Wondered how Terra recently created a new blockchain and new LUNA 2.0 tokens? Through a hard fork. In this article, we’ll go through what forks are and why blockchains undergo them.
What is a fork?
A blockchain fork occurs when the blockchain’s developers and community make changes to its protocol or smart contracts.
During a fork, new blocks are created under new rules. What differentiates a soft fork and a hard fork is whether these blocks remain compatible or incompatible with previous blocks.
Forks are usually proposed in governance proposals and then voted upon by community members.
Think of soft forks as software updates to the blockchain. New blocks created are still valid under the old rules i.e. soft forks are backwards-compatible. Hence, there is no need for validators to upgrade their nodes.
Soft forks are usually carried out to introduce new features and functions, like on the Bitcoin and Ethereum blockchains over the years.
A hard fork changes the code so much that the blockchain splits in two - the original blockchain and a new blockchain with its own set of rules. It is a radical upgrade to a network’s protocol that can make previous transactions and blocks either valid or invalid. A new crypto coin will also be created. This also means that validators have to upgrade their nodes to participate on the new blockchain.
The two blockchains will share a common history up until the point of the split, where they will then move off in two different directions.
Examples of hard forks:
- Bitcoin Cash (BCH), forked from the Bitcoin blockchain (BTC)
- Ethereum Classic (ETC), forked from the Ethereum blockchain (ETH)
- Terra (LUNA 2.0), forked from the original Terra blockchain, now renamed as Terra Classic (LUNC)
Why do blockchain forks occur?
Forks may occur when, as mentioned, the blockchain wants to add new features or functions on the programming level. These are usually soft forks.
Other times, hard forks may happen because the community fundamentally disagrees with how the blockchain should be run or upgraded; or the original blockchain had failed and the new blockchain was forked to present an upgraded version.
In Terra’s case, the hard fork was a last-ditch attempt to ‘revive’ the blockchain and its LUNA token. While there have been successful examples of hard forks like Monero (XMR) — which was forked from the now-defunct Bytecoin — Terra’s crash was monumental and a hard fork may not solve its problems.
The views expressed in this article are the author's alone and do not necessarily represent the views of ApolloX.
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