19.12.2019 08:44 GMT+1
Category: NEWS

Ethereum Ice Age May Be Imminent If Miners Withdraw from Network

The Ethereum block difficulty began to grow in November 2016. Since then, developers have constantly had to conduct hard forks to keep the network up until the transition to a proof-of-stake algorithm.

The Ethereum block difficulty began to grow in November 2016. Since then, developers have constantly had to conduct hard forks to keep the network up until the transition to a proof-of-stake algorithm.

Before the Istanbul upgrade, which took place on December 8, the Ethereum team decided to postpone the explosion of a so-called “difficulty bomb” again, which could lead to the start of an Ice Age.

In the beginning, Ethereum (ETH), was supposed to work on a proof-of-stake consensus algorithm. However, the implementation demanded more time, so the network was launched on the proof-of-work consensus model. At that time, the developers introduced a difficulty bomb into Ethereum — a mechanism that is supposed to gradually make the process of generating new blocks more complicated, which should eventually lead the network toward PoS.

First, the bomb was supposed to explode after Ethereum would be ready to work on the new algorithm named Casper, and provoke the “Ice Age” — a transitional period during which mining new coins would become difficult and unprofitable. Theoretically, this should force miners to switch to a new chain.

However, due to the delay in the development of the PoS mechanism, the transition to Ethereum 2.0 is constantly being postponed. At the same time, the difficulty bomb has been about to explode several times and the Ethereum team has been constantly delaying it by conducting hard forks.

The Dangers of the Ice Age

Vitalik Buterin had predicted the fall of the network in 2021 due to a difficulty bomb. However, the events in the Ethereum project are developing faster than expected, while the process of the PoS network transition cannot meet the deadline.

In April 2019, the ETH network difficulty began to rise again. If the growth trend continues, the Ice Age could happen much faster than expected. This could lead to miner withdrawal, reduced scalability, and even a network crash. Moving the Constantinople hard fork to January 2019 led to a decline in the number of ETH mined per day, since mining had become more difficult. Now, the daily value is 11,872 ETH and it continues to drop.

The difficulty bomb could make mining even more unprofitable, which could lead to miners leaving the network and individual pools would start to dominate the market. In case the miners voluntarily refuse to support the network, there will still be those who will ensure its operation — but with the full onset of Ice Age, mining will become impossible. However, some experts believe that the difficulty bomb is a necessary procedure for the transition to PoS, so it shouldn’t frighten the miners.

Vlad Miller, CEO of blockchain platform Ethereum Express, told Cointelegraph that despite the fact that mining will become less attractive, in the long run, the change will be worth it, because electricity costs will be reduced, and the likelihood of a 51% attack will be lower.

An increase in block time also leads to a decrease in the network’s ability to process data, however the current limitations are set precisely taking into account the block time and can be changed if necessary. The only negative consequence could be an increase in the confirmation time of a transaction. If the hard fork gets delayed again, it could affect the network bandwidth and lead to a rise in fees, since the complexity can increase to the level where the production of one block will take about two minutes. The current average production time is about 15 seconds.

Muir Glacier Hard Fork

Last week, the Ethereum developers raised the question of delaying the difficulty bomb again by proposing a hard fork named Muir Glacier. Among the possible solutions were both a delay and complete removal of the difficulty bomb mechanism. However, it is believed that removing the difficulty bomb would lead to Ethereum network being updated less often and, therefore, miners would become less incentivized to update their software and equipment.

The Ethereum developer team hasn’t agreed on a long-term program concerning the difficulty bomb, but, in the short term, they decided to postpone this mechanism for a couple of years.

According to Tim Beiko, product manager at blockchain solutions firm PegaSys, the hard fork will be conducted at block number 9.2 million, which will be generated on Jan. 6, 2020. If Muir Glacier succeeds, it will freeze the bomb until after another 4 million, meaning that Ethereum would not be threatened by the Ice Age for the next couple of years.

Hudson Jameson, a core developer liaison at the Ethereum Foundation, said that Ethereum users and miners should know that there are no critical threats by the difficulty bomb and that all it does is increase the block times. He added that the difficulty bomb has always been delayed in the past and it is planned to be delayed again in January with the Muir Glacier network upgrade.

Source: Cointelegraph 

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Nevena Bjelic
Nevena Bjelic