EIP1234 will delay the ‘Difficulty bomb’ by around one year, which means that miners will continue to find crypto mining getting harder.
However, delaying the ‘Difficulty bomb’ isn’t enough to disincentivize miners, since they already know about it. They factor this in their cost calculations. EIP1234 does something more. It reduces the fees for the miners from 3 ETH at present, to 2 ETH. This will disincentivize miners and will cause a gradual move away from crypto mining. That paves way for PoS, therefore, the transition to Casper becomes easier.
At the time of writing this article, Ethereum Constantinople has missed the scheduled implementation date of 16th January. This is because a security vulnerability that was recently reported. The Ethereum project team has communicated their decision to delay the upgrade.
The upgrade will make Ethereum faster, while also preparing it for the momentous changes coming soon with Casper. While we await more information on Ethereum Constantinople, watch this space for more information on this important upgrade.