[pavlov]

What makes this one of the biggest upgrades in the history of software?

How many Ethereum nodes are there compared to, say, iOS or Android or Windows deployments? What’s their hardware diversity? What’s the complexity of Ethereum compared to the aforementioned operating systems?

[dist1ll]

Several reasons come to mind:

- Operating systems, browsers, etc are not distributed systems. Their deployment procedure has no availability or liveness requirement. And they can be done asynchronously, at the discretion of the user. If you think about it, deployment for this type of software boils down to uploading build artifacts into a public folder.

- Most other massively deployed software is developed by a single organization that completely owns the pipe. Ethereum has multiple client teams that need to coordinate and rigorously test their specs.

- Any failure has potential to severely damage the reputation of Ethereum, and in turn a multi-billion dollar market.

[krainboltgreene]

> Operating systems, browsers, etc are not distributed systems

This is a hilarious statement.

> Their deployment procedure has no availability or liveness requirement.

Only to be followed by this.

[moralestapia]

Your average software update does not put 200B at risk.

[pavlov]

Crypto market cap is a made up, manipulated number. The actual amount of dollars in Ethereum is nothing even close to that.

The average Fortune 500 internal software upgrade probably has more real revenue on the line than an Ethereum update.

Imagine that this update fails and Ethereum goes down. Who’s going to actually notice? Traders on exchanges like Coinbase or Binance wouldn’t be affected. The price would crash, sure, but their actual trades aren’t on Ethereum. Crypto is all about perception of decentralization. It’s a story, not a product.

[chrisco255]

It's not a made up number any more than a stock's market cap. Is Apple really worth $2.5 trillion? I dunno, seems like a lot, but the market determines what things are worth.

But for the record, there's more than $100B in USD-backed (cash and equivalents-backed) assets on the Ethereum blockchain. Plus billions of dollars worth of on-chain organizations and applications that exist (Uniswap, Aave, Compound, GMX, etc). More than $28B moves on chain every day: https://money-movers.info/

[pavlov]

> "It's not a made up number any more than a stock's market cap."

This is a common crypto talking point but it makes no sense.

Companies are regularly acquired at a premium to their market cap, often in cash. For instance, Elon Musk signed an agreement to pay $44 billion to take Twitter private. Assuming the deal goes through, every single shareholder of Twitter is going to receive cash in exchange for their shares.

There's no such process for cryptocurrencies. It wouldn't make any sense for someone to acquire every instance of a coin. Coins don't pay dividends. They don't represent any kind of underlying assets. It's just weird to pretend that they have a market cap in the same sense as stocks.

[noch]

> Coins don't pay dividends. They don't represent any kind of underlying assets.

Every honest crypto market participant has long admitted that no one currently knows a good model for valuing crypto tokens. Indeed this is widely accepted. As a result, there is such a massive speculative premium placed on them and their prices are extremely volatile.

However, Ethereum will now pay a yield native to the protocol and so discounted [cashflows][1] apply in "Eth" terms. To try to value that ["internet dividend"][0] in USD is, however, still speculation and so ultimately reliant on global [liquidity][2] conditions (how much banks "print").

[0]: https://link.medium.com/HGOCQMUbltb The Web 3.0 Yield Curve

[1]: https://ethereumcashflow.com (pdf)

[2]: https://twitter.com/42macro/status/1550487881956802563

[meowkit]

> There's no such process for cryptocurrencies. It wouldn't make any sense for someone to acquire every instance of a coin. Coins don't pay dividends. They don't represent any kind of underlying assets. It's just weird to pretend that they have a market cap in the same sense as stocks.

Feel free to come back to these comments in 10-20 years, but one of the moonshot goals is to make blockchain networks base layers for all financial processes in the world and implement all the things you want from any asset class as applications on top of a globally distributed virtual computer.

Additionally, the same arguments can be made of any fiat currency. The US dollar doesn't represent anything except >faith in a system<. The relative value of any blockchain is the >faith in it as a system<.

[pavlov]

> "the same arguments can be made of any fiat currency"

That's just moving the goalposts because we were talking about market cap of stocks specifically.

I'm happy to check back in 10-20 years. I made an Ethereum wallet in 2017 and still haven't used it for anything meaningful. Anecdotally, the same seems to apply to everyone I know. I honestly don't think that will have changed by 2032. I don't think my stock portfolio will be on Ethereum then.

[archiemckenzie]

Not necessarily — commodities like gold have similar properties and they are also generally given a market cap.

[Zanfa]

However commodities also have inherent utility that cryptocurrency doesn’t.

[chrisco255]

Pretty bad example because Elon Musk is currently in court to back out of the deal or get the price reduced.

Companies are also regularly liquidated for next to nothing or go bankrupt and disappear altogether (ie Enron, Lehman, et al).

There is no such process for cryptos because they are decentralized and no one owns 100% of the supply or has the authority to authorize a takeover. They are more akin to commodities in that sense. Could you buy all the world's lumber supply? Of course not, not even if you were Musk.

Ethereum has been a yield producing asset since Beacon chain went live in December of 2020.

[RestlessMind]

> Crypto market cap is a made up, manipulated number. The actual amount of dollars in Ethereum is nothing even close to that.

Would you apply same reasoning to NASDAQ stocks? Or Gold market cap?

[seibelj]

I mean META stock is down 60% YoY and the revenue is the same. Hard to argue what is "manipulated" vs. perception

[foepys]

How is it at risk? If something goes wrong you can always return to the old chain.

The old chain will continue to exist anyways because some people dislike Proof of Stake.

[sterlind]

proof of stake is extraordinarily complicated to get right. that's why it took so long. not only is the code changing, but so is the entire incentive structure of a huge virtual economy, running the code in a sprawling, Byzantine, decentralized system, while trying to keep a miner's revolt from sabotaging the whole deal.

[worldsayshi]

>not only is the code changing, but so is the entire incentive structure

Is there any good writeup or video essay about how incentives and control will change? I'm a bit sceptical about this part. Feels like ethereum owners now have a big incentive to make this change benefit them rather than the utility of ethereum. Like I heard this will make it even more deflationary which seems like an odd choice.

[throw827474737]

and when the simplest etherum contracts with many reviewer eyes allowed for exploits, how is anyone confident that this has been achieved correctly?

[meowkit]

Because there have been several testnet merges (including a shadow merge of the mainnet) that have been successful and identified issues that have been fixed.

[sterlind]

I'm sure they've found and fixed issues. are you sure they've found and fixed all the issues? if I were a hacker, and I found a juicy bug in PoS, I'd sit on it until merge. either make money by shorting ETH and then wreaking havoc, or sell it to someone else so I don't get my hands dirty.

[sterlind]

exactly! hence why I think this must be the most harrowing software upgrade of all time.

[jlokier]

> What makes this one of the biggest upgrades in the history of software?

> How many Ethereum nodes are there compared to, say, iOS or Android or Windows deployments? What’s their hardware diversity? What’s the complexity of Ethereum compared to the aforementioned operating systems?

The code size for the core software of Ethereum isn't huge. It's possible for one person to understand it, and it's much simpler than iOS, Android or Windows. There are many things running on top, but those are supposd to keep running, similar to applications when you upgrade an OS.

But the finance attached to Ethereum is huge. I checked the figures just now.

$194 billion of ETH is being transferred from one blockchain mechanism to a radically different one, in about 40 minutes (estimated). Instantly, in what is effectively a single special transaction.

The consensus algorithm around that transaction is special and complicated, and it will only ever run once. It has been very carefully tested in advance by many teams at different companies, because it coordinates a handover between two robust but very different kinds of consensus protocols that don't normally link up.

It's unusual for another reason: Blockchains rarely merge two existing blockchains into one. Forking is more common, but not merging two different kinds of blockchains.

This is also an open source style software upgrade, because that $194 billion transaction only happens if enough users of the software have chosen to upgrade and run the new software by then instead of the old software (don't worry, it looks like most of them have). The necessary software was only ready to use a couple of weeks ago, and nothing forces people to upgrade, only incentive and getting the news out to them.

Not only is the consensus algorithm different, the p2p networking protocols are also different after the merge. There are many changes, though most of them are running already on one of the two chains being merged together.

Countless third party applications, defi, secondary blockchains and so on running on top are supposed to be able to continue running, seamlessly. There's a lot of those, running from many authors and companies, and some of those have their own financial value that's not even counted in the $194 billion I mentioned above. Their total value is not clear.

Those third party applications have not, in general, been tested on the new system. Nobody can be sure exactly which ones or how many will fall over, because it has not been possible to test them. It's a big like upgrading Windows XP to Windows 10: Applications are not supposed to be affected if the OS authors did it right.

Unlike most software updates rolled out on large networks, which can be done gradually with the old and new running alongside each other for a while, the Ethereum Merge is one single transaction to transfer everything over including protocols, and requires the whole network to do it all at the same virtual time.

Nobody knows in advance which block will contain the transition. Only the statistical conditions for the transition are set, and there is a kind of meta-consensus protocol to ensure the transfer between very different consensus mechanisms is itself going to satisfy special rules of both consensus mechanisms during the handover.

When it's over, the merge code will probably be deleted from client software, because it is only supposed to run once.

There will be future upgrades, as there have been "hard forks" in the past, but they don't appear require such high levels of carefulness and coordination as the merge. That said, maybe things like the planned switch to sharding, state expiry, change of hash tree structure, and zk rollups will be fairly radical too.

[cflynnus]

> It's also a software upgrade because that $194 billion transaction only happens if enough users of the software have chosen to upgrade and run the new software by then instead of the old software (don't worry, it looks like most of them have). The necessary software was only ready to use a couple of weeks ago.

"upgrade" is the wrong term. Not 100% of users will accept the new software so after this event called "The Merge" there will be 2 competing Ethereum networks (actually 3 because there's already "ethereum classic" from the last time Ethereum forked). The correct term is "fork." Yes the Vitalik endorsed fork will acquire most of the economic value, but that just highlights the degree to which Ethereum is centralized. There are key figures in ETH that force breaking rules changes on users. Bitcoin is very different.

[jlokier]

> Not 100% of users will accept the new software so after this event called "The Merge" there will be 2 competing Ethereum networks (actually 3 because there's already "ethereum classic" from the last time Ethereum forked).

It's not actually that simple. After the merge, non-upgraded PoW nodes will automatically wind down and self-destruct according to the built-in difficulty bomb curve which is part of PoW.

For PoW Ethereum to continue running in a useful way to whoever wants to use it, a majority of PoW users would need to upgrade to a new PoW fork that changes the difficulty bomb curve. They have to coordinate and agree that fork, as different bomb curves are incompatible.

That would require a majority of PoW users to perform a coordinated softare upgrade, agreed with each other. There's no default PoW Ethereum that can keep working for a long time if people don't deliberately agree on and roll out a new fork.

> Bitcoin is very different.

Bitcoin has a difficulty bomb too (when coin issuing stops), so Bitcoin may eventually self-destruct too, if nobody steps up to coordinate a new fork of Bitcoin and a majority of users accept the new fork.

[knocte]

> Bitcoin has a difficulty bomb too, so Bitcoin will eventually self-destruct, if nobody steps up to coordinate a new fork of Bitcoin and a majority of users accept the new fork.

What bullshit is this? bitcoin doesn't have a difficulty bomb

[jlokier]

It has a much weaker version, it's just not called a difficulty bomb, it's called the 21M bitcoin limit and the halvings leading up to it. As that limit is approached, Bitcoin mining gradually becomes less profitable.

https://www.cnbctv18.com/cryptocurrency/what-happens-after-a...

[RestlessMind]

iOS / Windows etc are not open source and are delivered by centralized entities (Apple, Microsoft). Android is open source but is also delivered by a single company (Google). Maybe my phrasing didn't reflect it but I meant one of the biggest upgrades for an open source project done by a distributed group of developers.