This is the fourth time Ethereum postponed the difficulty bomb. Core developers have expressed near-universal confidence that Ethereum will complete the Merge by next summer. Meanwhile, they will continue to offer updates during weekly All Core Developers meetings.
What is a Difficulty Bomb?
The difficulty bomb is a mechanism used to halt the proof-of-work network from creating blocks. Its goal is to make mining unprofitable and discourage miners from keeping the chain alive when the network switches to proof-of-stake. The mining difficulty levels increase as the block duration increases. It implies that if the block period is too short (10 seconds or less) or too long (10 seconds or more), the difficulty will be adjusted (more than 20 seconds).
Proof-of-Work vs. Proof-of-Stake
Miners must solve complicated mathematical problems or puzzles to validate transactions under Ethereum’s current proof of work paradigm. One major criticism of this concept is its negative environmental effect since it requires a lot of computer power and, consequently, electricity. The “difficulty bomb” was an expected exponential rise in the difficulty of addressing specific issues.
In contrast, the blockchain will validate transactions based on holders’ interest in the Ether token under the proof of stake mechanism Ethereum wants to introduce in 2022. Because it does not gain agreement by having miners compete to finish the same challenge, it will require far less computer power than the present proof of work model.
The Transition to Proof-of-Stake
Ethereum implemented the difficulty bomb to allow developers enough time to migrate into the proof-of-stake method completely. It is essential to the shifting process. EIP-4345, an Ethereum upgrade proposal, will increase the Difficulty Bomb by 10,700,000 blocks. Four million blocks had previously moved it due to the Muir improvement. The delay will allow developers more time to move to Ethereum 2.0 thoroughly.
These modifications are primarily under the hood and should not significantly impact the ordinary ether holder. You do not need to do anything if you utilize an external source, such as an exchange or an online wallet service.
However, miners and operators on the Ethereum blockchain must update to a new Ethereum client to continue operating on the network.
Why is the Arrow Glacier Upgrade Important?
The consequence of this improvement is beneficial to Ethereum’s eventual objective of transitioning to the proof-of-stake. The Ethereum 2.0 network, once built, will be more scalable, safe, and long-lasting.
The energy consumption of mining in the network will be one of the most significant repercussions of the change. Thanks to the concept, proof-of-stake will reduce Ethereum’s environmental effect by 99 percent.
It is difficult to forecast how this decision could affect the price of ETH, the native token of Ethereum. However, if the last few weeks are any indication, investors are relying on Ethereum’s ambitious technological developments.
How Eth 2.0 Will Benefit the Ethereum Network
The Ethereum Mainnet will join with the Beacon Chain network in 2022. The change will terminate proof-of-work on Ethereum, allowing the overcrowded network to scale better and cut gas fees.
Ethereum 2.0 will solve the gas concerns. It will provide a new incentive structure to reward network validators, changing from demanding computer power to staking Ethereum on the network.
Following the integration, additional functionality will be available on Ethereum. They include the ability to withdraw staked ETH, execute smart contracts on the PoS system, and deploy shard chains to increase the network’s usability.
Ethereum Has Been Facing Many Hurdles
Since its meteoric growth, Ethereum has faced several significant hurdles, the most visible of which is the current gas prices for moving assets over the network. Validators can favor users prepared to pay the most, resulting in gas prices considerably more than $100 to complete a transaction or launch an innovative contract-based exchange.
As Ethereum becomes popular, validating transactions has become more complex and energy-intensive, making it more challenging to create new blocks. The fact that Bitcoin and Ethereum consume so much energy is a big no-no in the era of global warming may have contributed to the prior decrease in the crypto market earlier this year.
While moving to PoS consensus will be a net gain to the Ethereum network, specific undesirable side effects may cause ETH problems in the future. For example, the threat of a 51% attack and granting validators considerably greater authority within the network. However, this scenario is exceedingly unlikely due to the sheer magnitude of the Ethereum environment and staking population.
Sharding might potentially be an issue. Because the network distributes validators across shards, malicious validators might take control of a single shard.
Potential Issues from the Upgrade
The switch to the proof-of-stake architecture and ETH2 does not appear to appreciate everyone. According to some estimations, this change will reduce miners’ income by 20% to 35%. Furthermore, some analysts are concerned that the modifications to Ethereum’s incentive mechanism would drive unhappy miners to abandon the network, disrupt it, or launch a competing chain.
While Ethereum 2.0 works to get to where it needs to be, ETH miners will be afforded breathing room through the Arrow Glacier update for a few more months. However, Ethereum’s time is running out as alternative layer-1 networks such as Solana, Avalanche, and Binance Smart Chain (BSC) continue to eat into its market share.
They are now considered superior in scalability, speed, and cost-effectiveness as native PoS networks and lure developers and consumers away from Ethereum. There’s no doubt about it: Ethereum’s difficulty bomb must get launched in June 2022. If not, the network may suffer a new Ice Age extinction catastrophe as it becomes outdated for the thriving DeFi, NFT, and metaverse companies, which require speed and affordability to prosper.