"Token Economy" Study and Thoughts 3/n

Nov 19, 2022#Mirror.xyz19

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The phenomenon of network forks in Web3. "Hard fork" phenomenon: It is an incompatible protocol change. Nodes that do not update to the new version of the protocol will be unable to process transactions, and nodes that validate transactions based on the old protocol will consider blocks generated by the new protocol as invalid. Therefore, nodes that want to adopt the new protocol will need to upgrade their software. "Soft fork" phenomenon: It is a backward-compatible protocol change. Nodes that do not update the protocol can still process transactions as long as they do not violate the new protocol rules. The process of a soft fork is more gradual than a hard fork, and it is a progressive forking process. When does forking occur? 1. Forking occurs when some nodes in the network continue to use the old protocol while others use the new protocol due to technical protocol updates. 2. Forking can also occur unexpectedly due to temporal forks caused by network delays. In this case, nodes in different parts of the network have two alternative versions of the ledger, resulting in two parallel blockchain networks. The Bitcoin protocol has a rule to resolve these temporary forks and ensure that only one branch survives in the network. 3. Politicized protocol upgrade decisions can lead to network forks, where minority chains have enough followers or governing principles to sustain their own economy. Politicized hard forks are black swan events that can have a significant impact on the value of their tokens, depending on which network develops better in the long term. Reference: English version online reading: Chinese version online reading: https://github.com/Token-Economy-Book/ChineseTranslation/wiki/0.1-引言

Web3 Network Fork Phenomenon.

"Hard fork" phenomenon: It is an incompatible protocol change. Nodes that do not update to the new version of the protocol will be unable to process transactions, and all nodes that validate transactions based on the old protocol will consider blocks generated according to the new protocol as invalid. Therefore, nodes that want to adopt the new protocol will need to upgrade their software.

"Soft fork" phenomenon: It is a compatible protocol change. Nodes that have not updated the protocol can still process transactions as long as they do not violate the new protocol rules. The process of a soft fork is more gradual than a hard fork and is a progressive forking process.

Under what circumstances does forking occur?

When some nodes in the network continue to use the old protocol while others use the new protocol, a technical protocol update will result in a fork.
Due to network latency, temporal forks can also occur unexpectedly in the network. When this happens, nodes in different parts of the network have two alternative versions of the ledger. This creates two parallel blockchain networks. The Bitcoin protocol has a rule to resolve these temporary forks, ensuring that only one branch survives in the network.
Politically driven protocol upgrades can lead to network forks, where a minority chain has enough followers or governing ideology to sustain its own economy. A politically driven hard fork is a black swan event that can have a significant impact on the value of its tokens, depending on which network develops better in the long run.

References:

Read the English version online: https://github.com/sherminvo/TokenEconomyBook/wiki

Read the Chinese version online: https://github.com/Token-Economy-Book/ChineseTranslation/wiki/0.1-Introduction