BlockchainBusiness

TM Exclusive – Ethereum 2.0: New Rockstar of Crypto world

Introduction:

According to Ethereum ecosystem co-founder Vitalik Buterin, Ethereum won’t be replaced by ETH2. They will merge. The community has even come up with a term for that – ‘docking,’ joining Ethereum minenet to ETH 2. The full merge is so significant because it will end the proof-of-work concept altogether.

1 cCXcZknppvQyioJYfUcBbA
Image credits: Source

Is Ethereum 2.0 released?

The Ethereum 2.0 transition is happening in three distinct phases. The first phase – the Beacon Chain – has been live since December 2020. It laid the groundwork for future upgrades. In the second phase, dubbed The Merge, the Ethereum network will switch to the Beacon Chain as its consensus mechanism.

What does Ethereum 2.0 do?

Ethereum 2.0, also known as Serenity or ETH 2.0, is an upgrade to Ethereum on a number of levels. Its primary objective is to increase Ethereum’s capacity for transactions, reduce fees and make the network more sustainable

“The total value in the ETH 2.0 Deposit Contract just reached an ATH of 7,824,674 ETH.”

FApzdRPWQAE4bwl
Image credits: Source

Market analyst Lark Davis had previously stated that the Ethereum 2.0 upgrade would prompt a 90% daily emission reduction from 12,800 to 1,280.

Ethereum has been witnessing various upgrades, which seek to boost the digital asset’s efficiency. The London Hardfork or EIP 1559 upgrade was the latest one to be incorporated, which triggered the first-ever deflationary block on the Ethereum network on August 5. 

  • “The price of ETH rising above $3,000 is propelled by a renewed interest by short-term traders. The number of addresses holding ETH for less than 30 days is up 43% since July and quickly approaching the ATH experienced in May. 3.87m addresses with a volume of 19.44m ETH.”

On the other hand, the amount of unique tokens moving on the Ethereum network, known as token circulation, has been increasing because they recently hit levels last seen in June. Token circulation and price are usually strongly correlated. 

Ethereum 2.0, also known as the Beacon Chain, was launched in December 2020 and was regarded as a game-changer that sought to transit the current proof-of-work (POW) consensus mechanism to a proof-of-stake (POS) framework.

The proof-of-stake algorithm allows the confirmation of blocks to be more energy-efficient and requires validators to stake Ether instead of solving a cryptographic puzzle. As a result, it is touted to be more environmentally friendly and cost-effective. ETH 2.0 is also expected to improve scalability through sharding.

Video source: Creator

In May, the number of deposits for spinning up new Eth 2.0 validators increased 246% to a record-breaking total of 26,681

How will Ethereum 2.0 affect mining?

Does Ethereum 2.0 kill mining? Yes. Although Ethereum 2.0 upgrades are not complete yet, the final phases will diminish ETH mining. The “merge” phase, set to launch in late 2021, will mark the end of proof-of-work mining where users will no longer receive mining rewards.

Who holds the most Ethereum?

According to the blockchain explorer website Etherscan, the top account by balance is Ethereum 2.0 with 6.9 million ETH ($21.3 billion worth). Wrapped ether (WETH) comes in second, holding 6.7 million ETH ($20.6 billion).

  • Ethereum 2.0 Staking Contract Now Holds the Most Ether: $21.3B

According to the blockchain explorer website Etherscan, the top account by balance is Ethereum 2.0 with 6.9 million ETH ($21.3 billion worth). Wrapped ether (WETH) comes in second, holding 6.7 million ETH ($20.6 billion). 

“The fact of the deposit contract overtaking the wrapped ether contract as No. 1 doesn’t really mean anything in itself,” said Ben Edgington, lead product owner at ConsenSys. “It just shows that staking on Eth 2.0 is incredibly popular.”

This shows growing confidence the Ethereum Foundation is going to successfully complete the transition to Ethereum 2.0, said Tim Ogilvie, CEO of Staked, a firm that helps investors stake digital assets on Ethereum as well as on other blockchains including Cardano, Polkadot and Solana.  

Wrapped ether is an ERC-20 compatible version of ether, allowing the token to be used in decentralized applications within the Ethereum ecosystem, according to Messari, a cryptocurrency data and analysis firm. 

The Ethereum 2.0 contract “is meant to move value into the Beacon Chain in order to secure it as a base layer on proof-of-stake, and then generate an interest rate on top algorithmically,” said Lex Sokolin, head economist at ConsenSys. The Beacon Chain will introduce proof-of-stake to Ethereum. The chain’s role will change over time but is considered a foundational component for the security, sustainability and scalability towards which Ethereum is working.

“That capital is currently a one-way street until more bridges are built, tech matures or through derivative liquidity,” he added.

At press time, ether was trading at $3,082, based on CoinDesk 20 data. 

“The 32 ETH deposit minimum for Eth 2.0 presents a barrier to stakers who have less than 32 ETH or prefer to hold liquid assets,” Nansen, a blockchain analytics firm, wrote in a report emailed to CoinDesk on Aug. 17. In order to become a full validator, users need to deposit a minimum of 32 ETH. 

Therefore, some users might prefer to stake ETH through an exchange such as Binance or Kraken, or in liquid staking protocols like Lido or Ankr. 

The report said that while Kraken and Binance continue to account for a significant proportion of the Ethereum 2.0 stake, they are losing share to alternative staking solutions like Lido, which is a decentralized staking pool. 

Ether

In terms of tracked entities across multiple wallets, Kraken is the biggest depositor. 

The rise of Lido marks a vast improvement in the distribution of network control. On 1st March 2021, Kraken (14%), Staked.us (8.2%), Binance (12.9%) collectively controlled over 34% of total stake,” according to the Nansen report.

Abhishek Shah

Journalist at TechMantle Technology Writer, Entrepreneurship, Business, IoT, Management

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button