Yesterday, on February 28, 2019, the long-awaited Ethereum “hard fork” or “network upgrade” Constantinople finally went live! As planned, it occurred on block 7,280,000 and although the plan anticipated two upgrades: Constantinople and St. Petersburg, both were combined in one.
Not to mention the success in upgrading the network, yet not all Ethereum users adopted the new network. At the time of writing, the total percentage of users that have their clients ready is 28% equivalent to 3088 clients. This includes 24,5% of total Geth nodes and 42,3% of Parity nodes. However, this is very early to point out, since the update is only a couple of hours in.
Constantinople and St. Petersburg upgrade
As mentioned before in our previous article, the new upgrade – Constantinople, will integrate 5 new proposals, also known as EIPs (Ethereum Improvement Proposal). These proposals will affect the speed and functionality of the network, its members’ costs and, of course, the miners.
During the update on February 28, the price of Ethereum remained significantly stable.
However, in the previous day on February 27, there was a slight dump in the price, and it went from $141 to $132. This probably was the effect of uncertainty from investors and users because of previous delays of this upgrade. Once they got affirmation that the upgrade is actually going to take place, they bought back in.
The Ethereum Network and PoS
The daily issuance now will be at 13400 ETH, with one block time of 14 seconds. Even more, the block reward will decrease from 3 to 2 ETH (EIP 1234). Overall Ethereum’s inflation rate will be around 4%. Also, the update optimizes the use of gas in the network and creates conditions for activating the Casper protocol, which will transfer Ethereum to the consensus PoW / PoS hybrid algorithm.
The long-awaited Constantinople network upgrade is finally here! It will happen today in block 7280000. As a result, mining rig owners will start this spring not only in the sun – after all, the cost of a block will fall from 3 to 2 ETH. Will it make the miners to move, and the network hashrate – collapse, respectively? Let’s try to understand it.
Hardfork “Constantinople” on the Ethereum Network
Let’s put theory in first. Constantinople is the name of the next Ethereum’s system update. The developers planned to update the blockchain already on January 16, but due to the vulnerabilities found in the code, they decided to postpone the hardfork. However, Constantinople is not a controversial issue – developers, stock exchanges and other community members support it. Also, you should not wait for a chain split and the appearance of new coins.
By the way, it did not stop the fraudsters/scammers. They were trying to get some HOLDers coins by promoting coins like Ethereum Nova and other scam projects. This issue was partly responded by Vitalik Buterin. On January 10, he offered to accept the Zcash terminology to start calling such “hard forks” “network updates”.
What’s new in the Ethereum network update?
Constantinople needs to integrate five proposals, also known as EIPs, to improve Ethereum. They will affect the speed and functionality of the network, its members’ costs and, of course, the reputable ones. Let’s remember them.
The component will add bit shifting instructions to Ethereum Virtual Machine (EVM). It will allow bits of binary information to move left and right. It all sounds complicated, but the point is simple. Thanks to the EIP 145, changes in smart contracts will become 10 times cheaper.
The upgrade will teach smart contracts to approve each other using only one hash. Before Constantinople, this was done by checking the entire code, which is long and expensive.
Vitalik Buterin’s proposal activates so-called state channels. Ethereum scaling will be implemented through transactions outside the chain.
The update reduces gas costs for SSTORE operations and makes transactions cheaper.
The proposal consists of two parts: the postponement of the difficulty bomb for 12 months and the reward for block reduction. The block reward will decrease from 3 to 2 ETH. The reduction will not be the first: activation of the hardfork “Byzantium” at the end of 2017 reduced the reward from 5 to 3 coins.
At the same time, Constantinople will also activate St. Petersburg. Its task is to correct previous errors in the protocol.
Why Constantinople was postponed?
The day before the update, ChainSecurity specialists found a hole in the code that allowed them to steal user funds. There was not enough time to fix the problem – so developers postponed the update to another date.
What happened with the network after Constantinople was postponed?
The update was announced a few hours before the scheduled time, so not all members of the community knew about it. Sources say that about 10 percent of the advertisers did not update the software and stayed in the wrong chain.
But the most important event here is the activation of the difficulty bomb, which Constantinople had to move. Remember – this word combination means a mechanism that gradually increases the complexity of the PoW acquisition to complete the blockchain operation. The bomb was introduced for the future transfer of Ethereum to PoS – as originally planned.
The recent record-low volumes of new coins in the network are directly related to the difficulty bomb. Moreover, the mechanism increased the block time from 14.5 to 20 seconds.
In addition, an anti-record was recorded on February 17, with 12989 coins on the day. However, during autumn, the indicator remained stable at 20,000 ETH.
The coins from block rewards became less and less, and therefore changing the Ethereum network became even more disadvantageous. However, the miners knew what was happening and gradually got off the network. Look at the hashrate changes.
Is this the end of Ethereum mining?
In other words, the situation seemed hopeless. Miner’s profits already are low, and now comes Constantinople with a reduction in its block rewards. As the reward falls from 3 to 2 ETH, everyone is expected to lose 33 percent. Does this seem logical?
In addition, for example, boys from Epool have joined a small hysteria and conducted a Twitter survey. They asked users to predict where will the 154 TH go – namely the entire Ethereum network – after the update.
Most of the tweeters voted for Ethereum Classic. 53% – it’s serious. Is everything really so bad?
No. Firstly, as correctly pointed out by Josh J White, the survey was similar to the dreams of other coin shillers to gain a significant hash rate increase on their networks.
Secondly, what is particularly important, is that the reduction in block rewards in the current circumstances will be almost unnoticeable. You should thank the difficulty bomb for that.
After yesterday’s results, the average block time is 20.9 seconds. So, 2.87 blocks per minute, 172.24 per hour, and 4133.97 per day. Let’s round the score to 4134 and multiply it by 3 reward coins for each block. We get 12402 ETH.
Now let’s make the same calculations for 14.5 seconds, which will lead to the postponement of the difficulty bomb. 4.13 blocks per minute at 248.27 per hour and 5958.6 per day. Round off to 5959 and multiply by 2 (coins) – we get 11918 coins. Excluding ankl-blocks, the reduction will be approximately 3.9%. In a global context, it can hardly reduce the networks hash rate. The result is that the situation with Ethereum mining will hardly change. The balance of power will remain, mining rigs will continue to function.
The Constantinople update will not kill Ethereum’s mining niche – compared to February – profits will still be almost the same.
If we remember what happened in November, there will be less ETH coins to produce. Taking into account the base law of demand and supply, theoretically, it is even able to increase the price of ETH, but the overall trend of the market still plays a big role.
Overall, Constantinople is not about the price of Ethereum. The update will be another step towards Ethereum 2.0 and the consensus of Proof of Stake. Also, this will obviously bring more benefit to the community and humanity rather than yet another chance to meet speculative interest a few times.
This article is done in cooperation with our Latvian media partners Kripto.Media
A so-called “mini-ice age” for Ethereum miners sets in as the new difficulty bomb is live. Due to that, the Ethereum daily block reward now is down by approximately 25%. It went from 20,000 to roughly 15,000 ETH per day.
The “Mini-Ice Age”
As we reported earlier, the Constantinople upgrade was already delayed a couple of times before, so this is putting a rather large question mark on whether the “Difficulty Bomb” could last longer than expected. The upgrade plans to be live at block 7,280,000 or around February 27th. With Constantinople setting in, the issuance reduction from 3 ETH to 2 ETH will kick in. Also, the Difficulty Bomb will be suspended for a year. This, of course, can put a large pressure on Ethereum mining economics.
Ethereum at high risk
The ice age protocol automatically initiated the difficulty bomb and now every two weeks the daily block rewards will fall for about 2,000 ETH. This is because of an increase of block times. This puts Ethereum at high risk because no one knows whether the upgrade won’t be postponed again. If Constantinople won’t go live again the difficulty can rise to such levels that it will be impossible to mine a single block. At the moment ETH block time is about 18 seconds, previously it was around 15. However, the last time difficulty bomb was delayed back in 2017. And then the block time reached a high of 30 seconds per block. Additionally, network fees stay at the same level – at around half a cent.
A leading Ethereum team developer Péter Szilágyi tweeted that the Ethereum Constantinople hard fork could take place on February 27th. The long-awaited event now can accour at block 7,280,000.
Constantinople faces security issues
Particularly canceled due to security issues, the long-anticipated Ethereum hard fork “Constantinople” didn’t take place. It was a critical vulnerability in Proposal (EIP) 1283, that could provide attackers a loophole in the code to steal other users’ funds. The vulnerability, called a reentrancy attack, allows an attacker to “reenter” the same function multiple times without updating the user about the state of affairs, an attacker could essentially be “withdrawing funds forever,” said Joanes Espanol, CTO of blockchain analytics firm Amberdata.
In a limited attendance meeting, ETH devs come to a consensus.
Friday, August 31 Ethereum devs held a meeting about the future of Ethereum. It was a limited meeting, where only 14 developers discussed the future of Ethereum. All the miners and investors didn’t attend the meeting.
They agreed to support the code that would reduce the amount of new cryptocurrency introduced on Ethereum to 2 ETH per block, down from 3 ETH, by implementing an upgrade named EIP 1234.
Also, the developers agreed to delay the difficulty bomb for a 12 month period. Also, they are planning a hard fork 8 months after the upgrade of Constantinople.
The transition to PoS (Proof of Stake)
Ethereum developers designed the difficulty bomb in order to gradually increase mining difficulty. Eventually, this will make Ethereum mining impossible. Furthermore, this is when the Ethereum blockchain will transition to a proof-of-stake (PoS) consensus mechanism.
However, blockchain developer, Níckolas Goline calculated that the Ethereum network could see block times of around 60 seconds exactly on February 27. These estimates are based on the Ethereum network’s current mining difficulty level and hashrate trends. The Ethereum dApps can be negatively affected if the block times become this slow.
Ethereum’s hashrate has decreased by roughly 44% last year, from its peak in August 2017.
In a developer call, Vitalik Buterin along with other high-rank developers postponed the long-anticipated Ethereum hard fork “Constantinople”. An audit firm found a critical vulnerability in Proposal (EIP) 1283, that could provide attackers a loophole in the code to steal other users’ funds.
Ethereum faces an audit
A Smart contract audit firm called ChainSecurity audited Ethereum’s hard fork proposal (EIP) 1283 and found critical vulnerabilities. This is the reason for delaying the hard fork for an unknown period of time. The vulnerability, called a reentrancy attack, allows an attacker to “reenter” the same function multiple times without updating the user about the state of affairs, an attacker could essentially be “withdrawing funds forever,” said Joanes Espanol, CTO of blockchain analytics firm Amberdata.
“Imagine that my contract has a function which makes a call to another contract… If I’m a hacker and I’m able to trigger function a while the previous function was still executing, I might be able to withdraw funds,”
What is wrong with the code?
ChainSecurity explains this in their medium blog post:
“The upcoming Constantinople Upgrade for the ethereum network introduces cheaper gas cost for certain SSTORE operations. As an unwanted side effect, this enables reentrancy attacks when using address.transfer(…) or address.send(…) in Solidity smart contracts. Previously these functions were considered reentrancy-safe, which they aren’t any longer,” further explaining that “Before Constantinople, every storage operation would cost at least 5000 gas. This far exceeded the gas stipend of 2300 sent along when calling a contract using transfer or send.”
Constantinople hard fork execution not specified
After this security issue, Vitalik Buterin, Hudson Jameson, Nick Johnson, and Evan Van Ness came to a consensus to delay this Hard Fork. However, they failed to deliver a specific date when the actual upgrade could take place. At this moment this is unclear because it is very essential to develop a proper code.
Last Friday, October 19, the Ethereum hard fork got delayed at a developers meeting on Youtube, moderated by Hudson Davis. In an hour-long meeting, they were talking about the upcoming Constantinople hard fork and at the end of it, they came to a consensus to delay it until the end of January 2019 which would be the earliest time the hard fork could be arriving.
Constantinople was first trialed on testnet Ropsten on October 13, but suffered from major consensus issues that lead to a three way chain-split. Some testnet miners hadn’t upgraded and possibly the most interesting and funny thing which happened was a tweet by Donald Trump endorsing congressman Keith Rothfus. Keith had made his way into the Constantinople testnet block, because of a dApp called TwitterHunt in which people are betting on what Trump mentions next. And with this some of the consensus issues arose. Two the same clients – Geth and Parity started to behave differently which lead to a thought that there must be a miscalculation there assuming that both of the clients have been upgraded. And after this, one of the Ethereum core developers Afri Schoedon came out in Twitter stating that there will be no Constantinople in 2018, adding that they need to investigate further on this. That was something that all the ETH devs previously had agreed on, that if there were any issues with the Ropsten testnet, they wouldn’t be able to activate Constantinople.
Basically, they found out that they had started the testnet hard fork just 6 days after the latest Geth client update and only one day after the Paritys’ update, leaving the users without enough time to upgrade. Before that, they stumbled on a situation where the expected block of the hard fork (4,230,000) had already been mined and later on, it stalled on block 4,299,999 for two hours because “not a single” user was mining the Constantinople chain. All this sounds like they were in a rush, and I can’t seem to understand why.
Constantinople key aspects
The Constantinople hard fork is a system-wide Ethereum update which is designed to increase the network’s efficiency. The most controversial aspect of the hard fork is the plan to notably reduce block rewards for miners and make it ASIC resistant. This obviously would make the miner community to split into different points of view despite the previously approved consensus. And interestingly enough, that was one of the main issues why the planned hard fork got delayed. Because it got stuck for 2 hours with no one mining the Constantinople chain.
This is definitely something to follow in the future, as the planned hard fork is dubbed to be a major innovation for the Ethereum blockchain.
Yesterday on Friday, August 31 ETH (Ethereum) devs held another meeting about the future of Ethereum. This time it was a more limited meeting, where only 14 developers were in a discussion and all the miners and investors, who attended the previous meeting in which they couldn’t find a consensus, were left out. Maybe it was the limitation which helped them to come to a consensus, but the fact is that they finally agreed to support the code that would reduce the amount of new cryptocurrency introduced on Ethereum to 2 ETH per block, down from 3 ETH, by implementing an upgrade named EIP 1234.
“We have a strong user base of investors who want to reduce as much as possible but we have miners that said they’d agree to a small reduction, and that’s why i think we should go with 2 ETH per block,” said Afri Schoedon, the author of the proposal.
The devs also agreed on delaying the difficulty bomb for a 12 month period and that a hard fork is planned 8 months after the upgrade of Constantinople.
Depending on the perceived outcome of the change to Ethereum’s code, security researcher Martin Swende suggested revisiting the question after the 8-month period: “I think we also need to be conservative with changes and make changes incrementally, and not dictate changes against the will of the community, but apply conservative measures in doing changes but try to keep them within the intent of the community,” he said during the meeting.
“Everything I view in the issuance discussion is an incremental compromise to encourage the community and move things sanely until we move to proof-of-stake, which will bring issuance down to the range of 0.5 or 1 percent per year, and at that point I think the community will certainly be happy. These are incremental compromises until we get to that goal,” said Danny Ryan, the Casper developer for the Ethereum Foundation.
One thing they didn’t decide yet was the algorithm change that would restrict the use of ASICs from the platform. The devs argued that there is a need for deeper research towards this issue and Danny Ryan noted that there might be a potential of receiving funding from the Ethereum Foundation.
A few other not so controversial upgrades were confirmed on the upcoming fork like EIP 145, EIP 1014, EIP 1052 and EIP 1283 which all are meant for increasing efficiency and scalability.