The evolution of the crypto ecosystem is bringing massive technological disruption in the industry. Blockchain enthusiasts are often intrigued by the number of terms coming up in the cryptoverse as a result of the upcoming technologies. One such term is “Ethereum Uncles.”
During the mining process, miners attempt to generate new blocks. A miner successful in finding a new block is entitled to the reward. Thus, the miner writes the first transaction for the same on the new block he/she has found. However, it is likely that two miners produce a block at the same time. In this case, the block with the larger share of proof of work (POW) gets accepted into the blockchain.
The other block is discarded from getting added to the blockchain and is termed as an orphan block; these blocks are essentially valid and verified but are orphaned due to delays in network propagation. These blocks are then termed as “Uncles.” Valid uncles actively contribute to the security of the main chain by neutralizing the effect of network lag on the dispersion of mining rewards.
Miners are paid incentives to include uncles every time a block is mined. In the Ethereum blockchain, the “heaviest” branch is selected as the truth. Uncles are added to the calculation of which block has the highest total proof of work backing it.
For example. There are 5 blocks- A0, A1, A2, B1, and B2. Now, if C1 is added to the chain, B branch gets chosen as it is the heaviest because the inclusion of uncle C1 results in an additional block in the branch weight. C1 arrived late in comparison to B1.
The two main reasons for adopting uncles with the GHOST (Greedy Heaviest Observed Subtree) protocol are-
Decreased centralization in Ethereum mining
The prevalent yet unresolved challenges of the current blockchain is ensuring that mining continues to be decentralized activity. Only a few mining pools are capacitated to solve increasingly complex mathematical problems. Initially, a personal computer could be utilized to mine. However, in the current scenario, it is not practical if the miner doesn’t own GPU racks. This has led to the dispersion of miners from existing pools.
For instance. John is a mining pool with 50% hash power and Steve only has 5% hash power. John is prone to producing a stale block 40% of the times (since the miner has produced the last block, it obtains mining data immediately) whereas Steve is at a risk of 95%. If the block interval is short for the stale rate to he high, John has an added advantage of being more efficient owing to its size. Consequently, blockchains producing blocks leads to a single mining pool having large enough hash power. This would lead to a single mining pool having sole authority over the mining process.
Smaller mining pools are benefitted subsequently with uncle rewards. Still rewarding miners producing orphaned blocks reduce the centralization incentive. The reward is given on account of them not being a part of a large mining pool and hearing about the blocks later due to network propagation delays.
Increased overall chain security
Uncles require the same computational power as necessary to mine main chain blocks. By adding uncles, the security is increased by the amount of work augmented on the main chain. However, a school of thought also considers uncles to be a design flaw, which can put network stability at great risk. The major deterrent being the potential incentive to mine empty blocks, yielding rewards when submitted as an uncle. The rewards for an uncle are less than submitting a valid block; also the transaction fee is not included. If submitted any later than the next block, the reward diminishes rapidly, becoming 0 after 7 blocks.