CoinShares Report: Ethereum Failed to Deliver on Scalability Upgrades in 2018
Digital asset management firm CoinShares recently released their overview of the crypto asset market for the second half of 2018. In the report, Ethereum’s 2018 is summarized as a disappointment in terms of progress with planned protocol upgrades.
This portion of the report starts by pointing to a statement Ethereum co-founder Vitalik Buterin provided to TechCrunch in January 2018.
“I expect 2018, at least within the Ethereum space that I’m best able to speak about, will be the year of action. It will be the year where all of the ideas around scalability, Plasma, proof-of-stake, and privacy that we have painstakingly worked on and refined over the last four years are finally going to turn into real, live working code that you can play around in a highly mature form in some cases on testnets, and in some key cases even on the public mainnet. Everyone in the Ethereum space recognizes that the world is watching, and we are ready to deliver,” said Buterin.
“Neither H1 nor H2 2018 turned out to be anything of the sort,” says the report in relation to Buterin’s comments.
In the CoinShares report, the first example of Ethereum’s disappointing 2018 is the Constantinople hard fork. While it was originally slated to launch in the first quarter of 2018, it was eventually delayed on three separate occasions. On top of that, the last postponement was made in the 11th hour due to the discovery of a bug.
The late cancellation of the hard fork caused a temporary chain split that was resolved in a matter of days. According to the CoinShares research team, this split probably caused significant monetary losses for the miners who were operating on the wrong chain.
“This incident probably did not serve to foster any further goodwill from miners—who were already publicly annoyed by the decision of Ethereum developers to reduce mining rewards by 40% via committee vote—in a time where mining profitability is already under severe pressure from falling ether prices,” the report adds.
Plasma and Sharding
In terms of Plasma and sharding, the report indicates there has not been that much noteworthy progress on that front.
“While we keep hearing that they are moving forward, with the minor exception of improvements added by EIP 1014, we can find no trace of them in any of the upcoming Ethereum Improvement Proposals.”
According to the report, Ethereum’s expected migration from proof-of-work to proof-of-stake also took a hit in the second half of 2018 by way of a review of Casper’s pre-spec initial structure.
“The structure was given more or less a complete fail in peer review by Muneeb Ali, Jude Nelson and Aaron Blankstein,” says the CoinShares report. “In their analysis, they noted that Zamfir et al. had essentially redefined Byzantine Fault Tolerance —a strictly defined term used in distributed systems since the late 1970s—such that their results could fit within their new narrow definition.
Even with Ethereum’s disappointing 2018 in the books, the CoinShares report adds that the firm is “cautiously optimistic” about the progress of various protocol upgrades in 2019. However, as a final note on the topic, the report also adds that this is the sixth year Ethereum’s move to proof-of-stake has been under development.