Difficulty Bomb Sees Ethereum Block Rewards Drop by 1,000 ETH

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Block reward on the Ethereum network is currently down by 1,000 ETH amid a slight increase in block time, signaling the emergence of yet another ‘difficulty bomb.’ Miners, dApp projects, and hodlers will have some decisions to make regarding the difficulty bomb even as Ethereum moves towards a pivot to proof-of-stake (PoS) consensus.

Ethereum Difficulty Bomb Explained

The difficulty bomb is a code fragment linked to the planned transition of the Ethereum network from a proof-of-work (PoW) consensus to a PoS consensus. This particular code string creates an incentive that allows miners and dApps to manage this consensus change.

In effect, the difficulty bomb as a protocol level algorithm causes an increase in the computational effort required to ‘mine a block’ on the Ethereum network. When activated, miners require a significantly larger amount of time to ‘solve a block.’

According to a report on Trustnodes, Ethereum’s daily block production has dipped significantly within the last fortnight. Also, the block reward has experienced a drop from 13,500 ETH to 12,500 ETH.

Data from the Ethereum network explorer platform etherscan show no material increase in orphan blocks. The absence of any significant surge in orphan blocks and the fact that there are no currently running protocol upgrades to create such a massive decrease in block reward points to the emergence of another difficulty bomb.

Previous difficulty bomb emergence in 2017 and 2018 have seen block times rise to as high as 30 seconds. Block time is currently approaching 15 seconds meaning that the difficulty bomb is only in its early stage.

What Next for Miners and dApps?

In the past, difficulty bombs have been delayed after a few months. However, with Ethereum on the throes of a protocol upgrade, network participants may be looking to allow the bomb to run its course.

Increasing block times could see the emergence of scarcity which theoretically exerts an upward pressure in price action. Generally, miners favor price increase as it improves their operational bottom-line.

For dApps, however, if the block time approaches 60 seconds, these projects may begin to suffer the negative effects of network congestion. As previously reported by BTCManager, Tether (USDT) transactions are already taking up the lion’s share of the network.

However, the network has been showing resilience to clogging in recent times. Gods Unchained, a digital card dealing game surpassed CryptoKitties’ highest-ever transaction volume count without significantly overburdening the network.

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