Ethereum Blockchain To Undergo Hardfork for Postponing Difficulty Bomb
Ethereum developers have agreed to postpone the difficulty bomb once again. The postponement is planned to be carried out a week after the Istanbul Gas upgrade, scheduled for next Sunday, is performed.
The decision was taken in an open discussion between ethereum developers and other non-developers in the ecosystem such as miners or marketers.
The discussion was centered around two options: to terminate it completely or postpone it. In the regard, Alexey Akhunov, an ethereum core programmer who is primarily working on data storage (rent) fees, stated “the risk/reward ratio from the usage of the difficulty bomb is not great so far.”
Eris Conner, a marketing executive working for Gnosis, was not in favor of terminating difficulty bomb completely as he fears community backlash. Gnosis is a decentralized app facilitating betting, similar to Augur.
Ethereum’s “Difficulty Bomb” refers to the increasing difficulty level of puzzles in the mining algorithm used to reward miners with ether on its blockchain. As the puzzles become more complex (and miners find it more difficult to earn ether), there will be a substantial lag between production of blocks on ethereum’s blockchain.
This will slow it down in exponential terms and its economics will become less attractive to miners. The onset of this scenario is referred to as “Ethereum’s Ice Age”.
None of the participants in the discussion protested against a postponement of the difficulty bomb. However, exchange of views on inflationary issuance led Tim Beiko of PegaSys, a branch of ConsenSys developing ETH clients to say as follows:
“Just wanted to point out that this would be the first push back of the bomb without an issuance change.”
James Hancock, who introduces himself as Coordinator of HardFork, said “in my opinion we should not touch issuance again. With hashrate already decreasing, I am not confident we want to reduce paying for security any further.”
None of them talked about the recent decrease in hashrate. However, the reason seems to be the decline in price, which directly reflects the supply and demand scenario. As Ethereum’s supply is increasing, only an increase in demand can keep the price stable.
If demand declines, it will lead to a drop in price and correspondingly the hashrate. Even though, the price has dropped by almost 90% from its peak, the hashrate has not even decreased by 50%, implying that a lot of money is spent on the security of the blockchain.
Therefore, there is room for another 40% decline in the hashrate. During the discussion, the developers, miners and marketers decided to remove the increase in algorithmic difficulty, while keeping the issuance unchanged.
Wei Tang of Parity said: “for parity, bomb delay, bomb defuse or reward change will all just be simple json config change, so I think it should be alright for us to deploy it in a short period of time.”
While Hudson Jameson, an Ethereum Foundation employee in charge of eth devs public relations, said: “I like the mid-January idea. Gives us a lot of time to get nodes to update no matter their current state.”
In 2018, around this time, Hudson Jameson argued that the entire month of December had to be removed because of holidays and the issuance minimization fork had to be moved to February. His opinion was later accepted.