New BNC Research: Ethereum at the Crossroads - The Istanbul Hardfork and its Implications
Ethereum is at a crossroads. In its current state, it has failed to provide working solutions for enterprise customers and faces the twin threats of a multitude of competitors and growing impatience from investors and developers alike. In an attempt to address these concerns the project is scheduled to make two major network updates in the next six months.
The first of these, Istanbul, is a hard fork set to occur in October 2019 that will complete the Metropolis stage of Ethereum development. The second and far more ambitious update, Ethereum Serenity (or Ethereum 2.0) is scheduled to begin in January 2020. The Serenity update will launch an entirely new blockchain with fresh core features like database sharding and a proof-of-stake consensus.
For token projects and Dapps already hosted on Ethereum, this near-term roadmap is either a reason for optimism or anxiety. Both network updates propose to increase Ethereum’s efficiency – allowing it to handle more transactions in shorter time frames with more security – while retaining the core values of decentralization and robust consensus.
Despite this, the Ethereum community is divided on the best way to handle the imminent launch of Ethereum 2.0. The most likely scenario will see Ethereum and Ethereum 2.0 run as two separate but connected blockchains, each with its own token. An alternative scenario would see Ethereum incorporated as a shard of Ethereum 2.0. The situation has some similarities to the contentious Bitcoin Segwit2x debates of 2017.
Ethereum’s mining and developer communities have serious concerns. Miners remain unconvinced that the proposed move from proof-of-work to proof-of-stake is viable and are concerned that their value to network block producers will be reduced. Meanwhile, the Ethereum developer community is troubled by the prospect of having to redeploy existing Ethereum projects to the new chain.
Meanwhile, exchanges, wallet providers and Ethereum users are watching warily from the sidelines, excited at the prospect of the long-awaited scaling solutions, but wary of another Ethereum hard fork which could potentially result in three Ethereum chains, three Ethereum tokens, and a confusing brand split. Against this highly charged backdrop, the pressure is on Ethereum developers to provide a solution that meets the needs of all stakeholders. Can they deliver? Download this free report from BNC Research for in-depth analysis of Ethereum’s options, and the likely outcomes of different rollout scenarios.