Istanbul hard fork on the Ethereum blockchain - what changes await us?

The activation of the Istanbul update on the Ethereum mainnet will occur at block #9056000. This will happen approximately 4December of this year. It is expected that this will be another step towards solving the main problems of Ethereum: scaling and high commissions.

What will change in the work of the Ethereum blockchain and how Istanbul hard fork will affect the work of projects launched on the basis of the second-largest cryptocurrency capitalization network, Mining-cryptocurrency.ru figured out.

Why is Ethereum updated?

The main problem with Ethereum is scalability:the network is already overcrowded and operating at full capacity. The more popular a network is, the less effective it becomes. In Ethereum, the commission for transfers depends on the amount of resources spent (“gas”) and their cost (price of “gas”). At the same time, there is only one correction mechanism - rising prices. Because of this, transactions are slower and the cost of “gas” (transaction fees) is rising. Thus, by September 2019, the cost of “gas” in the Ethereum network increased 30 times - from $0.004 to $0.012, and the transaction cost - to $0.3 (which is expensive for a large network). So if the problem is not solved, sooner or later developers will be forced to switch to another blockchain.

Relatively slow and no longer as effectiveAs before, Ethereum is still seen as a universal blockchain that allows you to create almost anything. However, new, more specialized solutions are beginning to emerge in other networks. Competitors TRON, EOS, NEO and Steemit, TomoChain and Binance Chain have long been vying for the Ethereum throne. In its current form, Ethereum has reached a technological dead end. To get out of it, developers have been working for several years to transition the network to the Ethereum 2.0 state.

Istanbul - Ethereum System-wide Update,which will change several aspects of network functionality, including data storage, mining protocol and code execution. Hard fork will allow the network to become cheaper, faster and more scalable. Istanbul is the latest update in the Metropolis series, while the next Berlin update will launch Ethereum 2.0.

When is Istanbul update activated?

Istanbul activation has been postponed several times: first on August 14, then on September 4 and then on October 16. And so the developers decided on a new date - December 4.

It is worth noting that in January 2019, duringConstantinople's latest system-wide update, activation of the mainnet update was delayed by a month due to a critical code vulnerability discovered just 48 hours before the planned upgrade. Then 10% of the miners still separated from the main network, and the launch of Constantinople occurred simultaneously with the activation of the St. Petersburg update. Therefore, in case of unexpected problems, the developers have set a reserve activation date for Istanbul - January 8th. A month should be enough to fix everything.

Simultaneously with the main update there will beupgrade EIP 2124 (Ethereum Improvement Proposal - proposal to update Ethereum) has been activated - fork identifier for checking the compatibility of networks. It starts a mechanism that determines which version of the software the network node is running through. This will help ETH miners choose the right blockchain - the one that the majority supports.

In September, Istanbul was activated in testRopsten networks. But due to the unexpectedly fast confirmation of blocks, some miners did not have time to update their software, and the network was split into two chains.

What will change in the Ethereum code on December 4th?

The developers decided to activate Istanbul at twostage. The first of these starts on December 4, within which six approved fundamental code changes, or EIPs, will be launched. They will reduce and optimize gas costs, allow Zcash to be compatible with Ethereum, and protect the network from duplicate transactions.

In the first quarter of 2020, developerswill switch the network from the PoW mining algorithm to ProgPoW (EIP-1057) and launch changes in the Ethereum virtual machine. This should reduce the advantage of ASIC miners and solve the main problems of Ethereum.

We will analyze six innovations in the code that will be launched on December 4. Basically, these are technical changes to reduce the cost of "gas".

EIP-152: Add Blake2 F compression function for precompiling, optimizing blockchain performance, and enabling relay and atomic swap transactions between Zcash and Ethereum.
EIP-1108: Reducing the cost of precompiling (reassembling) gas, which should increase the privacy and scalability of the Ethereum network.
EIP-1344: Add ChainID Operation Code. This will allow smart contracts to track the correct chain when processing signatures and to prevent re-attacks between different chains.
EIP-1884: increases the cost of computation (virtual machine opcodes, i.e. instructions within smart contracts) when accessing the blockchain for dApps developers.
EIP-2028:reduction in the cost of Calldata gas from 68 Gas per byte to 16 Gas per byte. Price calculations are “supported by mathematical modeling and empirical estimates.” This will make it possible to make second-layer solutions, thereby increasing network throughput and will prove that zk-SNARKs and zk-STARKs solutions (a type of Zero Knowledge Protocol - a zero-knowledge proof protocol that does not involve direct exchange of passwords) are cheaper and more effective.
EIP-2200:rebalancing the cost of “gas” SSTORE taking into account changes in the cost of gas SLOAD (reading from storage). This will change the calculation of the cost of storing data in an EVM (virtual machine) and will allow smart contracts to introduce new features, including re-entry locks and re-submission of multiple contracts.

Potential smart contract issues after activating EIP-1884

EIP-1884 provides increased cost«газа». Это самое спорное обновление хардфорка, с которым была не согласна даже часть ведущих разработчиков. Однако необходимость его запуска объясняется тем, что с ростом сети Ethereum некоторые смарт-контракты, используемые в dApps, стали слишком ресурсоемкими.

As the blockchain size has increased,the computational costs of obtaining data on the state of the network (such as account balances) also increased, and the price of “gas” remained the same - this created an imbalance between the cost of the operation and the consumption of resources. This mismatch creates vulnerabilities for a number of attacks. To reduce the possibility of network congestion, EIP-1884 raises the price of gas for three resource-intensive, but cheap operations. This should prevent spam attacks and better balance the blocks.

The problem is that part of the smart contracts waswritten without considering that the prices of "opcodes" may change. Accordingly, the proposed update attracted attention and initiated a discussion in the Ethereum ecosystem.

Ряд разработчиков считает, что изменять правила playing in this manner is unacceptable. For example, Parity Technologies programmer Wei Teng expressed his concerns about possible problems with the EIP-1884 in a series of tweets. He believes that it would be fair to use the current gas price in current smart contracts, and a new one in future ones. This is an implementable function. However, there are no plans to launch such compatibility due to lack of development time. He notes that Istanbul is likely to violate several extensive contracts. These may be isolated cases, but Tang's concern is that some developers seem to think this is acceptable.

“One of the reasons Windows has becomepopular, is backward compatibility .... You can run old operating systems on modern processors. Ethereum should not be an exception if we want to have a bright future ”- summed up Teng.

Activation of EIP-1884 may also result inthat some of the dApps may break. For example, the cost of an SLOAD operation (reading from storage) will increase from 200 to 800 gas per operation. This will affect, first of all, two types of smart contacts: holding complex data structures in the storage and actively using them; as well as contracts that had a choice - calculate the value each time or calculate once and remember (now this strategy will become unprofitable).

Moreover, EIP-1884 can disrupt the operation of approximately680 smart contracts governing ethereum decentralized applications on the Aragon and Kyner Networks, or will raise prices for end users. Now their developers are working to ensure the projects work after the update.

Ethereum Core meeting moderator Hudson Jamesonagreed with Tan's position, but advised developers to take into account that the prices of “opcodes” may change in the future. Vitalik Buterin supported the EIP-1884, noting that he would like their price to be even higher.

Will updates affect the price of ETH?

Given the planned nature of the majorityEthereum, Istanbul updates, most likely, will not significantly affect the price of the coin network. At the same time, delays in the implementation of the roadmap often negatively affect the price of ETH. If this situation happens again, the coin may sag. However, even in the event of an initial recession or stagnation, the long-term impact of the fork is likely to be positive due to upgrade improvements for scalability, cost, and speed.

In February 2019, before awaiting activationIn a few weeks, Constantinople and St. Petersburg rose from $ 105 to $ 157. At the same time, a few days before the hard fork, the course began to fall and recovered only in early April.

Of course, Istanbul will improve appeal.Ethereum in the eyes of users. But, it seems, so far there are no prerequisites for a sharp increase in the price of ETH. The ICO boom has long passed, and the December 4 update does not solve all the network problems. It will be much more interesting to follow the price spikes on the eve of the long-awaited transition to Ethereum 2.0, expected at the beginning of next year.

Ethereum's most ambitious update yet to come

Activation of Ethereum 2.0 is planned for the first quarter of 2020. Finalization may take 3-4 years, during which two networks will operate in parallel. Buterin promises that existing apps will continue to work without changes. But developers should prepare in advance for increased costs of operations.

Hard fork will increase network bandwidth to15,000 transactions per second, will reduce transaction processing time, switch to the Proof-of-Stake (PoS) algorithm, reduce commissions and expand the functionality of smart contracts.

The transition to Ethereum 2.0 should solve the problems of security, decentralization and scalability and reduce costs by 100 times. December's updates are necessary steps towards this.