Ethereum has had a rough ride over the past 12 months. The big bear market and network scalability woes have resulted in the world’s second largest crypto asset dropping to third and dumping nearly 90% of its value.
A long-awaited planned upgrade to the Ethereum network is due this week and it could spell some big improvements for the ecosystem. Constantinople, as it has been dubbed, will usher in five updates called Ethereum Improvement Proposals (EIPs).
The blockchain will split into two with the new version running operations as the old one fades out. The “hard fork” will take place at block 7,080,000, which has been estimated to happen on or close to Wednesday, January 16.
Ethereum now has a number of competitors which also offer smart contract and decentralized application platforms. The difference is that they are all faster and more efficient than Ethereum. Some such crypto projects include Tron, EOS, NEO, and NEM.
Ethereum needs to improve its performance and decrease the cost of operations to remain competitive and this upgrade will be the start of those improvements.
The first of the five upgrades will modify the Ethereum Virtual Machine so it is cheaper and easier to do certain things on the chain. When transactions take place on the blockchain they need ‘fuel,’ which in this case is called ‘gas.’ Reducing the usage of this gas has become a priority for the developers.
The second upgrade also reduces gas usage by making smart contract code verification improvements, and the third adds off-chain functionality that also increases performance and drops the gas use. Upgrade four tackles contract storage and gas metering, which is another plus for performance.
The fifth modification is a little more complicated. Ethereum now operates on a “proof of work” model whereby miners use computing power to find the next block on the chain. It is planning to switch over to “proof of stake” consensus later this year in which the blocks are verified by staked crypto instead of being “mined.”
The blockchain has been designed to get exponentially harder to mine with a built-in “difficulty bomb.” So, in order to prevent the whole thing freezing up before the next big upgrade, called Casper, this difficulty has been delayed with adjustments to the block reward.
Ethereum has a long way to go in terms of development, as do most current crypto projects, which is why so many are still focused on markets and prices. On that front things are not pretty as Ethereum is still around its lowest levels for more than 18 months.