Ethereum (ETH) Istanbul Hard Fork Coming Saturday, Followed By Mountain Glacier Which Will Delay The Difficulty Bomb By Two Years Due To Difficulty Bomb Becoming Unpredictable

December 4, 2019 / by Zachary Mashiach

Ethereum (ETH) is about to go through some major changes, with the Istanbul hard fork scheduled to happen on Saturday December 7 at block 9.069 million. This hard fork includes 6 Ethereum Improvement Proposals (EIPs) which will reduce network gas costs, increase security, and improve blockchain interoperability.

However, one thing that is not included in Istanbul is any change to the difficulty bomb. The difficulty bomb starts to go off at a predetermined block, and after that block times get longer every 100,000 blocks, eventually leading to an exponential increase in block times which brings the network to a crawl and drastically reduces mining revenues. This forces the Ethereum (ETH) devs and community to come together to implement upgrades, and is also an opportunity for those who disagree with the devs to fork to a different blockchain.

https://twitter.com/TimBeiko/status/1200411450319220736

Apparently the devs thought the difficulty bomb would not kick in until July 2020, but those calculations were wrong. The difficulty bomb began to go off on October 5, before which block times were 13.1 seconds, but now block times have increased to 15 seconds. It is projected that block times will increase to 20 seconds by the end of this month, and to over 30 seconds by February.

The difficulty bomb adds to mining difficulty in order to increase block times, but the problem is that the difficulty bomb is included in the same complex code for block time retargeting. Due to be intertwined with the block time retargeting algorithm, it is hard to predict the difficulty bomb and its effects on the network, since assumptions must be made regarding network difficulty in the future.

https://twitter.com/TimBeiko/status/1200422253713854465

The solution is a single EIP upgrade called Mountain Glacier, which will push off the difficulty bomb by 9 million blocks, which is approximately two years. Essentially, the difficulty bomb is being delayed as long as possible in order to give the devs time to fix it, and if it cannot be fixed the difficulty bomb will be removed entirely.

This upgrade would occur at block 9.2 million which is in early January. It is unclear if this upgrade will require a hard fork or if it can be done without a hard fork. Also, this plan is not completely finalized yet, probably since the Istanbul hard fork has to successfully occur first. In the past Ethereum (ETH) hard forks have had unexpected delays, such as when Constantinople was delayed due to a critical security error discovered at the last moment.

In any case, Mountain Glacier will lead to the longest period of network stability since the difficulty bomb was first implemented. This stability will likely be a positive factor for Ethereum (ETH), since users will not have to worry about the network getting progressively slower, and miners will not have to worry about revenues being drastically reduced.

That being said, Ethereum (ETH) developers are still looking to do another hard fork called Berlin in 2020, which will increase GPU mining efficiency to make Ethereum (ETH) more ASIC resistant.

Further, the plans for Ethereum 2.0, where Ethereum (ETH) will become Proof of Stake (PoS), are already being put into place. The launch of Ethereum 2.0 will come in 3 phases. Phase 0 will launch the beacon chain, which manages validators and the coordination of shards. Phase 1 will allow data to be put into shards, and phase 2 will upgrade Ethereum 2.0 from a database to a fully functioning decentralized computing platform.

Thus, Ethereum (ETH) is going through some major changes, with the Istanbul hard fork expected Saturday and then another upgrade/fork coming in January called Mountain Glacier which will delay the difficulty bomb by two years, since the difficulty bomb is intrinsically flawed and needs to be fixed since it has become unpredictable. After that, the Berlin hard fork will happen sometime in 2020, as well as the launch of the beacon chain and eventually the transition to Ethereum 2.0 and PoS.

Traders and investors need to watch each one of these events closely, since each fork and upgrade will likely be associated with significant market movements.