What Is a ‘Soft Fork’ in Cryptocurrency?
A soft fork is a backward-compatible change to the blockchain protocol. This means that non-upgraded nodes will still see the new blocks as valid, even if they don't understand the new rules.
For example, a soft fork might impose a stricter rule on block validation. It only requires a majority of miners to upgrade to be enforced, as old nodes will follow the longest, new-rule-compliant chain.
Glossar
Soft Peg versus Hard Peg
Stabilization ⎊ ⎊ A soft peg in cryptocurrency or financial derivatives represents a managed exchange rate regime where the currency’s value fluctuates within a defined, yet relatively wide, band against another currency or asset, often requiring central bank intervention to maintain its position.
Soft Rug
Exposure ⎊ In cryptocurrency derivatives, a "Soft Rug" describes a deceptive strategy where an initial project exhibits superficial legitimacy, attracting investment before gradually diminishing in value, often through subtle manipulation of tokenomics or liquidity pools.
Soft Fork Impact
Impact ⎊ Soft fork impact refers to the effects of a backward-compatible protocol upgrade on cryptocurrency derivatives markets.
Fork Mechanics Explained
Architecture ⎊ Fork Mechanics Explained involves the technical divergence in a blockchain's consensus rules, creating parallel chains from a shared history.
Fork Resolution Methods
Contingency ⎊ Fork resolution methods, within cryptocurrency and derivative markets, address scenarios arising from blockchain divergences, ensuring market stability and contractual obligations are maintained.
Hard Fork Permanent Divergence
Divergence ⎊ Hard fork permanent divergence describes the irreversible separation of a single blockchain into two distinct, non-interoperable chains, each operating under a different set of consensus rules.
Fork Coordination
Governance ⎊ Fork coordination represents the complex process of achieving consensus among core developers, miners, node operators, and the broader community regarding a proposed change to a blockchain's protocol rules.
Chain Upgrade Process
Governance ⎊ The chain upgrade process is fundamentally dictated by the protocol's governance model, which outlines the voting mechanism and stakeholder consensus required to approve a change to the underlying blockchain code.
Chain Fork Resolution
Resolution ⎊ Within cryptocurrency and decentralized finance, a chain fork resolution represents the outcome of a blockchain split, specifically addressing the post-fork state and the distribution of assets.
Soft Liquidation
Liquidation ⎊ A soft liquidation, within the context of cryptocurrency derivatives and options trading, represents a controlled reduction of exposure, typically occurring when margin requirements are breached but before a forced liquidation event is triggered by the exchange or clearinghouse.