Metropolis is coming! Casper as well?

Metropolis is the next, already partially implemented, major update of the Ethereum project, the second-last one actually.

Metropolis implementation requires two hard forks which are named Bizantium (this one has already been implemented) and Constantinople (the upcoming one, which will probably be implemented in a few months).

What Bizantium means for Ethereum?

The EIPs (Ethereum Improvement Proposals) included in Bizantium were:

EIP 140: It permits to handle errors without consuming all the GAS

EIP 658: The success or failures of transactions are now indicated in transaction receipts

EIP 196 & EIP 197: Some mathemagic permitting ZK-Snarks and other cryptographic goodies

EIP 198: Some math implementation that enables RSA signature verification and other cryptographic sweets

EIP 211: Support for variable length return values

EIP 214: Adds a function that permits to call another contract (or itself) while disallowing any modifications to the state during the call

EIP 100: The uncle blocks are now taken into account by the difficulty adjustment formula (which impedes difficulty manipulation by uncle blocks manipulation)

EIP 649: Delayed the difficulty bomb by 1 year and reduces the block reward from 5 to 3

To put it simply:

Bizantium:

Improved the ways errors are handled by lowering their GAS price.

Made possible ZK-Snarks, which render possible anonymity on a level that wasn’t possible on Ethereum before.

Lowered the block reward and postponed the difficulty bomb

Made Ethereum more secure in some ways (most of which need implementation by smart contract developers)

What will be implemented by the means of the Constantinople hard fork?

We still don’t know all about the changes that Constantinople will bring to Ethereum but we know some that will definitely be a part of it and some that could.

What will (definitely) be brought by Constantinople?

EIP 86: Abstraction of transaction signature and origin allowing creation of “account contracts” that performs desired signatures/nonces checks

EIP 96: Stores blockhashes in the state which reduces required client complexity and protocol complexity. Also renders light client initial syncing more efficient

EIP 145: Native bitwise shifting support which is way more efficient than the arithmetic implementation

What does that mean?

The chain will become friendlier to the light clients, will offer at least one more tool to developers and will be more efficient.

What may be a part of Constantinople?

Well, Vitalik Buterin said “Theoretically, Casper may well be at the stage where we may actually just try doing it for the next fork”, so there is definitely a consistent possibility that we get a POS/POW hybrid with Constantinople!

What does that mean and why is that important?

Casper is a consensus algorithm, which means that it is the algorithm that decides which blocks are confirmed, it is a POS/POW hybrid.

POS stands for Proof of Stake while POW means Proof of Work, and while the second one requires a lot of computing power to run (which means a lot of electricity and hardware) the first one does not and could potentially also help addressing the scalability issues.

Proof of Stake, instead of running electricity hungry rigs with many GPUs, requires you to “stack” ETH to confirm transactions. Stacking is like “freezing” an amount of ETH and then, if you try confirming a block that ends up being identified as invalid, you lose a part of your deposit while if you confirm only valid blocks and transactions instead, your deposit grows.

So you get an economic deterrent to trying an attack against the network, because, if your attack fails you lose ETH, and if your attack actually succeeds your ETH lose worth… And to actually get such an attack you need really much of it: 51% of all the stacked eth holders would need to participate in an attack for it to succeed!

At the same time POS is a whole lot more efficient so it should help the scalability when we’ll go full Proof of Stake (It is meant for the Serenity update).

In conclusion

It sure seems like a great time to invest in ETH, with the upcoming update we should be confident enough that it will be bullish in the coming months thanks to the upcoming hard fork.

Also, investment could have the additional benefit of permitting stacking in the future, so that’s definitely something to keep in mind as well!