How will the transition from PoW to PoS impact smart contract development on Ethereum?
The Ethereum blockchain noted its plan for a transition to its consensus mechanism from PoW to PoS. Indeed, such a transition will bring about a drastic change to the operations of its blockchain ahead.
At the moment, Ethereum is using a consensus protocol known as Proof-of-work (PoW), just like Bitcoin. PoW is the mechanism responsible for the Ethereum network’s agreement on things such as transactions’ order and account balances. Likewise, proof-of-work is the underlying algorithm that establishes how difficult the work of miners is as well as rules guiding them.
On the other hand, Proof-of-stake (PoS) is a kind of consensus mechanism used in achieving distributed consensus, requiring users to stake their ETH towards becoming a validator in the network. The function of validators is similar to that of miners in proof-of-work, which is to order transactions as well as create new blocks for consensus on the network’s state.
Proof-of-stake as the underlying mechanism is responsible for activating validators when sufficient stake is received. Thirty-two (32) ETH needs to be staked for users to become a validator. There is a random selection of validators towards creating blocks and their function is to check and confirm blocks they do not create.
Why the transition from PoW to PoS?
The rise in the cost of energy for the maintenance of network security is a key concern regarding PoW networks. The kind of power required for the security and operation of the Bitcoin blockchain is huge, such that it is more than the power output of numerous nations. This is why PoS has been suggested as a feasible option for this consumption of energy.
Unlike PoW, validators do not require remarkable amounts of computational power due to random selection and the absence of competition. Likewise, mining of blocks is not necessary but the creation of blocks when selected and validation of proposed blocks when they are not is required. This validation is called attesting and validators are rewarded for the proposition of new blocks and attestation to ones they have seen.
What is a smart contract?
A smart contract is just a program running on the Ethereum blockchain. It contains code (its functions) and data (its state) which are located at a particular address on the Ethereum blockchain. Since it is a kind of Ethereum account, it has a balance and is capable of sending transactions over the network.
Nevertheless, a user does not control a smart contract but it is deployed to the network and run based on programming. Interactions between user accounts and a smart contract are through the submission of transactions that carry out a function defined on the smart contract. Just like normal contracts, a smart contract can define rules for automatic enforcement through the code.
Effect of transition from PoW to PoS on smart contract development
Since a smart contract is just a program running on the Ethereum blockchain, the transition from PoW to PoS should enhance its development. Anyone who knows how to use a smart contract language can write a smart contract and deploy it to the network. The only thing required for its deployment is sufficient ETH.
The ETH required for deployment is paid as gas fees which are currently huge. Gas fees for transactions on the Ethereum network are high and this is one of the problems PoS will solve. Gas costs for contract deployment are far higher. However, with the transition to PoS, a remarkable reduction in fees is expected.