This is an informational topic meant to inform the Bancor community with an analysis of the anticipated changes in the upcoming Ethereum transition to proof-of-stake.
TL;DR
- Ethereum will soon transition to a proof-of-stake consensus mechanism.
- Bancor contributors have found that no action needs to be taken as it imposes no breaking changes.
- Bancor will only support the main Ethereum blockchain (proof-of-stake) going forward.
- A different thread will be created to discuss what to do in the event of an active proof-of-work fork.
Transitioning from Proof-of-Work to Proof-of-Stake
The Ethereum network will soon be undergoing a long-planned upgrade to its consensus mechanism, from proof-of-work to proof-of-stake. Soon, the Beacon Chain, which has been running proof-of-stake since Dec 2020, will be merged with Ethereum Mainnet, resulting in a single chain.
Ethereum has entered the final phase of testing, with the Goerli testnet successfully upgraded this last week, and the upgrade to Ethereum Mainnet coming around September 15th. This can be seen here: Mainnet ETH Merge Countdown.
Further details about The Merge can be found in the Ethereum foundation’s documentation.
How does The Merge affect Bancor?
The Ethereum Merge has been designed to have little to no consequences for the application layer (dApps), and therefore should not have any effect on the Bancor Network.
These are the indicated changes and their possible effects:
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Ethereum change: Block structure
- Smart Contract and on-chain transactions: block structure changes are NOT referred to in the smart contracts and are NOT used in any of the transactions that can be performed on the Bancor smart contracts. As such, it has no effect and does not require changes.
- API and data endpoints: some minor changes will be required to keep availability up and running. These changes are already being worked on.
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Ethereum change: Block time
- Smart Contract and on-chain transactions: block time is NOT used in any of the transactions that can be performed on the Bancor contracts. There are time related rewards systems which do NOT use blocks, but time, meaning they are fully aligned with this change and will not be affected.
- Vote duration: there might be a slight effect on vote duration and lock times as they use blocks to determine the duration. Meaning, the expected vote duration may be ~10% shorter.
- API and data endpoints: this should not have an effect on API or data endpoints.
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Ethereum change: Opcode changes
- Smart Contract and on-chain transactions: opcode is NOT used in any of the transactions that can be performed on the Bancor contracts. As such, it has no effect and does not require changes.
- API and data endpoints: this should not have an effect on API or data endpoints.
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Ethereum change: Sources of on-chain randomness
- Smart Contract and on-chain transactions: on-chain randomness is NOT used in any of the transactions that can be performed on the Bancor contracts. As such, it has no effect and does not require changes.
- API and data endpoints: this should not have an effect on API or data endpoints.
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Ethereum change: Concept of safe head and finalized blocks
- Smart Contract and on-chain transactions: finalized blocks are NOT used in any of the transactions that can be performed on the Bancor contracts. As such, it has no effect and does not require changes.
- API and data endpoints: the block finalized are used to report “final” information which will no longer be able to change. Currently, 12 blocks are used (best practice). This means a slightly longer delay should be used when updating the API data.
Proof-of-work Fork
There is a possibility that a proof-of-work fork will be orchestrated by miners. A different thread will be created to discuss Bancor’s possible options.
Conclusion
- The Merge should not have an effect on the Bancor protocol.
- Options for a proof-of-work fork will be discussed in a different thread.