Analysis: When will Ethereum’s difficulty bomb and POW be cancelled?

Wu Shuo Author | Wu Zhuocheng

Editor of this issue | Colin Wu

Will Ethereum's proof-of-work mechanism (PoW) be phased out after the 2.0 upgrade is completed? This sentence contains two questions: first, whether Ethereum PoW must be terminated; second, whether the termination will occur after the 2.0 upgrade is completed.

To answer these two questions, we first need to understand the logic of sharding. Currently, the Ethereum network has only one public chain. After the upgrade, Ethereum will set up multiple public chains (64 in the early plan, and will increase later). Each chain only needs to retain the current data and does not need to verify the data of the entire Ethereum network, so the nodes will be smaller and lighter. The beacon chain launched on December 1 last year can be understood as the forerunner chain of Ethereum 2.0. Its main mission is to implement the PoS mechanism and replicate all the states of 1.0. After the shard chain goes online, it will be connected to the beacon chain. The current Ethereum public chain will be docked on the entire network as one of the shard chains.

Therefore, many miners believe that PoW mining can continue to provide accounting services for one of the shard chains. This possibility did exist in the early days, because the original plan of the beacon chain was to only be responsible for implementing the basic functions of PoS, and only after merging with the current main chain could the functional contract be executed. However, according to the current upgrade process, the beacon chain is already in the state of copying 1.0, so all the current functions of Ethereum can be realized without PoW.

Moreover, since the number of nodes required for each chain is reduced, the difficulty of attacking a single chain will also decrease, resulting in a decrease in network security. The PoS mechanism can punish malicious nodes by confiscating staked coins, but it is impossible to confiscate miners' hardware facilities under the PoW mechanism, so the existence of PoW is a hidden danger to the security of the network. From the public opinions of some large mining pools, there are fewer and fewer voices supporting the continued existence of PoW as a mining method for a shard chain or forking the existing Ethereum.

So, will the end of PoW happen after the 2.0 upgrade is completed? This depends on the priority of merge and sharding. The sharding phase of Ethereum 2.0 will start around the second quarter of 2022. In the early view, since there are a large number of decentralized applications on the Ethereum 1.0 main chain, in order to allow these applications to smoothly transition to the PoS mechanism, the Ethereum community will allow the remaining 63 shard chains to connect to the beacon chain first, and then merge 1.0 and 2.0 after ensuring the normal execution of smart contracts. But now it seems that if the beacon chain successfully replicates all the functions of 1.0, then the merger does not need to wait until the end of sharding.

Judging from the existing official news channels, almost all opinions believe that the merger will be earlier than the sharding. In other words, the current Ethereum chain will be connected to the beacon chain as the first shard chain, which means that the merger will be completed by the middle of next year at the latest, and PoW mining will be out of history by then. Of course, all this is based on the premise that the sharding phase is carried out as scheduled. If Ethereum's upgrade plan is delayed again, the lower limit time for the merger will continue to be postponed.

As for the upper limit of the merger time, you can pay attention to the specific opening time of the difficulty bomb. As part of the London upgrade, EIP-3554 postponed the difficulty bomb originally planned to be executed in July this year to December, when the daily output of miners will be greatly reduced. Therefore, the final opening time of the difficulty bomb can be regarded as a leading indicator of the end of PoW. If other protocols continue to postpone the difficulty bomb after EIP-3554, it means that the conditions for the upgrade will not be fully met by then. A significant reduction in miners' income will cause harm to network security, and naturally it will be impossible to cancel the PoW mechanism. In fact, it is precisely because the Ethereum community considers that the current network cannot be separated from the maintenance of a large number of miners that EIP-3554 was launched to postpone the difficulty bomb, which also makes the most radical views (that the merger can be completed by the end of 2021) be judged wrong.

In summary, the merger of Ethereum 1.0 and 2.0 will mark the end of PoW mining, and the upper limit of the merger will not be earlier than the opening of the difficulty bomb, but no later than the opening of the sharding stage. Existing official information channels show that the difficulty bomb will be opened in December this year, and the sharding stage will be opened in the middle of next year. Therefore, under the premise that all plans are implemented as scheduled, the PoW mechanism will exit the stage of history in the first half of 2022. (Head picture from StormGain)