Over the last year, developers of Ethereum have run several hard fork updates to enhance the capabilities of the Ethereum blockchain. Along with the latest upgrades, we would like to take a closer look at the development of the Ethereum project, presenting both its past and future updates.
Four stages of Ethereum
Initially released in 2015, Ethereum is a platform for decentralised applications, serving as an extremely powerful computer with no risk of downtime or third-party interference. The network provides a virtual machine called EVM (Ethereum Virtual Machine), which executes scripts through a public node network.
The applications that are run on the Ethereum blockchain are called smart contracts. For example, one of such applications is very familiar to our users – it is designed to distribute weekly net transactional revenue share to the holders of Banker (BNK) token.
Ethereum platform is powered by ‘gas’ – a unit of computation that is used for executing transactions and performing various other tasks within the blockchain. Ether (ETH), one of the most popular cryptocurrencies in the world, was ultimately designed as the means of payment to cover gas costs on the platform.
The team of Ethereum have put forward many improvements to the system throughout the years. The development of the project has been split into four main development stages, each of them symbolising a certain period of progress – Frontier, Homestead, Metropolis and Serenity.
Ethereum Frontier and Homestead: The beginning
At first, Ethereum was designed only for developers, not for the end users, as the platform only featured command-line interfaces. It was commonly used as a place for experimenting and building the early versions of decentralized apps. This period was named Frontier with reference to American Frontier, a historical period, better known as the Wild West.
The founders of the Ethereum project have mentioned that such name was chosen to resemble a place with immense possibilities, but huge risks as well – the platform brought great potential that attracted many blockchain developers but was also unstable and needed improving.
As the American Frontier period came to an end, life became calmer: newcomers in the USA started to settle in their lands building homes for the future. A similar situation occurred in the Ethereum platform as well. Once the errors were fixed, and the platform itself was adapted for the end-users, Ethereum launched its first public version – Homestead.
Ethereum Homestead hard fork has introduced three major improvements. The first of them has removed the so-called ‘canary contracts’, which gave Ethereum team members a chance to stop certain activities within the network. Thus, the platform became more autonomous.
The update also included a new ETH wallet called Mist, an application for not solely storing and holding Ether, but writing smart contracts as well. Finally, new codes for the programming language Solidity, used within the platform, were introduced.
Metropolis: the current phase
In the last quarter of 2017, the founders of Ethereum have decided to take things a step further and introduce a new hard fork upgrade called Metropolis. Arguably, the main purpose of Metropolis hard forks is the transition from the current Proof of Work (POW) consensus mechanism to a more advantageous Proof of Stake (POS) method.
Until now, Ethereum has used a similar model of consensus as the Bitcoin network, where transactions are confirmed by blockchain miners. Nevertheless, the founders of Ethereum have introduced an alternative model intended to make the blockchain more independent and eliminate the problem of miner pools monopoly.
At the moment, these pools make up the major part of the miners’ community, in this way reducing competition and causing a possible threat of taking over the network. Proof of Stake concept relies on ‘stakes’, a certain amount of ethers that each validator – an alternative to miner – will have to deposit to the system. After a certain amount of blockchain transactions is confirmed, the validator would get his stake back with a reward.
This concept should prove advantageous for raising competition between the validators, as it would not require expensive mining equipment and anyone interested should be able to join. It would become costly for validators to control the majority of the network, so a monopoly would also become very unlikely.
As the shift to Ethereum 2.0 and the new consensus model is going to have a major effect on the whole network, it has been decided to implement the change gradually, by splitting the Metropolis phase into three distinctive updates. The updates have been inspired by the historical names of Turkey’s biggest city – Byzantium, Constantinople, and Istanbul.
The POS concept has still not been fully implemented and will start functioning with a future hard fork named Casper. However, upgrades moving closer to it can already be found in Byzantium, Constantinople and Istanbul hard fork updates.
Byzantium: Postponing the Ice Age
The first part of Metropolis phase, Byzantium introduced a total of nine updates to the system. First of these, has paved the path for the Proof of Stake method by restructuring the reward system for blockchain miners.
With the update, the award for mining a single block was reduced from 5 ETH to 3 ETH, in this way disincentivising mining on the Ethereum blockchain. However, the update also introduced a delay of around 18 months to the so-called Ethereum ice age – a state when mining will become extremely difficult, ultimately moving the whole network to a Proof of Stake model.
After reviewing the rewards formula, developers also fixed an issue of minor occurrences when the rewards were bigger compared to the block size. This improvement made the total supply of Ethereum more predictable – a change crucial for the developers, as they are planning future updates in accordance with the block size.
Byzantium update has also increased the privacy within the system by making it compatible with cryptographic primitives – functions that provide cryptographic proof that a transaction has been completed without revealing the identity of the parties participating in the transaction. This upgrade introduced a more autonomous flow of assets within the system.
Other updates were mainly designed to improve the Ethereum smart contracts. The security of these applications has been enhanced by an update which creates a secure environment for smart contracts to interact with unknown sources that might prove harmful to the platform. Another adjustment changed the way gas fees are charged for new smart contracts implemented in the system to enhance efficiency.
Constantinople: Restructuring the fee schedule
In early 2019, Ethereum advanced to the second part of its third development phase. Constantinople hard fork update provided five core improvements to the Ethereum system. These were mainly focused on delivering more efficient alternatives for some of the functions on the Ethereum blockchain.
Constantinople provided an alternative for transaction execution and improved the speed of the Ethereum blockchain. In the past, it took around 15 seconds to get a confirmation for a transaction on the Ethereum blockchain, and there has been an active search for alternatives to reduce these figures.
One of the improvements of Constantinople, similar to the Bitcoin Lightning Network solution, provided just that. It allowed Ethereum users to set up new types of state channels – off-chain solutions that act as an alternative platform to make payments between two parties without the need of on-chain confirmation.
Considerably high gas costs have been regarded as an issue on the Ethereum blockchain for an extended period of time. The platform developers aimed to solve the problem by introducing three improvements to the system.
The first one lowered the gas costs for performing bitwise shifting operations on the Ethereum Virtual Machine by providing a cheaper alternative. The second update provided a significant gas price cut by introducing an alternative code for checking bytecode of a contract, while the third improvement was focused on decreasing the gas metering for a certain opcode.
Constantinople also took further adjustments for the move towards the Proof of Stake consensus method. The update delayed the ice age of Ethereum even further, in this way providing more time for the blockchain developers to prepare the measures necessary for implementing the new consensus algorithm.
Istanbul: Safer and cheaper environment
The latest Ethereum hard fork, third in the Metropolis phase, introduced six additional improvements to the platform. Although no ground-breaking adjustments have been included in the update, Istanbul presented even more efficient gas usage models, as well as presented a couple of new features to the network.
Although some changes regarding the gas metering and usage have already been introduced in the previous hard forks, the project is not planning to stop there and has now introduced even more attractive pricing models for certain on-chain functions. The Calldata function is now around four times cheaper than before, while the gas costs for running a number of popular Ethereum applications were lowered as well.
Ethereum blockchain is completely public, and some users might find it unattractive. To bring a certain level of privacy to the system, the developers introduced a more efficient (gas-wise) code for calling equihash functions, widely applied for privacy-oriented cryptocurrencies, such as Zcash. The update is aimed at ensuring seamless interoperability between Ethereum and Zcash blockchains.
The updated platform is now also better protected from distributed denial-of-service (DDoS) attacks. However, network security is ensured at a certain cost. Some of the opcodes for recalling the data of Ethereum blockchain have become more expensive – the pricing update was held with a purpose to deter potential hackers, as the financial costs of a potential attack would become virtually impossible to cover.
Muir Glacier: Further Delaying the Ice Age
Although not a part of the original Metropolis plan, Muir Glacier hard fork was implemented to further postpone the Ethereum ice age that has been nearing quicker than the developers have predicted. The update contained only one improvement proposal, EIP2384.
The proposal delayed the Ethereum difficulty bomb and ice age for another 4,000,000 blocks, which converts to approximately 600 days. Developers of the platform hope that the delay introduced by Muir Glacier will be the last of its kind, providing the network enough time to prepare for the new Proof of Stake model.
Ethereum Serenity: The final phase
The founders of Ethereum are continually trying to improve their blockchain, providing alternatives and updates. The platform will eventually be ready to have the Ethereum Casper update and after that, with the help of another hard fork, move entirely to the new Proof of Stake model.
That is when Ethereum will reach its fourth state, which is called Ethereum Serenity. As the dictionary suggests, it is the state of being calm, peaceful, and untroubled. At that point, the Ethereum platform should have reached its full potential.
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