Is a fork inevitable as the Ethereum merger is imminent?

We have talked a lot about Ethereum 2.0, from the differences between PoW and PoS to the fate of miners after the merger.

Recently, the Ethereum merge upgrade date was revealed (expected to be September 19), and another issue has begun to frequently come into people's attention - the Ethereum fork issue.

This fork is obviously different from previous ones. The forks of Ethereum and ETC were largely caused by the attack on The DAO, while this fork was, to a certain extent, the choice of the miners or users themselves.

The value of introducing sharding technology

As we all know, the upgrade of Ethereum 2.0 has two core elements: one is the introduction of sharding technology to expand network performance; the other is the change of consensus mechanism from PoW to PoS.

Regarding sharding technology, its greatest value lies in the expansion of network performance. Prior to this, Ethereum's performance issues were basically solved through Layer 2, and the most mainstream and recognized solution was Rollup. At the same time, Rollup has also gathered a broad consensus in the Ethereum community. From the founder Vitalik Buterin to the ecological application team, everyone's consensus is almost the same, and even the project side has placed its attention on Rollup before Ethereum 2.0.

Compared with Rollup, the status of sharding technology has been reduced from data execution to data storage, which is also recognized by Vitalik himself.

In a conference call with the core developers of Ethereum 2.0 in mid-November last year, the core developers discussed and concluded that Ethereum 2.0 may temporarily shelve its second phase plan until the feasibility of the data sharding layer Rollup solution is proven to be false.

In other words, Rollup is now recognized as Ethereum’s most promising expansion tool. Everything is centered around the development of Rollup. If Rollup doesn’t work, consider using sharding technology to execute data. The current sharding function only serves as data storage.

But if the shards are only used for data storage, is it necessary to directly use the shards originally used for execution expansion?

There is no definitive answer to this question yet, but there are more difficult problems that need to be solved.

The PoW vs. PoS debate

The biggest interest division issue involved in the Ethereum 2.0 upgrade stems from the change in consensus mechanism. The transition from PoW to PoS means that a large number of miners will be laid off early.

Some people have questioned this: When all technical improvements can be completed based on the PoW consensus, why use PoS?

In this regard, Vitalik’s point of view is clear: upgrading PoS is to improve security and efficiency.

In blockchain, there is an impossible triangle, namely security, efficiency and decentralization. Usually, these three aspects cannot be achieved at the same time. PoW and PoS make different trade-offs in these three aspects.

PoW ensures the security and decentralization of the entire system by requiring no permission and requiring no computing power, but it inevitably suffers from shortcomings in terms of efficiency. In fact, it has long been plagued by problems such as high latency and low throughput.

PoS has chosen another path. It is no longer permissionless. Instead, miners become the actual participants in the ecosystem. This means that if miners make decisions that are not beneficial to the entire system, the bad guys will also pay a price (the token value will drop). However, its voting mechanism also reduces the security of the entire system. At the same time, the identity of miners and capital also makes the system have the risk of centralization.

Someone once made an analogy.

In a typical PoS consensus system, everyone obtains a ticket by staking their equity, and then the person who obtains the ticket sits in the conference room and makes decisions.

In the PoW consensus system represented by Bitcoin, a group of people sit in a dark wilderness. They don’t know the identities of others, how many people are in the wilderness, or when others will come and go. They can only communicate and reach a consensus by shouting out their own opinions and listening to the shouts of others.

I have to say that this analogy is quite vivid, and the characteristics of PoW and PoS are clearly shown. In fact, it is impossible to compare the advantages and disadvantages of the two, and their adoption can only reflect two different trade-offs.

In Vitalik's plan for Ethereum 2.0, the Ethereum 1.0 chain and the Beacon chain will be merged at some point. The operating idea is roughly as follows: everyone first votes for a block height. After this height, Ethereum 1.0 will no longer continue to track the status and will start tracking the status of 2.0.

In other words, in theory, as long as there are miners continuing, the Ethereum 1.0 chain will continue to run unaffected. According to this scenario, we may see two Ethereums running at the same time.

This kind of fork is no longer a conventional fork. Conventional forks require computing power to make choices, and the main players in the choice are largely miners. If the above scenario is really followed, it is not only the miners who need to make the choice this time, but the entire Ethereum ecosystem.

Currently, supporters of Ethereum 1.0 and 2.0 are clearly divided.

The miners’ support for Ethereum 1.0 is self-evident. In their eyes, Ethereum 2.0 has no advantages, and the pain points Ethereum is facing now can be solved by Layer 2 or Polkadot. Moreover, if they cannot solve them, then Ethereum 2.0 will most likely not be able to solve them either. In addition, the motivation of interests also forces them to stand firmly on the side of 1.0.

Supporters of Ethereum 2.0 believe that Ethereum 2.0 is an iteration of the current version. To improve the performance of Ethereum itself, it is necessary to turn to an ecosystem based on PoS. In their view, although there are many Layer 2 solutions on the market, these solutions are more like plug-ins. No matter how powerful the plug-in functions are, they cannot represent the strength of the underlying infrastructure itself. Therefore, the replacement of PoS is imperative.

In addition to these two options, there are also voices pointing to a return to ETC, which has also brought certain benefits to ETC's recent price performance.

Conclusion

Recently, Guo Hongcai, an old generation Bitcoin player, also expressed his opinion on the Ethereum fork in the community. He seemed to have determined that Ethereum would definitely fork. Guo Hongcai has long been out of the market's sight, but this time he seems to be well prepared. He is by no means an exception. In the eyes of many people, this may be a once-in-a-lifetime opportunity, so there will be others who will try to take advantage of this rare opportunity to plan and call on miners to fork the computing power.

I remember the last fork that attracted the attention of the entire network was the battle between BCH and BSV, but that was ultimately a battle between Bitcoin and BSV. As mentioned above, if Ethereum really forks, the biggest decisive factor is probably not the computing power, but the assets. As the world's largest application chain, the initiative of ETH has long been transferred to the asset side, and they are the decisive key.

In a sense, this is a very radical exploration, which will involve disputes of hundreds of billions of dollars and the interests of many groups. A fork under this background will inevitably cause a huge shock in the market and even change the overall pattern. As for the result, I am afraid that even Vitalik Buterin does not know. We can only wait and see and witness history.