On Thursday, November 1, the decentralized cloud storage blockchain Sia successfully completed a planned hard fork, after which ASIC miners from Bitmain and Innosilicon cannot participate in the production of blocks. As a result, only one type of mining equipment, which is produced by a subsidiary of the Sia developer company, Obelisk, remained compatible with the updated Sia protocol. The miners, who believe that the “developer” monopolization is no better than that of Bitmain, refused to change the algorithm and formed a competing branch of the blockchain, which operates according to the old consensus mechanism. DeCenter considered the positions of the conflicting parties.
The Patient Is Rather Alive Than Dead
The operation to introduce a new protocol did not go very smoothly. The fork should have taken place a day earlier, on the 179,000th block, but the miners were stuck on the block 178,999 for several hours because, as co-founder and CEO of Nebulous (Sia developer) David Vorick said, the error in the code meant that the miners “needed to get at least one block at full difficulty before it [the difficulty level] is adjusted. This can take from 6 to 48 hours.”
The block was found around 6:00 AM EST. Following this, the complexity, a parameter that blockchains use to make sure that blocks are mined at a constant time interval regardless of the network’s hash rate, fell by 98%, which allowed the miners to continue mining blocks on average every 10 minutes.
According to Vorick, the hard fork will be beneficial for the cryptocurrency. “The hash rate is much more decentralized than it was before the fork,” said Vorick, noting that 87% of the hash rate is now distributed between “community members.” This will provide “healthy mining communities and higher aggregate complexity” in the long run.
Given that the fork’s goal was to make the competitors’ ASIC miners incompatible with the consensus mechanism of the network, the “hard fork trick” worked, according to Vorick. He notes that “now everything is functioning normally.”
From a technical point of view, it is impossible to throw out Bitmain and Innosilicon forever. If they desire, the companies can develop new ASICs suitable for the changed algorithm. According to Vorick, it will take three to four months. The task of the Sia management at this stage, however, was to gain time: in a couple of months, the network will already belong to the miners of Obelisk.
All Means Are Go
The chip maker Obelisk was launched in June 2017 as a competitor to Bitmain and is a subsidiary of Nebulous, a non-profit organization that supports Sia. Obelisk announced that its first product would be ASICs for Sia, but within a few months, it became clear that Bitmain had outstripped Obelisk and had already been secretly mining blocks using its miners.
In January, Bitmain “without warning” presented its ASIC miner for Sia; later in April, another manufacturer, Innosilicon, unveiled its even more powerful miner. According to Vorick, by October 1, Innosilicon controlled 37.5% of the hash rate and, given its capabilities, could take possession of 100%.
At the same time, Obelisk itself was late with supplies of already sold ASICs, as the first ASIC miner from Obelisk was delivered in August, and the last in mid-October, while the deadline announced by the company was June 30. This naturally provoked discontent of the community and customers, some of whom intended to file lawsuits after all. While Bitmain and Innosilicon miners took possession of an increasing hash rate, Obelisk equipment buyers lost their potential profits. And there was a lot of money invested as Obelisk earned $22 million just on pre-sales.
Even then, Sia developers were discussing the possibility of carrying out a hard forks that would “push out” extra miners and thus, on the one hand, help confront large mining corporations that can centralize mining, and on the other, provide a sort of compensation to Sia’s ASIC miners by eliminating hashing competitors.
Similarly, the Monero cryptocurrency has already gotten rid of Bitmain, and Ethereum has been discussing this possibility for quite a long time now. The case of Sia, however, is different. The project is trying to exclude not all ASIC miners, but only those that compete with a subsidiary of Nebulous. Therefore, some members of the community accuse Sia’s leadership of lobbying their own interests, calling the fork blatant “protectionist.”
It’s Not What You Thought
The Sia team regularly refutes such allegations. “ASICs and increased hash rate are useful for the Sia network . . . ASIC mining means that Sia is protected from 51% attacks, even if mining is relatively centralized among a small number of pools and manufacturers,” wrote Zach Herbert, Sia’s vice president of operations, on Medium. He also noted that Sia was not concerned with the appearance of ASIC itself, but with the Bitmain invasion, which is promoting monopolization, intervention in the development, and attempts to influence projects in their own interests. “We consider Bitmain a villain in the crypto space,” wrote Herbert.
Vorick shared these views and said in a conversation with CoinDesk: “Although there was no direct attack on the consensus mechanism, most of the community felt that the secret development of the ASICs [by Bitmain and Innosilicon] was an attack, and also felt that if one farm owned 45% of the hashing capacity, that would be risky, and justified the forced change [of the protocol] . . . We do not believe that the cryptocurrency should tolerate a parasitic and abusive ASIC monopoly.”
It is unclear what differentiates Obelisk’s established monopoly, but Vorick noted that the change of code is “optional,” and those who disagree can “break away and be on a separate blockchain, where a hard fork has never been introduced.” According to him, such a split does not affect the functionality of the main network.
The Community Heeded the Advice
As a rule, hard forks are preceded by a rather long period of disputes and discussions precisely because each project is aware of the possibility of a split, up to the formation of a competing chain. The most successful examples of separated “twins” are Ethereum Classic and Bitcoin Cash. In both cases, part of the community continued to support the old version of the blockchain, which eventually acquired enough support to function as a full-fledged separate chain.
Having anticipated this possibility, the Sia community discussed the feasibility of a fork for almost a year. One of the opponents of the change of the algorithm two months ago presented his views in a thread called “Siacoin Obelisk Fork Is No Better Than Ethereum DAO Fork,” referring to the history of the appearance of Ethereum Classic. In a sense, this post became prophetic because the network split script was embodied and, moreover, it strongly resembles the case of Ethereum.
The new chain was called SiaClassic. Like the Ethereum Classic community, the new group published its own “Declaration of Independence.”
“We have carefully developed an organizational structure that will promote transparency in financing, management, and development . . . Moreover, we are proud to be part of a decentralized platform, which allows us to be confident that its own internal leadership increases community involvement in decision-making”, writes the author of the “Declaration” Scott Ellis.
Despite that Vorick reported 90% support for the fork by the community, and discussions on Reddit confirm a large number of supporters, the “Declaration” casts doubt on the transparency of the decision to change the algorithm, hinting at the centralization of power over Sia in the hands of Vorick and the leading developers. The new non-profit organization called SiaClassic Foundation proposes a division of power between the board of directors, the supervisory board, and the advisory board.
Vorick noted that the opposition chain still enjoys “shallow community support.” He does not, however, exclude the possibility that the main chain of Sia will support the separated project should SiaClassic fail to become independent.
In addition to SiaClassic, there were at least two groups alternative to the main Sia blockchain: Sia Prime, which, according to Vorick, “collaborates with Nebulous” and left in the code a mechanism that is sponsored by Nebulous, and Hyperspace, “a competitive fork, which wants to replace Nebulous, although they did not write the code themselves at all.”
Mark Huetsch, the Hyperspace founder, commented: “We are not trying to replace Nebulous. We have made several innovations in the source code, including scriptless atomic swaps using Schnorr signatures and support for nodes with simplified payment verification. We asked Nebulous to add these improvements to Sia, but . . . it seems they are not inclined to do that.”
It is still unknown which of the “new Sias” will survive, but the Sia community obviously intends to fight for the ideals of decentralization.