Will the Ethereum merge lead to forking?
The long awaited Ethereum merge has finally been carried out. The event has generated so much uproar and excitement in the web 3 community, the dissatisfaction and concerns of some users have not also gone without notice. One of the greatest concerns is whether the merge would lead to a fork.
What is a fork in blockchain?
A fork is a change in the blockchain’s protocol that may render the old transactions invalid. There is a need for agreement amongst users of a blockchain to preserve its operation, when the contrary happens, it leads to forking. A discord or variation of opinion among users of a blockchain on the operation of the protocol may lead to a change in such operation. Forking maybe of two kinds, soft fork and hard fork.
A soft fork is a change that occurs in a blockchain’s protocol. It is an upgrade or advancement in the operations of a blockchain. It has been constantly compared to the software upgrades carried out on smartphones. Transactions that are not in tune with the recent change of the blockchain are not rendered completely invalid, older transactions may be validated by nodes operating on the changed system or vice versa on the back-end.
Despite the changes and disparities that occur in the operation of the protocol after a soft fork, the blockchain still remains a single entity. Just like an upgrade to a smartphone, if someone decides not to upgrade to the latest software, he can still make use of the phone regardless. Soft forks have occurred in some blockchain protocols like Bitcoin. The Segregated Witness (SegWit) that occurred in 2015 was an update to the Bitcoin protocol to help fix transaction malleability and scalability issues. While users operating on the SegWit updated bitcoin have different addresses from the users not operating under it, all transactions are carried out on the Bitcoin Blockchain. Segwit was merely an upgrade to Bitcoin though lauded not compulsory to adopt by users of the chain.
A hard fork is also a change in the operation of a blockchain. In this case, the change leads to a divergence into two separate blockchains. This occurs when a change is proposed to the operation of a protocol, in most cases such change maybe fundamental to the existing operation of the protocol. Opponents of the agreed change may go ahead to form their own blockchain according to their beliefs which shall operate separately from the other chain. This includes having different native tokens.
Bitcoin and Ethereum have had hard forks at one point or the other. In the case of Bitcoin, Bitcoin Cash, an upgrade to the network that was meant to increase the transaction speed of the network to accommodate more demand got its proponent forked out of the network. In the case of Ethereum, a famous hard fork is the Ethereum Classic which emerged as a result of the decision of the team to completely erase the history of the famous $50m The Dao theft. Proponents of the Ethereum classic were against this idea and decided to fork and keep the original “unaltered history of ethereum network”
Soft forks could also lead to hard forks. The severity of the disagreement and how important a change could affect users could result in a hard fork that originated from a soft fork. The Segregated Witness (SegWit) 2 is a good example of this. Segwit 2 was an idea that emanated from the concept of Segwit 1. Segwit 2 was later discarded due to lack of consensus.
Is Forking bad for a blockchain?
Changes are inevitable especially to a new and developing concept such as blockchain. A resistance or an action to hold persons with dissimilar interest against their will will be against decentralization. However, forking has not always led to the best of times with regards the blockchain and its native currency. When forking occurs, holders of the “parent” native tokens of the blockchain ends up with an equal number of forked tokens. This knowledge could make holders or whales with large holdings buy as many coins as possible, so they could get that amount of forked coins. This process leads to a large pressure on the token which leads to inflation. After receiving the forked tokens, these whales go to dump both parent and forked token on various exchange platforms which leads to a dump in the values of those tokens. The instablility of the token creates a difficult period for traders of such tokens. Most times, it takes a while for the tokens to fully recover.
Also, there is always the fear of which of the blockchain will outperform the other. In the case of Bitcoin which have more than 10 hard forks which includes, Bitcoin XT, Bitcoin Cash, Bitcoin Gold, etc. The original bitcoin has always outperformed all hard forks, perhaps it is due to the fact that it receives more hash power, other forks continue to slowly die out till they become completely defunct.
The reverse happened with Ethereum, the original idea which is the Ethereum Classic is underperforming in comparism to the altered idea, Ethereum. The newer version has gained so much prominence and popularity, it is now the second cryptocurrency in the world and a home to web 3 applications like DeFi and NFTs.
Another demerit of forking is the disruptive experiences of the community. All hard forks and blockchain believe they are working towards achieving the right vision for the future of the chain. This has led to competition and ill feelings amongst the communities. An example is the Bitcoin Cash’s claim to be the Satoshi’s. “true vision for Bitcoin”.
Is the Ethereum Merge a Fork?
There are a lot of misconceptions that the Ethereum merge is a different blockchain from Ethereum 1.0. This is false, the Ethereum merge is an upgrade to the Ethereum 1.0, the result of the event leads to an upgraded 1.0, not a separate blockchain. Although, this change is to the structure of the chain which is fundamental to the identity of such chain, in most scenarios this has led to a hard fork. However, it should be noted that the Ethereum merge or Ethereum 2.0 is part of the plan of how the chain would operate into the future, the change is not a revolution of the chain, rather it is an evolution.
According to Vitalik, Ethereum will only be 55% complete after the merge. Unlike, Ethereum Classic, the Ethereum merge is a planned, non-contentious protocol upgrade. The innovation of the Beacon Chain was the first step to effect this transition, the chain was run as a test of the Proof of Stake mechanism. The Beacon chain ran transactions using the pos mechanism which was in parallel with the Ethereum mainnet and did not have effect on the actions of the mainnet. After a successful test of the beacon chain, it is merged with Ethereum 1.0 to allow the full operarion of the Ethereum mainnet as a Proof of Stake system. This action is what is regarded as the Ethereum merge or Ethereum 2.0. The next step in the evolution of the chain is sharding where validators would be able to secure and validate a particular data or transaction without the interference of other validators. The idea in the future is that Ethereum will operate with the combination of staking, sharding and the beacon chain.
Also, when a fork occurs, the forked and parent chain have different native tokens.An example is the Ethereum Classic which has ETC has its native token while Ethereum has ETH. The merge has already been carried out, users still have their assets in ETH as it was when Ethereum was operating a POW system
Will the merge lead to forking?
A popular fork movement that started gaining momentum is the Ethereum Proof-of-Work (ETHPOW) led by Chandler Guo. It has already launched its native token, ETW. Ironically, as the merge comes closer, ETW has continued to fall drastically. This movement is to help preserve the original proof of work mechanism earlier adopted by Ethereum and to attract miners of the chain who are about to become out of work or have to join another chain that uses POW.
The decline in the popularity of the concept and its native token maybe due to the fact that Ethereum Classic is operating on POW and there might be no need for another duplicate chain. The hash rate of ETC started increasing as the merged soared closer, ETH did quite the opposite. Also, ETHPOW was largely built on the difficulty that will be faced by miners due to the transition and not the merits POW has over POS. This has made the movement less credible in the view of the Ethereum community.
The Ethereum merge has been successfully carried out, there has been no form of revolt from the Ethereum community or an action from the ETHPOW community. This implies that the chances of a successful fork on Ethereum is slim. However, the odds will always be present but overpowering or outperforming Ethereum which is the fear of most would most likely not occur in the nearest future.
