Ethereum's new algorithm is coming? Where will ASIC go?

As the Constantinople fork approaches, many pending projects on Ethereum have begun to follow up one after another. The ultimate goal is to embark on the "broad road" of POS.

Today, reporters learned that Coindesk reported that members of the Ethereum open source development community temporarily agreed to implement a new algorithm that will prevent specialized mining hardware or ASICs, and they will conduct further tests on the proposed code.

If accepted by the user network, the code change, dubbed “ProgPow,” would block ASICs (those produced by major mining companies such as Bitmain) and instead allow general-purpose or GPU hardware to compete for rewards on the platform.

The annoying ASIC

From the time when Satoshi Nakamoto mined the Genesis Block using a multi-core CPU, to the birth of personal GPU mining, and then to the updates and iterations of FPGA and ASIC, the mining industry derived from PoW has been constantly seeking more efficient mining shortcuts in order to compete, and Ethereum, as a major PoW user, cannot escape this disaster.

As we all know, Ethereum uses the Ethash algorithm. This algorithm has not been cracked by ASIC mining machines for a long time. GPUs can be provided on a large scale to many individuals who are not involved in cryptocurrency and have no financial motivation. Therefore, GPU mining has been the mainstream on Ethereum in recent years because it has obvious decentralized characteristics.

However, in April 2018, Bitmain announced that it would start pre-sales of the first batch of ETHhash ASICs, breaking this situation.

The computing power of Ethereum ASIC mining machines is obviously better than that of GPU mining machines. As a result, the computing power is likely to be concentrated in the hands of a small number of miners who own a large number of ASIC mining machines, making Ethereum face centralization problems. Therefore, even though ASIC is a product of the mining industry that keeps up with the trend, the Ethereum community is obviously not interested in this machine.

Previously, Vitalik publicly insisted that he would do everything he could to prevent the arrival of ASICs in order to protect the security and decentralization of Ethereum.

However, the opinions of the community do not represent the will of the miners. This extremely profit-seeking group only cares about money. Moreover, if high-performance mining is rejected due to support for GPUs, this is also something Ethereum does not want to see.

In this dilemma, the ProgPow consensus mechanism was born.

ProgPow

As the name suggests, ProgPow is an extension of PoW. Its basic principle is the same as PoW, which is proof of workload, that is, the amount of computing power determines the amount of profit.

The reporter learned that this algorithm, called "ProgPOW", has been developed at least in 2017. There is a detailed description on GitHub:

“ProgPOW is a proof-of-work algorithm designed to close the efficiency gap available with specialized ASICs. It leverages nearly all commodity hardware (GPUs) and is pre-tuned for the most common hardware used in the Ethereum network.”

In other words, while some algorithms offer an advantage to highly specialized, expensive mining equipment over the more common, ProgPOW attempts to level the playing field by reducing the financial barrier to entry. Many other blockchains considered and implemented ASIC algorithms, including Zcash (ultimately rejected) and Monero (implemented), as a way to reduce the centralization of mining pools.

Previously, Kristy-Leigh Minehan, a GPU supplier and the main developer of this code change, said in an interview: The code is designed to maximize the characteristics of GPU hardware and use 80% of the overall graphics card performance to calculate algorithms, rather than the 10% to 20% of traditional cryptocurrency mining.

Because of this, Minehan said that if a hardware designer tried to build a ProgPoW ASIC — that is, a specialized chip whose only function is to calculate ProgPoW — it would end up as GPU hardware.

Ensure transition safety

The final destination of Ethereum is POS, and POS does not need miners. Therefore, the process from POW to POS is destined to be the process of miners from rise to fall.

However, the emergence of the hash rate war has made people realize that miners are not easy to mess with. How to complete the transition to POS without causing a joint boycott by miners is a question that Ethereum needs to think about.

In the Ethereum white paper, there is a term: Difficulty Bomb.

The difficulty bomb refers to the calculation of difficulty. In addition to adjusting it according to the block time and the difficulty of the previous block, a difficulty factor that increases exponentially every 100,000 blocks is added.

At first, the additional difficulty is not noticeable, but as the block height increases, the proportion of the exponentially growing difficulty factor will increase significantly, making it much more difficult to mine new blocks, and miners will find it difficult to mine new blocks. This process of boiling the miners in warm water is what Vitalik originally envisioned.

However, ideals are full of hope, but reality is very skinny. Although there is a difficulty bomb to protect it, it can be expected that in order to keep Ethereum running stably, its advancement process will inevitably be difficult, and there are many problems in the POS mechanism that need to be solved. Today, people can see that the development time of POS is much longer than Ethereum originally planned.

As we all know, the arrival of the Constantinople fork, in addition to the optimization of Ethereum itself, also has two measures: the introduction of the POW+POS hybrid consensus mechanism, and the reduction of miners' mining rewards from 3ETH to 2ETH.

The introduction of the POW+POS hybrid consensus mechanism is to make the transition from POW to PoS smoother. However, for miners, the mining income will be greatly reduced.

In this regard, some industry insiders are concerned that the reduction in mining rewards may concentrate the power of the mining industry in the hands of a few mining pools that have access to cheap electricity and the resources to purchase ASIC mining machines.

Therefore, the promotion of ProgPow is imminent.

Recently, ProgPow became the focus of discussion at the Ethereum developer conference call.

Ethereum security chief Martin Holst Swende said he prefers the switch because it will help ensure the security of ethereum’s eventual transition to proof-of-stake, a new system.

“We know today that ethash is flawed and is currently being targeted. So, that’s why I want to switch as soon as possible, to give us time to prove the stakes,” Martin Holst Swende further stated.

Hudson Jameson, communications officer at the Ethuunm Foundation, also said, "It sounds like we've reached a consensus that we're doing ProgPow on a tentative basis, which means we're going to proceed unless there are major issues found in testing or something of that nature. We're going to move forward with ProgPow."

This means that unless developers encounter unexpected issues with the change, ProgPow will be released as part of a standalone system-wide upgrade or hard fork in the next 2 to 4 months.

At this time, the timing of ProgPow remains unclear, however, the developers agreed to raise the issue of the upgrade timing at the next developer call on January 18. Undoubtedly, what happens next will be important.