The Ethereum network implemented a major upgrade on Dec. 9 called Arrow Glacier which delays the launch of a feigned “difficulty bomb” and will impede further mining of its Ether (ETH) cryptocurrency for six months.
Tim Beiko, coordinator of Ethereum’s protocol developers, said that “after the transition, the ‘bomb’ will no longer exist on the network.”
The development team behind Ethereum is working to create a new version 2.0 or ETH, which will shift their underlying model from “proof of work” into “stake.”
The “difficulty bomb” is an anticipated exponential increase in the degree of difficulty for miners to solve these problems, which will lead them into heavy use and consumption on computer power. This has been critiqued due its negative environmental impact. This is under the current Proof of Work.
In contrast, Ethereum’s Proof of Stake model will be more energy efficient than the current proof-of-work system as it requires much less processing power. With no need for miners to compete and race against each other, this new blockchain can operate in a way that is much simpler on everyone involved.
Ethereum 2.0 is proposed to be higher in scalability, security, and sustainability, decreasing energy consumption by approximately 99.95%. In the meantime, Ethereum mining discontinues its revenue generation.
The shift to a proof-of-stake model for ETH2 collected contrasting responses from Bitcoiners. As this could lower miner revenue by over 20%, according to a few estimates. Some people worry that the changes to Ethereum’s incentive model could encourage dissatisfied miners’ departure, or even create a competing chain.
Cointelegraph describes the facets of the Ethereum update as follows:
“In the current version, nodes must validate every transaction to maintain Ethereum’s public ledger. But the Ethereum 2.0 upgrade would launch ‘sharding,’ which would divide the network into various segments (called shards) and randomly assign nodes to each shard.”
“That would remove the need for each node to scan the entire chain, theoretically improving the speed and costs required to maintain the network. Meanwhile, individual shards would share the transaction details with a so-called Beacon Chain, which serves as the backbone of Ethereum 2.0.”
“Beacon Chain, which went live in December 2020, would validate the transactions on each shard, thus assisting the entire Ethereum 2.0 network in reaching consensus. It would also detect dishonest validators and initiate penalties by removing a portion of the validator’s stake from circulation.”
“Beacon Chain’s deposit contract has received over 8.42 million ETH tokens from 55,300 unique depositors (validators) since its launch in December 2020.”