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Opportunities and risks after Ethereum POS merger

Time : 14/05/2022 Author : niz1ma Click : + -
        As we all know, Ethereum merger may become the biggest event in the encryption field this year or in the second half of the year. What opportunities and risks may Ethereum merger bring?. Ethereum merger refers to a change in consensus mechanism. Ethereum currently has two chains, one is the pow chain we have been using, and the other is the beaconchain beacon chain launched on December 1, 2020, which runs the POS consensus mechanism. The transformation of Ethereum from POW to POS is to combine these two chains, while retaining the executive layer and user state of pow chain, as well as the POS consensus mechanism of beacon chain.
 
        I think from the perspective of products, if we regard this merger as a product upgrade, the biggest highlight is that its merger is very smooth and almost imperceptible to ordinary users. Then because quark is a node operator, Ethereum still retains or strengthens its security for us, and reduces the use cost, including our operation cost and the user's interaction cost on the chain. This is the highlight of some mergers I feel from a non-technical perspective. I want to make a beautiful background image for my dynamically generated NFT on the chain, but it is too large to store on the chain. Will the capacity change after Ethereum changes from POW to POS?.
 
        The capacity of blockchain has not changed at the time of merger, and the gas limit of a single block is still 30million. When merging, the only place where TPS (tps= number of transactions processed over a period of time / time) can be improved is that the block out time will be strictly controlled to 12 seconds from the current fluctuation of 14 seconds. When we talk about the capacity expansion of Ethereum merger, we mean that a hard bifurcation after the merger will expand the capacity of Ethereum 2.0, and it is also the capacity expansion of calldata. If Huang wants to store image data on the chain, he may not put it in the state, but encode SVG and store it in calldata.
 
        Probably at the end of this year, when Shanghai forks, the initiation of proposal eip-4488 can reduce the cost of calldata. Calldata is generally used for L2 expansion. If Huang uses this method, it may be a very good experiment. Huang is also expected to make these contents after Ethereum eip-4488. The reason why the current blocking time is not a strictly controlled value is that the blocking process is the process of miners calculating hash values, and only the miners who first calculate the correct results have the right to block. The hash value is uncertain, so the blocking time is also uncertain, so we can only use the difficulty value to control the blocking time at about 14 seconds.
 
        After entering eth2.0, it is no longer everyone competing for blocks, but the random algorithm assigns the verifier to propose blocks. The order of verifiers of the proposed block has been determined, so the time of block out can be determined. As for the benefits, the fixed block out time is better predicted and the user experience is better. For example, in many defi applications, the release of defi tokens is related to the number of blocks. Suppose that the token is released once every 1000 blocks are packed. In the old model, although the block out time fluctuates around 14 seconds, if the block out time on a certain day is 20 seconds, it will take 20000 seconds to release the token once, while the original expected time is 12000 seconds, resulting in the instability of the token release of the DFI application.
 
        Therefore, a fixed block out time is more friendly to DFI applications. At present, Ethereum upgrades are fixed in a certain block. For example, I remember that the original upgrade time of London fork was last July. Later, due to the change of the block out time, it did not meet the high requirements of the block until August before upgrading. I think this Luna incident is mainly about the economic model. Consensus algorithm is to maintain the security of the chain, and economic model is to maintain the security of currency. Luna collapsed not because his chain was attacked, but because the token model was attacked. So I don't think we should blame the POS consensus algorithm, but such concerns are understandable.
 
        The occurrence of Luna event has nothing to do with POS. The setting of the mechanism led to the hair removal of UST, and Luna continued to issue additional shares. This problem occurred only when everyone's confidence in Luna and ust collapsed. Therefore, it has little connection with POS, and I think it has little impact. Will Ethereum merge lead to more centralized nodes? Because 32e is needed first to participate, the large-scale e is more, the large-scale mining obtains income, and the income and principal continue to mining, resulting in more and more money he earns every year, and the nodes are more and more concentrated, so the income of small-scale households is not large. Such concern is very correct.
 
        Ethereum community also found such problems, so it first adopted POW instead of POS, one of the reasons is that it hopes that everyone can participate in mining, and take POS after dispersing enough tokens, so as to reduce some pressure in this way. After the transformation, there will still be this problem, but we can see that there are many decentralized pledge schemes, such as rocketpool, which will help the degree of decentralization. But I think this problem also exists in pow. Using the earned income to buy new mining machines to continue mining will also lead to concentration of computing power, and ordinary people can't afford the high electricity bill.
 
        After changing to POS, or using a decentralized pledge scheme such as rocketpool, you can run nodes at home, which is actually conducive to decentralization. POW has not completely solved the problem. I don't think it's realistic to completely solve it in the state of POS. In terms of participation, more hardware cooperation was originally required, and many people may be unable to even solve the cost. After being converted to POS, it is more conducive for the public to participate in this matter. On the whole, it is relatively good. It needs to be divided into POW and POS. After Ethereum turns to POS, a group of miners will pour into other POW chains. We can expect whether the currency price of these chains will rise to a certain extent.
 
        There will be a certain pressure on other public chains using POS. After all, ether is the best in terms of credibility and security. After switching to POS, coupled with the prosperity of layer2, the reduction of handling fees and the improvement of efficiency, we have a greater desire to use ether, and developers are more willing to develop new products on the Ethereum ecosystem. The better the ecosystem, the more users, and I think it is bound to squeeze into some other POS chains. I think the growth of other public chains is due to the performance shortcomings of Ethereum. At the beginning of Ethereum merger, the performance will not be greatly improved in the short term. After Ethereum slowly fills up its shortcomings, other public chains really need to consider the possible crises and impacts.
 
        Personally, I am not optimistic about the development of other public chains. I think the development of blockchain in the future will be centered on Ethereum, transforming to modular blockchain. Through layer2 and piecemeal expansion, layer 1 provides the most scarce security. The transformation of consensus mechanism also solves the problem of energy consumption. It is relatively difficult for other public chains to break out of the existing developer ecosystem and its accumulated users on Ethereum. I think the future construction and narration will be the combination of layer2 and layer3, with two layers of capacity expansion and three layers of application construction. I think in blockchain, no matter what the upper application is, the logic of the lower chain must be decentralized and highly secure, which is why we choose Ethereum as layer1.
 
        Of course, we also hope to see other public chains make some feasible upgrades and improvements to promote the benign competition between public chains. Let's build Web3 together. There is an impossible triangle in equity investment, as well as in the public chain of blockchain. Its security scalability and three characteristics at the application level cannot fit perfectly, and there is no absolutely perfect public chain. When developers choose the public chain, they also aim at their most desired features to carry out ecological development on this public chain. For ordinary users, try to suspend operations such as charging and lending at that time. Although there is not much risk in principle, if Ethereum needs to roll back when a small probability event occurs, the transaction may bear a certain risk of asset damage.
 
        There won't be too much risk for the project parties like us who are nodes. We will operate according to the official process, and the node side will ensure the security of large assets and strengthen the monitoring of node status. The defi application triggered a bull market at the next level. I think the rise of axie and stepn made the Ethereum community realize the potential of gamefi. At present, some applications choose to store data under the chain as an alternative to ensure the operation of these large-scale high TPS applications. I think in the future, some social and game applications will be built on layer 2 or layer 3, or the chain change of traditional web2 applications.
 
        These customized applications have greatly improved the user experience, and then detonated the next bull market. You can pay more attention to L2 and L3. We are also exploring layer3, and the specific scheme is still under study. I think this professional application has a high probability in L3, and we can wait and see. The specific merging time depends on the situation of the public test network to be merged. The main network can be merged after 2 to 3 months of stable operation. For example, Ethereum 2.0 in December of 20 was created after the stable operation of the public test network for a period of time. If successful, Ethereum will merge. If there is a problem, it may continue to delay until the end of the year or next year, depending on the size of the problem.
 
        The impact on retail investors is that ether is more valuable. After the merger, Ethereum has broken through the performance bottleneck and can withstand larger application operations. Although the gas fee is reduced, with the increase of interaction, the number of coins destroyed increases, and the reward for giving out blocks decreases, so etheric is naturally more valuable. Understanding Ethereum merger from the perspective of finance, I think it is a major positive for the upward trend of eth. Generally, there will be a price peak before such benefits are realized. Moreover, the merger of the main network is not completed in an instant, but is synchronized slowly, so there may be a long price buffer period in the middle. Combined with the background of the macro interest rate hike, I think Ethereum will come out of an independent market after September this year, which needs to be observed again.
 
        As we all know, Ethereum merger may become the biggest event in the encryption field this year or in the second half of the year. What opportunities and risks may Ethereum merger bring? Now we will discuss it. Ethereum merger refers to a change in consensus mechanism. Ethereum currently has two chains, one is the pow chain we have been using, and the other is the beaconchain beacon chain launched on December 1, 2020, which runs the POS consensus mechanism. The transformation of Ethereum from POW to POS is to combine these two chains, while retaining the executive layer and user state of pow chain, as well as the POS consensus mechanism of beacon chain.
 
        I think from the perspective of products, if we regard this merger as a product upgrade, the biggest highlight is that its merger is very smooth and almost imperceptible to ordinary users. Then because quark is a node operator, Ethereum still retains or strengthens its security for us, and reduces the use cost, including our operation cost and the user's interaction cost on the chain. This is the highlight of some mergers I feel from a non-technical perspective. I want to make a beautiful background image for my dynamically generated NFT on the chain, but it is too large to store on the chain. Will the capacity change after Ethereum changes from POW to POS?.
 
        The capacity of blockchain has not changed at the time of merger, and the gas limit of a single block is still 30million. When merging, the only place where TPS (tps= number of transactions processed over a period of time / time) can be improved is that the block out time will be strictly controlled to 12 seconds from the current fluctuation of 14 seconds. When we talk about the capacity expansion of Ethereum merger, we mean that a hard bifurcation after the merger will expand the capacity of Ethereum 2.0, and it is also the capacity expansion of calldata. If Huang wants to store image data on the chain, he may not put it in the state, but encode SVG and store it in calldata.
 
        Probably at the end of this year, when Shanghai forks, the initiation of proposal eip-4488 can reduce the cost of calldata. Calldata is generally used for L2 expansion. If Huang uses this method, it may be a very good experiment. Huang is also expected to make these contents after Ethereum eip-4488. The reason why the current blocking time is not a strictly controlled value is that the blocking process is the process of miners calculating hash values, and only the miners who first calculate the correct results have the right to block. The hash value is uncertain, so the blocking time is also uncertain, so we can only use the difficulty value to control the blocking time at about 14 seconds.
 
        After entering eth2.0, it is no longer everyone competing for blocks, but the random algorithm assigns the verifier to propose blocks. The order of verifiers of the proposed block has been determined, so the time of block out can be determined. As for the benefits, the fixed block out time is better predicted and the user experience is better. For example, in many defi applications, the release of defi tokens is related to the number of blocks. Suppose that the token is released once every 1000 blocks are packed. In the old model, although the block out time fluctuates around 14 seconds, if the block out time on a certain day is 20 seconds, it will take 20000 seconds to release the token once, while the original expected time is 12000 seconds, resulting in the instability of the token release of the DFI application.
 
        Therefore, a fixed block out time is more friendly to DFI applications. At present, Ethereum upgrades are fixed in a certain block. For example, I remember that the original upgrade time of London fork was last July. Later, due to the change of the block out time, it did not meet the high requirements of the block until August before upgrading. I think this Luna incident is mainly about the economic model. Consensus algorithm is to maintain the security of the chain, and economic model is to maintain the security of currency. Luna collapsed not because his chain was attacked, but because the token model was attacked. So I don't think we should blame the POS consensus algorithm, but such concerns are understandable.
 
        The occurrence of Luna event has nothing to do with POS. The setting of the mechanism led to the hair removal of UST, and Luna continued to issue additional shares. This problem occurred only when everyone's confidence in Luna and ust collapsed. Therefore, it has little connection with POS, and I think it has little impact. Will Ethereum merge lead to more centralized nodes? Because 32e is needed first to participate, the large-scale e is more, the large-scale mining obtains income, and the income and principal continue to mining, resulting in more and more money he earns every year, and the nodes are more and more concentrated, so the income of small-scale households is not large. Such concern is very correct.
 
        Ethereum community also found such problems, so it first adopted POW instead of POS, one of the reasons is that it hopes that everyone can participate in mining, and take POS after dispersing enough tokens, so as to reduce some pressure in this way. After the transformation, there will still be this problem, but we can see that there are many decentralized pledge schemes, such as rock
 
        
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