What you need to know and what to be ready for when updating protocols — advice from BeFund

What you need to know and what to be ready for when updating protocols — advice from BeFund

Any technology invented by mankind is bound to undergo improvements and improvements. Even the common wheel has undergone millions of changes and differentiations since its stone prototype, although the form factor has remained the same. Similarly, blockchain, as a technology, involves the construction of blocks of data that are stacked on top of each other. But how these blocks are built, who validates them and how many other processes take place in parallel is a separate matter of the protocol of each individual decentralized network.

Frequency of updates

It makes no sense to look for advantages or disadvantages of the network in the number of updates per unit of time: the main goal of implementing changes is to improve the work in general or in some specific directions. Updates for the sake of updates are a bad and ineffective idea that end up playing against their authors because:

  •     involve unjustified expenditure of resources;
  •     do not give users advantages, and therefore reduce trust in the network;
  •     cause technical instability that can be used by attackers, etc.

That is why some networks have to wait years for protocol updates. However, after the implementation of such changes, the blockchain technology receives really noticeable advantages that provide a competitive advantage.

One of the most famous examples of protocol updates was the transition of the Ethereum network from POW to POS methods in the fall of 2022. This update really increased the efficiency of the blockchain, reduced costs by hundreds, even thousands of times and opened up new opportunities for developers and investors. But at the same time, almost at the same time, the innovation deprived millions of miners around the world of profits, who previously earned quite successfully from mining.

Therefore, it is worth understanding that the main reason for updates should be the desire for positive changes, and not media hype or just praise. Each decentralized network, no matter L1 or L2, has its own characteristics and improves them in order to increase its own value and increase investment attractiveness. The development of some solutions takes time, for others – new technologies that may not even exist yet (but they are being talked about and are trying to be implemented). This radically differentiates the decentralized network from, say, iOS, where updates are related to small features and come in dozens per year.

Update management

Another interesting personality of decentralized networks is a high level of democracy in the direction of development. DAOs have achieved something that is difficult to achieve in centralized systems, namely freedom of choice and transparency of elections. Token holders have not only electronic assets, but also the right to vote to determine the overall policy of the system. Of course, the authors of the network form a package of proposals and visions based on their own considerations and suggestions from users. However, unlike ERC 20—the improvement proposal that revolutionized the token development process—prospective updates are left to public discretion. And it is the voting that determines which way the history of a particular blockchain and decentralized organization will go in the future.

For example, on June 18, 2024, the update of the Stellar network protocol (XLM) to level 21 came into effect, the implementation of which took place precisely on the basis of the will of the token owners. This is a package of several updates (from CAP-0053 to CAP-0056), which qualitatively distinguishes the protocol from the 20th version:

  •     added two separate functions for the host that extend the TTL lifetime, allowing users to independently manage smart contract components;
  •     reducing the cost of creating a VM thanks to a new model of working with the central processor;
  •     increases the performance of the network and simplifies the process of connecting the VM to the host, which increases the number of simultaneous transactions;
  •     improves internal transaction caching.

The Stellar protocol was updated to version 20 quite recently, only in March 2024. However, the previous version 19 has lived since 2022, so the latest updates are more bug fixes based on practical usage analysis.

Are there “bad” updates?

Because changes are prepared long and carefully, the percentage of harmful changes is usually extremely low. However, one should not forget about the human factor, which is present in any aspect of technical activity, the activity of intruders and unforeseen situations. It should be understood that updates increase the level of danger for the system, because validators are in a less secure state for a certain time, maybe even a small amount of time. And if one of the attackers decides to take advantage of this, his chances of success increase significantly precisely at the time of updates.

Also a fresh fact from the world of WEB 3.0 infrastructure is the situation with the OKX crypto exchange: it is known about the theft of more than $11 million from various customer accounts. According to one of the most common versions, this became possible due to the forgery of documents with the subsequent hacking of accounts and obtaining new API keys. The incident caused panic and mass distrust among users, who withdrew more than $630 million of their own funds from OKX. This put the exchange in a difficult, if not catastrophic, position.

OKX’s position remains uncertain: on the one hand, they confirmed the fact of hacking and theft just after the last update; on the other hand, they avoid publicizing the real reasons for the incident. The crypto exchange refutes rumors about the unreliability of verification tools, including Google Authenticator and SMS verification. Meanwhile, many experts believe that everything happened precisely because attackers intercepted a short message for the user at a time when the system was “distracted” from implementing updates.

Could hackers forge documents and fool the facial recognition system with the help of Artificial Intelligence? Well, we live in a very interesting time, when neural networks are already capable of creating miracles that are not known to the general public.

Information is now spreading about the problems found on the eve of the theft in the security system of OKX accounts, to which the crypto exchange did not react in time.

Third party updates

The topic of blockchain updates is closely related to software updates used to develop these changes. Here it is worth emphasizing the updates of the programming languages used to create smart contracts or develop the infrastructure, updates of various popular services involved in the entire process. It is clear that the quality of development of updates will directly depend on the conditions that the development environment puts before the specialist.

For example, the Enterprise Server 3.13 update for GitHub was long-awaited in the IT community. This tool is in particular demand among all developers and allows not only to work together, but also to share ideas, declare copyright and build a portfolio. GitHub updates include:

  •     improved interface;
  •     extended search capabilities both among content and among files;
  •     special storage properties that improve management and classification processes;
  •     Elasticsearch version 8 for improved performance and security;
  •     enterprise and organization audit log events now contain the appropriate SAML and SCIM credentials, making it easier to correlate a GitHub handle with an enterprise identity.

There will be updates tomorrow. What to do today?

Although we have already established that the implementation of updates should only be beneficial, this does not mean that you should relax and just wait for better times. One should always remember about force majeure situations and be prepared, according to Murphy’s Law. Especially if you are not just an owner of electronic assets, but also have blockchain-related projects. Here are some tips from BeFund specialists:

Check the backup

Blockchain provides for lifelong storage of information in a sequence of blocks, so there is no need to worry about its disappearance. However, be sure to back up the infrastructure elements of the project that are not hosted on a decentralized network.

Be prepared for delays

There are many factors that do not depend on you personally. Keep this in mind when planning your activities during the decentralized network updates. The least bad thing that can happen at this time is transaction delays. So if you need to transfer electronic assets just in time for updates, try to do it in advance.

Diversify your crypto portfolio

This is general advice for all electronic asset owners. However, in the context of our topic, this is a must do. Remember that systems are in a vulnerable state during updates. Therefore, it makes sense to temporarily protect assets, for example, conversion to another cryptocurrency or fiat funds. Of course, this is acceptable for small amounts.


Renewal is what will accompany us as long as humanity evolves within the framework defined today. Each subsequent update should only be for the better. Follow the safety rules when implementing innovations and let success accompany you! BeFund specialists are always ready to provide you with comprehensive advice on the technical aspects of updates for decentralized networks.