The price of Ether (ETH) came close to hitting a new all-time high on October 21 before dipping below $ 4,000 after the $ 435 million option expiration on October 22 sour the mood. The Ethereum network is set to take another step towards Ethereum 2.0 on October 27 in the 74240 era with the Altair upgrade to Beacon Chain. Eth2 will be a fully proof-of-stake (PoS) network, which the community has been preparing for for over a year.
According to a blog post from the Ethereum Foundation explaining the development, Altair is an upgrade to the Beacon Chain that brings support for thin clients, pre-validator idle leak accounting, increased slashing severity, and validator rewards cleanup that enables simplified management of validator state. This is the first scheduled update of the Beacon Chain.
The blog post states that this update represents a “warm-up update” for the Beacon Chain and its associated clients. Essentially, the update will bring several main features to the Ethereum 2.0 network.
First, the introduction of sync committees for thin client functions enables the thin clients to easily sync with the Beacon Chain, with low computational and data costs.
In second place, Incentive accounting reforms bring three main changes: Storage stocks use a more efficient bitfield format that reduces complexity, quadratic “idle leakage” is based per validator rather than globally, which is negligible for validators participating more than 80% of the time, and there are some bug fixes in reward accounting.
Du Jun, Co-founder of crypto exchange Huobi Global, told Cointelegraph: “Before Altair, if a chain stops terminating for two weeks, fully inactive validators lose ~ 11.8% of their balance and active validators 75% of the time lose ~ 3.1%. After Altair, fully inactive validator loss it would be ~ 15.4%, but the active validator at 75% would only be ~ 0.3%. ” This will make the inactivity loss more forgiving on honest, but spotty validators.
Keep calm and upgrade your client to beacon chain Altair HF compatible version ASAP!
Please ensure the version of your beacon node and validator client is greater than what https://t.co/pK78fogKbd listed.
Altair will go live at epoch 74240 (Oct 27, 2021, 10:56:23 am UTC)! pic.twitter.com/d6vPzUT09U
– Hsiao-Wei Wang (@icebearhww) October 25, 2021
Keep calm and update your client to the version compatible with the Beacon Chain Altair HF as soon as possible.
Please make sure the version of your Beacon node and validator client is higher than the one shown here.
Altair will be activated in epoch 74240 (Oct 27, 2021, 10:56:23 am UTC)!
Third, the update brings with it penalty parameter changes that make idle leaks and hacks more punitive than in the pre-Altair era. There will be three main changes to these parameters. The inactivity penalty ratio is reduced by 25%, reducing the time to drain balances by almost 13.4%. The minimum quotient of the penalty per cut has been reduced from 128 to 64. The quotient is the minimum fraction of the total balance that a validator will lose per cut. Thus, the minimum penalty per cut is 0.5 ETH, double the previous penalty of 0.25 ETH.
The proportional multiplier of the reduction will also be increased from one to two, which means that the reduction penalty will double the percentage of other validators that have been reduced within 18 days of that validator. Jun explained this change in more detail: “For example, if you are penalized and within 18 days (in both directions) 7% of the other validators are also penalized, before Altair your penalty would have been 7%, after Altair’s would be 14%. “
These types of adjustments to the incentive structure are often extremely critical to network security, rewarding the highest degrees of contribution and adjusting accordingly. Currently, however, this change will not directly affect users and decentralized applications (DApps) on the network, as it is an update that only affects the Beacon Chain.
However, this will affect Ethereum users once the transition to Eth2 is complete. Jun said that this update will lower the threshold for users to participate in Ethereum 2.0:
“One of Altair’s main goals is to make a thin client easy and efficient enough that it can run within any environment (mobile device, embedded hardware, browser extension, and even within another blockchain capable of smart contracts) “.
Redistribution of validator earnings will lead to redesign of the reward and penalty structure for validators, making incentives for network contributors more systematic and easier to understand with logical reasoning.
Preparing the merge (Merge)
It makes sense that this update is being carried out as a “warm-up” for the Beacon Chain updates in the future, as the economic stakes are relatively low at the moment. Since node operators will already have experienced a simultaneous on-chain update, future updates targeting Merge should run more smoothly, which is more critical as there will be a significant amount at stake on the network after Merge. .
Ben Edgington, An Ethereum developer and owner of the Teku product, an Eth2 client developed by ConsenSys, spoke with Cointelegraph about how Altair ties in with Merge:
“The proof-of-stake update, known as” The Merge, “will be the biggest update in Ethereum’s history. The Altair update will provide us with valuable experience to ensure that The Merge runs smoothly when it is ready for deployment on 2022. “
When asked about the impact of the update on the Beacon chain bettors, Edgington said that overall they won’t notice any difference to Altair. This is essentially an exercise in “ordering” that does not affect the expected rewards that stakers can earn or the way they interact with the chain in any way.
As outlined in Ethereum Enhancement Proposal (EIP) 2982, the change in punishment parameters will apply to both outage and inactivity leaks. Edgington mentioned that the reduction of these penalties at the beginning of the Beacon Chain was done to allow the stakers to find their feet and gain confidence. Ultimately, Merge will set its penalties at their “crypto-optimal values,” while Altair raises them a bit in that direction. He further explained how this benefits network security:
“The Beacon Chain has never experienced an idle leak, and only 0.06% of the validators have been reduced, so these penalties are largely theoretical. They are intended to make deliberate attacks against the beacon chain very expensive. So increasing them with Altair increases on-chain security. “
Rick Delaney, Senior analyst at OKEx Insights, the research team at crypto exchange OKEx, told Cointelegraph that this is a vital component of network security, stating: “If the incentives are misaligned, malicious actors may be able to play with the system.”
Merge may alter the dynamics of “Ethereum killers”
The Altair update is the next big update to the network, following the London fork that took place earlier in the year, in August. The fork mainly brought EIP-1559, which changed the pricing mechanism of transactions so that a certain part of the gas tariffs is burned, putting ETH on a deflationary trajectory.
According to data from Ultrasound.money, the current burning rate of Ether is 5.31 ETH / min, and more than 628,000 ETH has been burned to date, worth more than $ 2.6 billion. The supply growth rate is currently 2.2% per annum. A simulation of Merge on the Ultrasound.money website shows that this supply rate will turn negative, down to -2% per year.
Delaney delved into the impact of gas rates on the entire ecosystem, saying: “It’s a part of the ongoing update that should bring Ethereum gas rates down. So far, the ‘Ethereum killers’ have benefited from the often prohibitive fees of the mainstream smart contract network. It will be interesting see if those chains retain their market share if the Ethereum fragmentation implementation goes smoothly and reduces transaction costs. “
“The Merge” will bring the PoS consensus mechanism to the entire Ethereum network, after which scalability is expected to improve as data fragmentation unfolds across the network. Until then, competing blockchain networks that have a functioning smart contract utility, such as Solarium and the Binance Smart Chain, They could continue to gain traction thanks to their low gas rates.
Edgington further noted network support for layer two solutions through which users can access gas rates lower than those present in the existing layer one network:
“As developers, we don’t care too much about ‘Ethereum Killers’. […] Meanwhile, Layer 2 technologies in Ethereum are already providing huge scalability benefits and a rich ecosystem of exciting new capabilities, fully supported by the security of the Ethereum base layer. Protocol updates over the next year and beyond will support and enhance everything that is happening at Layer 2. “
Although the Altair update may not mean much to end users of the Ethereum network, it is very significant for developers and other community participants who are eagerly awaiting The Merge, which is scheduled for 2022. In early October, 40 representatives from the Eth1 and Eth2 teams, the Ethereum Foundation, and ConsenSys met for a week in which they successfully built a testnet running PoS with multiple Eth1 and Eth2 clients.
This achievement is a huge boost for confidence that Ethereum will be able to fully transition to PoS and leave Eth1’s proof-of-work network for good.
Keep reading: