Xu Kun: Explain the development of Ethereum in detail

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2021-03-07 14:15 (UTC+8)

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From a global perspective, the more important significance of EIP-1559 is the distribution of benefits.

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From a global perspective, the more important significance of EIP-1559 is the distribution of benefits.

Editor's Note: This article comes fromXu Kun's Sixianghui (ID: gh_0c9473726b11)Xu Kun's Sixianghui (ID: gh_0c9473726b11)

In December last year, the ETH2.0 beacon chain has successfully launched, and EIP-1559 was officially included in the London hard fork in July this year. The transition from POW to POS and the change of the gas fee model, from a global perspective, the distribution of ETH’s benefits will be more inclined to the holders, and from a local perspective, the income structure of miners will change. Regarding whether Ethereum will Towards fragmentation, there are different voices in the industry. Learning from the past and knowing the present, I reorganized the development of Ethereum, and it is also a study note to share with you.

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1. The birth and 1.0 stage of Ethereum

On December 31, 2013, Vitalik Buterin, the founder of Ethereum, released the first white paper of Ethereum and launched the project.

In April 2014, Gavin Wood published the Ethereum Yellow Paper, which standardized important technologies such as the Ethereum Virtual Machine (EVM).

From July 24, 2014, Ethereum conducted a 42-day pre-sale of ether, raising 31,591 bitcoins, worth $18,439,086 at the time.

On July 30, 2015, Ethereum began the [Frontier (frontier)] stage, and developers began to write smart contracts and decentralized applications on Ethereum for deployment on the Ethereum real-time network.

Block Reward: When miners successfully mine a block on the Ethereum blockchain, they will receive a reward in ETH. In the Frontier phase, the block reward for miners is 5 ETH per block.
Block Reward: When miners successfully mine a block on the Ethereum blockchain, they will receive a reward in ETH. In the Frontier phase, the block reward for miners is 5 ETH per block.
Gas: In the early days after the release of Frontier, the gas limit for each block was hard-coded to 5000gas. To put it bluntly, this means that there will be no big moves on the Internet. This allows a buffer period for miners to start working on ethereum and for early users to install the client. After a few days, the gas cap is automatically lifted and the network can start processing transactions and smart contracts as planned.
Canary contracts: Canary contracts are incorporated into Frontier to inform users which chains have been or are vulnerable to attacks. Canary contracts are assigned a value of 0 or 1. If the contract is assigned a value of 1, the client can recognize that this is a faulty chain and avoid this invalid chain when mining. Essentially, these functions of the Canary contract allow the Ethereum core development team to stop operations or transactions when there is a problem with the network. In the early stages of Ethereum, the Canary contract was an extremely centralized but indispensable protection mechanism.

Usability: All developer operations are performed through the command line, as there is no GUI.

On March 14, 2016, Ethereum released the second phase [Homestead], which mainly includes three important improvements to Ethereum:
First, it removes the canary contract, removing the centralized part of the network.
Second, it introduces new code in Solidity, Ethereum's contract programming language.

Finally, it introduces the Mist wallet, which allows users to hold/trade ETH and write/deploy smart contracts.

On July 20, 2016, Ethereum successfully implemented a hard fork, forming two chains, one for the original chain (Ethereum Classic, ETC), and one for the new forked chain (ETH), each representing a different community consensus and values.

On October 16, 2017, the Ethereum mainnet completed the Byzantium hard fork upgrade at block height 4370000, marking the opening of the third phase [Metropolis]. In the Byzantine hard fork, the EIP-649 proposal postponed the difficulty bomb (also known as the ice age) by one year. In addition, the block reward was also reduced from 5 ETH to 3 ETH.

The "Ethereum difficulty bomb" refers to part of the difficulty adjustment mechanism of the proof-of-work algorithm used by Ethereum. The difficulty bomb adds a value to the difficulty of mining that only increases with the increase of the block height and does not change with the change of the block generation time. This value increases every 100,000 blocks and never decreases. In the beginning, the difficulty increased by the difficulty bomb is very small, so it has no obvious impact on the block generation time; and the increase of this part of the difficulty is also very slow, but its growth is close to exponential growth. So at a certain time, it will suddenly increase the difficulty of the network, and the speed of block production will drop sharply, until the difficulty reaches the point where it is impossible to dig out new blocks. This is what we call the "Ice Age".

The difficulty bomb was originally incorporated into the Ethereum network in September 2015 to help the Ethereum network transition from PoW to PoS. Once the PoS mechanism is implemented, miners can theoretically still choose to support the old PoW chain, which will cause the community to split and produce two independent chains-one maintained by stakers and the other by miners. maintain. In order to prevent this from happening, the difficulty bomb mechanism came into being, which will make the mining efficiency lower and lower, and finally ensure that the entire network completes the transition to the PoS mechanism without hard forks.

On January 16, 2019, Ethereum will undergo a hard fork upgrade of Constantinople (Constantinople) (block height 7080000). On January 16, the upgrade was delayed due to a security breach. On January 17, the block at the height of 7080000 has been dug out. On March 1, 2019, the Ethereum block height reached 7,280,000, Constantinople & St. Petersburg (Constantinople & St. Petersburg) were upgraded, and the Ethereum hard fork was successful. An important proposal for this fork is EIP-1234, which reduces block rewards and suspends the difficulty bomb.
Block reward reduction: The block reward received by miners has been reduced from 3 ETH per block to 2 ETH. This move is called "Thirdening".

Difficulty Bomb Delay: EIP 1234 has postponed the activation of the difficulty bomb for another twelve months, when another vote will be held.

On December 8, 2019, the Ethereum mainnet completed the "Istanbul" hard fork upgrade at block height 9069000. The main upgrade contents include:
Redistribute the gas consumption of some opcodes according to the calculation overhead and the need to improve the resistance to denial of service attacks;
Improve the performance of Layer-2 schemes based on SNARKs and STARKs;
Make Ethereum and Zcash interoperable.

On January 2, 2020, Ethereum completed the "Muir Glacier" hard fork upgrade at block height 9,200,000. "Muir Glacier" will contain EIP-2384 to delay the difficulty bomb. This EIP proposes to delay the difficulty bomb by another 4 million blocks, or approximately 611 days.

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2. Ethereum 2.0

There are two main goals of ETH2.0:
One is to improve the overall performance and provide a more powerful infrastructure for the development of the application layer;

The second is to optimize the token economic model. The newly issued Ethereum will depend on the pledged ETH, making ETH an important economic resource in the ecology.

Phase 0

Specifically, from the POW mechanism to the POS mechanism, Ethereum 2.0 will be carried out in four stages.

Introducing the Beacon Chain as the "command and control" center for the entire Ethereum 2.0 network. The beacon chain will organize validators together and assign them to different shard chains to process transactions; after a period of time, all validators will be reshuffled and randomly assigned to another shard chain.

The goal of the initial phase is to implement the Beacon Chain, introduce a PoS mechanism, and store and manage transactions for validators. During this phase, the 1.0 PoW network will run concurrently with the 2.0 beacon chain to ensure the continuity of the transition.

Phase 1

On November 4, 2020, ETH released the main network deposit contract address; on November 24, it reached 16,384 validators, with a total target of 524,288 ETH locked; on December 1, Pos mining was started, and as of March 3, the accumulated lock Position 3,351,554 ETH.

Phase 1.5

It is planned to be launched in 2021, and the deployment target is the shard chain. That is, various designs related to sharding begin to be deployed, and participants in the PoS consensus mechanism ("verifiers") begin to be assigned to different shards to produce blocks and submit some information about the shards to the beacon chain.

Phase 2

Add an execution engine to the shard chain, so that the shard has the function of executing transactions, and can deploy contracts like the current Ethereum.

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3. EIP-1559

EIP-1559 aims to change the existing gas model. Specifically, it will double the current block Gas Limit, and the block utilization rate will fluctuate around 50% through the adjustment of the base fee (Basefee). When transaction demand spikes, fluctuations in block utilization can (partially) absorb transaction fee fluctuations. The base fee acts as a transaction tax in the new mechanism and needs to be paid for every transaction. The transaction tax is not rewarded to miners, but burned, and the beneficiaries are all ETH holders.

The base fee is calculated based on the base fee and utilization rate of the previous block. When the utilization rate is higher than 50%, the base fee increases; when the utilization rate is lower than 50%, the base fee decreases. The base fee for each block does not change by more than 1/8.

The base fee can be accurately predicted by the wallet software, and its fluctuations are relatively smooth. In addition to the basic fee, the user needs to pay a tip (Tip) when initiating a transaction. The function of the tip is to compensate the miners for the increased risk of uncle block due to the transaction included in the block. Tips are expected to form a fixed value by convention, such as 1GWei.

EIP-1559 has recently caused

V God said in the community, "The greater significance of EIP-1559 is to allow each transaction to be confirmed within 1-2 blocks. If some miners leave, there will be new ones. If the miners are 51 % attack, then transfer all of them to PoS as soon as possible. The miners seem to be the ones who are sacrificed. At present, the main income of the miners comes from the users on Ethereum. Miners are fungible, and there will be new miners on the Ethereum network that agree to the EIP-1559 proposal.”

From a global perspective, the more important significance of EIP-1559 is the distribution of benefits. The destruction of the base fee will introduce a deflation mechanism for ETH, making the value of ETH more supportive. At the same time, this also means that the ecological prosperity and active transactions on the chain will benefit all token holders, not just the exclusive benefits of miners.

Partially, part of the income structure of miners will change. Cryptocurrency researchers Hasu and Georgios Konstantopoulos analyzed that there are three main sources of income for miners:

1. A block subsidy of 2 ETH per block and additional rewards for uncle blocks;

2. Fees for users to bid for their transactions to be included in the block space (regardless of the final position of these transactions in the block);

3. Difficult to quantify, but extremely valuable miners can extract value (referred to as MEV, refers to miners (or verifiers, sorters, etc.) through the ability to arbitrarily include, exclude or reorder transactions in the blocks they produce A measure of profit), most miners currently “outsource” this revenue to frontrunners and arbitrage bots, who bid against each other in the mempool for these revenue opportunities (note: also lead to higher network fees, thus increasing miner income).

EIP-1559 will affect the second part of the miners' income source, that is, gas income, but both gas income and MEV come from users and rely on the strong Ethereum developer ecosystem. If there are no developers, Without such excellent applications as Uniswap and Compound, it is impossible for miners to obtain such a considerable gas income.

However, if miners choose to confront the developer community and start anew, not only will it be difficult to cultivate an active application ecology and user groups in the short term, but it will also be difficult for the value of new tokens to gain market recognition.

In the article, Hasu analyzed the five paths that miners can choose in detail. They also believe that all attempts to oppose the EIP-1559 proposal (including various fork methods) will have adverse effects on miners. Therefore, the best strategy for miners It supports the deployment of EIP-1559, and you can read it if you are interested.

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