Polygon Completes Hard Fork to Reduce Gas Fee Spikes, Disruptive Reorgs 🔗 Source

The software upgrade to the Ethereum-Scaling project went live on Jan 17, 2023 and included two proposals from December that Polygon validator teams voted to approve.

What is a fork? 🔗 Source

Cryptocurrencies like Bitcoin and Ethereum are powered by decentralized, open software that anyone can contribute to called a blockchain. They’re called blockchains because they’re literally made up of blocks of data – picture a really long train – that can be traced all the way back to the first-ever transaction on the network. And because they are open source, they rely on their communities to maintain and develop their underlying code. A fork happens whenever a community makes a change to the blockchain’s protocol, or basic set of rules. When this happens, the chain splits — producing a second blockchain that shares all of its history with the original, but is headed off in a new direction.

Why is this important?

Most digital currencies have independent development teams responsible for changes and improvements to the network, much in the same way that changes to internet protocols allow web browsing to become better over time. So sometimes a fork happens to make a cryptocurrency more secure or add other features. But it’s also possible for the developers of a new cryptocurrency to use a fork to create entire new coins and ecosystems.

Soft fork: Think of a soft fork as a software upgrade for the blockchain. As long as it’s adopted by all users, it becomes a currency’s new set of standards. Soft forks have been used to bring new features or functions, typically at the programming level, to both Bitcoin and Ethereum. Because the end result is a single blockchain, the changes are backward-compatible with the pre-fork blocks.

Hard fork: A hard fork happens when the code changes so much the new version is no longer backward-compatible with earlier blocks. In this scenario, the blockchain splits in two: the original blockchain and new version that follows the new set of rules. This creates an entirely new cryptocurrency – and is the source of many well-known coins. Cryptocurrencies like Bitcoin Cash and Bitcoin Gold evolved out of the original Bitcoin blockchain via hard fork.

Why do forks occur?

Just like all software needs upgrades, blockchains are updated for a variety of reasons:

To add functionality

To address security risks

To resolve a disagreement within the community about the cryptocurrency’s direction

How are forks continuing to change the crypto landscape?

The Ethereum blockchain is designed to run “smart contracts,” which are chunks of code that automatically execute a set of predetermined actions when certain criteria are met. Smart contract applications include everything from games to logistics tools to DeFi dapps. As the platform that runs all these applications, you can think of the Ethereum blockchain as similar to a computer’s operating system. In that analogy, the various Ethereum forks – Ethereum, Ethereum Classic, Ethereum 2.0 – are like newer versions of an operating system that add features or efficiencies the prior versions might have lacked. An older fork might continue as a stable, well-proven platform while a newer fork might offer developers entirely novel ways of interacting with it. (Older and newer versions can eventually merge or continue evolving further apart.) Think of a soft fork as a ‘software upgrade’ (like when your phone asks you to update to the latest OS) and a hard fork as an entire new operating system (like Linux and Mac OS are evolutions of the half-century old UNIX platform).

Polygon Hard Fork Details 🔗 Source

The changes proposed by the hard fork aim to reduce the severity of gas spikes and address chain reorganization inefficiencies in an effort to reduce time to finality (the amount of time it takes for a transaction to be considered final and irreversible on the blockchain).

The first proposed upgrade aims to reduce gas spikes by changing the BaseFeeChangeDenominator from 8 to 16. This will help smooth out the increase/decrease rate in the base fee (the minimum fee for block inclusion) when the gas exceeds or falls below the target gas limits in a block.

The reasoning behind this change is that when the chain experiences high demand, the base gas fee experiences exponential spikes, which are not normal or good during surges in demand on any blockchain protocol. So, by increasing the denominator from 8 to 16, the growth curve can be flattened, resulting in a more seamless experience when interacting with the chain.

The second proposed upgrade addresses chain reorganizations (reorgs) by decreasing the sprint length from 64 to 16 blocks.

What's a sprint and how does this impact the network?

When validators produce blocks, they do so in a sequence called a "sprint". The sprint length refers to the number of blocks produced during a single sprint. By reducing the sprint length, the time a validator continuously produces blocks decreases, which in turn decreases the chances of a secondary or tertiary validator (who hasn’t discovered the primary) kicking in to produce blocks, resulting in fewer reorganizations ("reorgs") overall. This means a single block producer will produce blocks continuously for a much shorter time (~32 sec) than the current (~128 seconds). This will decrease the depth of reorgs, making the chain more predictable.

What's a reorganization?

A reorganization, or "reorg" is a change to the blockchain's history. It happens when a different chain that has more accumulated proof of work than the current chain is added to the blockchain. In a blockchain network, validators work to maintain the integrity of the chain by reaching consensus on the ordering of transactions. In a PoS staking protocol chain like Polygon, validators "stake" a certain amount of the native token to participate in the consensus process. In the event that validators come to a disagreement on the ordering of transactions, it can lead to a split in the chain, with different validators working on different versions of the chain. When this happens, the network will then "reorganize" itself to follow the chain with the most accumulated proof of work.Reorgs can happen for different reasons, such as a validator producing blocks on an old version of the chain, or a bug in the protocol which causes a chain split. They can cause confusion and unpredictability for users and developers, which is why the Polygon team is proposing changes to the sprint length, in an effort to decrease the depth of reorgs and make the chain more predictable. By implementing these changes, the Polygon PoS chain hopes to improve performance and predictability for users, validators, and developers.

How will the hard fork impact MATIC's price?

In short, this hard fork is a major milestone in the development of Polygon and MATIC; it has the potential to boost network performance significantly and increase its popularity among users and developers alike. In turn, this could lead to a surge in MATIC’s price as demand for the token increases. If this event excites investors as much as other news from other projects in the space, we could see major price moves for MATIC in the coming days. However, if the crypto market rally continues to lose momentum and potential buyers have already priced in this news, it's possible that MATIC's price may not benefit from the fork immediately. Regardless, from a long-term fundamentals perspective, it's clear that this hard fork will bring a lot of value to MATIC and the Polygon network, paving the way for more developments in the future.

Polygon - Hard Fork