Ethereum Constantinople Hard Fork
What is it? And what do I need to know about it?
Everyone is talking about it.
Ethereum’s price has surged over 70% over the last few weeks. In mid-Dec, its market capitalization was only about $8 billion, which is the lowest since May 2017. But since then, thanks to the imminent hard fork, it has doubled to $16 billion at press time.
The Constantinople Hard Fork, which is the second phase of the Metropolis project, is due to happen on the block height 7,080,000. Judging by the current mining speed, we can expect it to occur on around January 16.
The Hard Fork will result in a new blockchain which contains all five upgrades, also known as the EIP’s, the abbreviation of Ethereum Improvement Proposals.
In the Ethereum community, every member can write a proposal (EIP) for the community to review. If the majority agrees, it will be implemented.
But unlike the contentious fork of Bitcoin Cash, the Constantinople Hard Fork is more like a maintenance and optimization upgrade. In fact, most of us may not even notice the differences after it is complete.
Now, let’s take a look of the 5 EIP’s:
EIP 145: Bitwise shift instructions
The new instruction will use 10 times less gas, meaning running certain smart contracts will be cheaper.
EIP 1052: Hash of smart contracts
By adopting a unique hash, the verification of the code of the other contract will become much more efficient.
EIP 1014: State channels
State channels allow certain transactions to be settled off-chain, which is very similar to Bitcoin’s lightning network. It will greatly improve the performance of the Ethereum network.
EIP 1234: Delaying difficulty bomb & reducing block reward
The founder of Ethereum planned to move the network from PoW (proof of work) to PoS (proof of stake) algorithm eventually (Casper update).
However, if the network is switched to PoS, miners will not be able to get the revenue. They can choose to keep the old blockchain running, and not adopting the new upgrades. This actually happened once in history, splitting Ethereum into Ethereum Classic (ETC) and the current Ethereum (ETH).
To prevent the same forking from happening again, a difficulty bomb was introduced to the Ethereum network, making mining a block exponentially difficult to unprofitable, and at some point it will become impossible, freezing the entire network (a.k.a Ethereum’s ice age).
The difficulty bomb forces the developers to keep improving the network, so the ice age will not happen so soon. It also forces miners to adopt the updates, or they will not be able to profit from mining.
However, the developers do not want to rush the Casper update. They want to make sure that the new protocol is as safe as the old one. So, the difficulty bomb has been delayed for a few times. In this hard fork, the difficulty bomb will be delayed again.
On the other hand, the reward for mining a new block is reduced from 3 ETH to 2 ETH. Approximately every 15 seconds, a new block is created, meaning that there are ~5,500 new blocks in the Ethereum blockchain per day. However, the ever-growing supply will put pressure on Ethereum’s price. So, the reduction in supply can prevent inflation and drive the price of Ethereum back up.
EIP 1283: Gas metering on SSTORE
This EIP proposes net gas metering changes for SSTORE opcode, enabling new usages for contract storage, and reducing excessive gas costs where it doesn’t match how the most implementation works.
Is there anything I need to prepare for the hard fork?
Instead of storing your ETH in your wallet, we strongly recommend you to deposit them into OKEx. At OKEx, we have a technical team to handle all the requirements for the upgrade. At the same time, you can rest assured that your asset will be safe with our institutional-grade security system.
Risk Warning: Trading digital assets involves significant risk and can result in the loss of your invested capital. You should ensure that you fully understand the risk involved and take into consideration your level of experience, investment objectives and seek independent financial advice if necessary.
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