The Ethereum network is set to implement an upgrade called Arrow Glacier on December 9, 2021. A key impact of this upgrade is that it will delay the appearance of a so-called “difficulty bomb” – which would hinder or stop mining of its cryptocurrency Ether (ETH) – until June 2022.
“After the transition, the ‘bomb’ will no longer exist on the network,” according to Tim Beiko, Ethereum’s protocol developer coordinator. Specifically, Ethereum developers are working to create Ethereum 2.0, or ETH2, which will change its underlying model from “proof of work” to “proof of stake”.
Key points to remember
- Ethereum is implementing an upgrade called Arrow Glacier.
- This will delay to June 2022 the appearance of a “difficulty bomb” that could stop the mining of the Ether (ETH) token.
- Ethereum is moving from a proof-of-work model to a proof-of-stake model.
- Ethereum 2.0, or ETH2, is not a new cryptocurrency, but this new model.
- This will reduce power consumption by more than 99%.
proof of work
Under the current proof-of-work model used by Ethereum, miners must solve complex mathematical problems or puzzles to validate transactions. A key criticism of this model relates to its negative impact on the environment, since it leads to a high use of computer power and therefore electricity. The “difficulty bomb” was an anticipated exponential increase in the degree of difficulty in solving these problems.
Proof of Stake
In contrast, under the proof-of-stake model that Ethereum plans to implement in 2022, the blockchain will verify transactions based on the holders’ stake in the Ether token. It will require far less computational power than the current proof-of-work model because it fails to reach consensus by racing miners to complete the same puzzle.
The result is that Ethereum 2.0, or ETH2, should be more scalable, secure, and sustainable, reducing power consumption by up to 99.95%. During this time, Ethereum mining will no longer generate revenue.
‘Sharding’ and ‘Beacon Chain’
Cointelegraph, which emphasizes that ETH2 is not a new cryptocurrency, describes the details of the Ethereum upgrade as follows:
“In the current version, nodes must validate every transaction to maintain Ethereum’s public ledger. random nodes to each fragment.”
“This would remove the need for each node to scan the entire chain, theoretically improving the speed and cost needed to maintain the network. Meanwhile, individual shards would share 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 transactions on every shard, helping the entire Ethereum 2.0 network to reach consensus. It would also detect dishonest validators and initiate sanctions by removing a portion of traffic validator involvement.”
“The Beacon Chain deposit contract has received over 8.42 million ETH tokens from 55,300 unique depositors (validators) since its launch in December 2020.”
“ETH2 is not a new coin and would not change the amount of ETH one holds… ETH2 could end up becoming a rebranded version of the original Ether, with no need for holders to exchange a version for another one.”
Not everyone seems happy with the move to the proof-of-stake model and ETH2. This decision will reduce the income of miners by around 20% to 35%, according to some estimates. Additionally, some observers fear that changes to Ethereum’s incentive model could encourage disgruntled miners to leave the network, attempt to sabotage it, or start a competing chain.