Ethereum forks in London, Berlin and Shanghai and their role in Serenity

The Ethereum network is taking a big step towards a scalable PoS blockchain. This is how the London and Berlin hard forks fit into the path to Ethereum 2.0.

Ethereum ( ETH ) has been on a hot streak so far in 2021, with its value rising from about $ 1,300 at the beginning of the year to nearly $ 4,000 in May. However, Ethereum price aside, the ongoing problems on the Ethereum blockchain have brought to light the anger of traders and decentralized application (DApp) developers in the Ethereum ecosystem. L to lack of scalability and high rates of gas are the main problems.

As one of the largest cryptocurrency platforms for decentralized applications, Ethereum has been dealing with network congestion reflecting the high gas fees that people have had to pay with each transaction. Since the beginning of the year, at times, the cost of facilitating transactions in the Ethereum ecosystem has hovered around the range of $ 16-20, reaching $ 100 in DApps such as Uniswap that have a high volume of transactions.

From this point of view, the transition to Ethereum 2.0 (Eth2) as a solution designed to address scalability issues, as well as solve the problem of skyrocketing gas rates, is a welcome respite from the Ethereum community.

Eth2, or Serenity, will be a technical update that will move the Ethereum blockchain from a proof-of-work (PoW) protocol to a proof-of-stake (PoS) blockchain. , thus increasing its transaction capacity, reducing gas rates, and making the network easy to scale and greener when generating new currencies and validating transactions.

After years of preparation, the step towards Eth2 began with the launch of the Beacon Chain as the first step to revolutionize the development of the Ethereum network. The move to a PoS blockchain will be one of the biggest upgrades in the life of the Ethereum blockchain, and will therefore take place in phases. London's Ethereum hard fork is one of the updates that will bring the Ethereum network closer to Serenity.

Berlin's hard fork

The Berlin upgrade went live on block 12,244,000 on April 15. Named after the host city of Ethereum Devcon's inaugural convention, Berlin is a precursor to the larger London hard fork, incorporating four Ethereum Enhancement Proposals (EIPs) that address gas prices and allow new types of transactions.

Berlin's EIP-2565 consists of the reduction of gas rates on Ethereum. This mechanism uses a feature called Modular Exponentiation (ModExp) to benefit Ethereum users who need to run services on the Ethereum network.

The EIP0-2718 protocol makes all types of transactions backward compatible, thus facilitating the incorporation of new transaction logic in Ethereum. The developers who created this protocol used a new feature known as the Typed Transaction Envelope.

The Berlin hard fork also introduces a proposal titled EIP-2929, which introduces a gas price increase in opcode transactions. In computing, opcodes are parts of a machine language that specify operations. Ethereum opcodes have been a major pain point for denial of service (DoS) attacks in the past. With EIP-2929, a higher gas cost will eliminate the incentive for denial of service attacks.

Finally, the Berlin hard fork includes the EIP-2930 protocol, which is based on the EIP-2718, and which provides a new type of transaction mechanism that allows users to form lists of wallet addresses to be able to trade with fees. much lower gas rates.

Reactions to Berlin

The EIPs introduced with the Berlin hard fork were intended to reduce the cost of gas rates at a time when network saturation was at its peak, as well as improve the efficiency of Ethereum. However, the update was postponed several times due to concerns about potential vulnerabilities caused by the centralization of the update.

Furthermore, the consensus in the Ethereum community was that Berlin would have less of an impact in the short term, but that it would pave the way for the long-awaited London hard fork EIP-1559 protocol.

London's hard fork: increased elasticity of blocks

Ethereum's London hard fork is part of Ethereum's roadmap on its way to the Eth2 launch. The long-awaited hard fork will likely launch on August 4 in a delayed and previously rescheduled release for late July.

The Ethereum London hard fork will include five Ethereum enhancement protocols. The most notable of the five EIPs are the EIP-1559 and the EIP-3554.

EIP-1559 introduces a new fee structure that will make Ethereum deflationary. Although highly controversial, this protocol change aims to burn part of the commissions generated on the Ethereum blockchain, thus reducing the income of miners.

EIP-3554, on the other hand, will introduce incremental difficulty in mining Ethereum, thus removing the incentive for miners to participate in the PoW network. This move is expected to push miners towards the new PoS blockchain while freezing the proof-of-work network.

Ethereum miners react to EIP-1559

While Ethereum users and investors anticipate the launch of EIP-1559 as it will help reduce gas rates, Ether miners were not enthusiastic about the proposal.

The long-awaited update will put Ethereum on a deflationary path through the burning of commissions that originally went to miners. The EIP-1559 plans to set a flat fee for everyone on the Ethereum network, so that no one will have the option to pay more to have their transaction confirmed faster than other transactions. The network sets the commission automatically, and then the commission is collected from transactions and burned, allowing a dynamic expansion and contraction of the size of the blocks.

For users who wish to prioritize their transactions, this EIP-1559 update will include an optional "priority rate" that will act more like a tip that incentivizes the miner to prioritize the transaction. Miners will be able to pocket this priority commission, however, the base commission will be burned.

According to James Beck, director of communications for ConsenSys - the technology company that supports the Ethereum blockchain - the burning of the base commission will put deflationary pressure on the emission of ETH.

While some argue that the deflationary mechanism of this update will lead to an Ether price boom and create a positive price feedback loop, some of the disgruntled miners have criticized the move as it will reduce their revenue significantly.

In protest at the upcoming implementations, some Ethereum miners expressed their desire to carry out a 51-hour show of force on the Ethereum network, directing computational resources to a group that supports unilateral changes to the Ethereum network. Since then, the threats have subsided, and Vitalik Buterin has proposed a quick transition to Eth2 as a solution.

The near future of hard forks in Ethereum

The London and Berlin hard forks are just the beginning of the improvement proposals coming to the development of Ethereum before the network's transition to Eth2. Following the London fork, the Ethereum community will prepare for the Shanghai fork, which is scheduled to go live by the end of the year.

The Shanghai hard fork will be the last step in the journey towards merging Eth1 with Eth2. The discussions underway among developers on the hard branch Shanghai suggest that the update will take place in October 2021 and implemented exclusively a merger rather than an added feature to the next Eth2, as has been the case of hard bifurcations previously.

Overall, there is a mix of excitement and disappointment in the Ethereum community, with some anticipating a move to a PoS blockchain that will result in cheaper transaction costs, while others lament a reduction in profits. It remains to be seen if the updates will lead to a quick and successful transition to Ethereum 2.0.