The Ethereum merge may be the talk of the town, but it isn't the only upgrade on the block. Cardano's Vasil hard fork is also scheduled to go live this month, on September 22, just a week after Ethereum transitions to the proof-of-stake consensus mechanism.

But what is the Vasil fork, and how will it help the Cardano network? Tag along to find out.

What is the Vasil fork?

The Vasil hard fork is part of Cardano's third development cycle. Named after Bulgarian mathematician and prominent Cardano community member — Vasil Dabov — the fork is meant to improve network capacity and lower transaction cost. It is also meant to make the network more developer friendly in a bid to overtake Ethereum as the preferred blockchain for smart contracts and dApps.

Vasil has been long in the making, with a previous release date of June 29, 2022. However, it has been delayed several times as the goal was "getting it right and not rushing", according to Input Output Global technical manager Kevin Hammond. Input Output Global is Cardano's parent concern.

How will the Vasil hard fork improve the Cardano network?

The hard fork will introduce several Cardano Improvement Proposals (CIPs) and bug fixes. Three of the more critical improvement proposals are CIP 33, CIP 31, and CIP 32. Let's have a look at what each will do for the network.

Apps built on Cardano are written in a programming language known as Haskell. The code is then converted into Plutus, the native smart contract language for Cardano. However, the Plutus script is not stored on the blockchain. Therefore, every time a transaction is made, it needs to carry all the app logic along with it. More data with the transaction results in slowed performance and increased cost.

CIP 33 will introduce reference scripts that act "in place" of the script you want to use. They can be attached to outputs and point the Cardano Virtual Machine to a reference script instead of having to include the whole script with the transaction. This will allow for lighter transactions, quicker processing and lower fees.

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With CIP 31, Cardano developers will introduce a new kind of input, known as reference input. It will allow users to look up outputs without actually spending (processing) them. This means that Decentralized Apps can now access transactional output without having to recreate it as before.

Finally, CIP 32 will introduce an on-chain data storage feature for the community and developers. This is expected to improve Cardano's decentralized architecture.

The Vasil fork also includes CIP 40 and diffusion pipelining. CIP 40 will introduce a new type of output transaction known as collateral output. And finally, diffusion pipelining will improve information propagation regarding a newly added block before it is fully validated. This will allow for parallel block validation and distribution.

How will the Vasil update affect ADA prices?

There have been three Cardano hard forks before Vasil — Shelley, Mary and Alonzo. All three of these hard forks affected the price movement of ADA. One commonality is that prices rally leading up to these hard forks and tend to fizzle out post the upgrade. This has happened with Shelley and Alonzo, whereas prices continued to rise after the Mary upgrade.

The same goes for the Vasil fork, with prices rallying over the last couple of days after Charles Hoskinson revealed Vasil's go-live date. Prices shot up from $0.453 on September 2 to $0.496 at the time of writing. This represents a 9 percent price increase over a couple of days. However, what's unique about Vasil is that it is the only hard fork in Cardano history to occur during a bear market. This makes it harder to predict how prices will react post-merge.

At the time of writing, ADA was trading at $0.4969, up 0.27 percent in the last 24 hours. Trading volume stood at $737 million, down 8.20 percent during the same period.

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