DeFi is on fire! Maicai is causing chaos! Mining algorithm sparks discord in Ethereum community, DeFi ecosystem complains against reckless changes.
The Ethereum core developer community approved an Ethereum Improvement Proposal (EIP) called "ProgPoW" during a conference call last week, causing dissatisfaction among Vitalik Buterin and the Ethereum community, leading to a potential split of the Ethereum chain, which remains uncertain at this point.
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ProgPoW Sparks Community Controversy
ProgPoW is a proposed improvement to Ethereum's hashing algorithm Ethash, aimed at narrowing the performance gap between regular hardware and specialized mining machines. The proposal was first introduced during the Constantinople hard fork but was postponed due to strong community opposition. However, last week, at a meeting of Ethereum core developers, the controversial proposal was quietly agreed upon.
ProgPoW is a variant of the Proof of Work (PoW) consensus algorithm. Traditional PoW uses a fixed algorithm, allowing mining equipment quality to directly impact mining efficiency. ProgPoW modifies the fixed algorithm to a floating one, generating a new algorithm every 50 blocks mined, which would diminish the advantage of ASIC miners, reducing their mining efficiency to around 1.2 times that of regular miners. This mechanism aims to benefit miners using GPUs and address centralization issues among miners.
Supporters' Perspectives
Supporters of the proposal believe that implementing ProgPoW will help reduce the influence of ASIC mining machines on the network's hash rate, enhance Ethereum's decentralization, and preemptively avoid miner-led forks as Ethereum transitions to Proof of Stake (PoS) in the coming months. They argue that all miners/pools that participated in the vote agreed to introduce the proposal, indicating that the controversial fork feared by opponents may not occur.
Opponents' Views
Opponents of ProgPoW argue that Ethereum should focus more on the Ethereum 2.0 process and that switching the current consensus algorithm will not affect the network's normal operation. They believe that transitioning to a new algorithm may cause a decrease in the network's overall hash rate and compromise its security. Additionally, prominent Ethereum community members such as Hayden Adams of Uniswap, Tim Coulter of Truffle Suite, and Andrew Keys of DARMA Capital have submitted a petition expressing their opposition to the ProgPoW proposal.
Cyrus Younessi, the Risk Manager at MakerDAO, asserts that the decision to approve or reject ProgPoW is not the main concern. What truly matters is the evident lack of consensus within the community on this issue. Introducing ProgPoW hastily in disregard of this situation could potentially lead to a controversial fork in Ethereum. Some opposing parties are likely to want the non-ProgPoW chain to have sufficient economic value. Even if the fork is temporary, it could result in a sharp drop in Ether prices, leading to immediate liquidations of considerable collateral in DeFi systems like Maker/Dai, Compound, and dYdX, putting them at risk. Cyrus Younessi concludes:
"I believe if one side must back down, it should be the ProgPoW supporters, as they have a responsibility to avoid any controversial blockchain forks."
THREAD: DeFi is at risk due to ProgPOW. If you care about collateral-based systems such as Maker / Dai, Compound, dYdX, and more, please consider taking a stance on ProgPOW. My number one priority is to prevent a contentious split, not to approve / reject ProgPOW (PP). 1/10
โ cyrus.ismoney.eth ๐ฆ๐๐ฌ๐จ๐ (@cyounessi1) February 28, 2020
Furthermore, although mainstream miners and pools on the Ethereum chain, including Ethermine, Nanopool, and F2pool, have reached a consensus and agreed on the proposal, the voting results among all Ethereum users indicate significant controversy surrounding the proposal, leaving open the possibility of a contentious fork in Ethereum.
Related Readings
- MakerDAO Risk Manager: ProgPoW Offers No Benefits to the DeFi Industry
- HashKey Capital: Understanding the Reasons and Subsequent Impacts of Ethereum 2.0 Changing its Consensus Mechanism
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