Ultimate Resource On Ethereum 2.0
A surge of validators awaiting Eth2 staking has pushed Ethereum’s node count to 11,259 — surpassing Bitcoin by more than 100. Ultimate Resource On Ethereum 2.0
Ethereum 2.0 genesis stakers have pushed the total number of Ethereum nodes past the number of Bitcoin nodes for the second time this year.
According to Ethernodes.org, 11,259 Ethereum nodes are currently active, giving it a roughly 1% lead over Bitcoin’s 11,136. Ethereum’s node count last surpassed Bitcoin’s in early September.
The number of Ethereum nodes has increased by more than 50% in the past two weeks or so, spiking from 8,086 on Nov. 15, just 11 days after the Eth2 deposit contract went live. Ethereum’s node count overtook Bitcoin’s on Nov. 30.
According to Blockchain Center’s “Flippening” index, which seeks to track the strength of Ethereum’s network relative to Bitcoin, the surge in node counts has seen the index gain from 50.5% to 62.4% over the course of November.
According to the index, node count is the third major on-chain metric on which Ethereum has currently “flipped” Bitcoin, alongside transaction count and transaction fees.
Etherscan estimates that Ethereum processed nearly 1.2 million transactions in the past 24 hours, compared to Bitcoin’s 300,000. Ethereum also processed $3.6 million worth of transaction fees in the last 24 hours, while Bitcoin fees were worth close to $1.4 million.
The Flippening Index estimates that Ethereum posted a two-year high of 67.68% for strength relative to Bitcoin in early September due to the third-quarter DeFi boom.
Eth2’s beacon chain genesis kicks off in just a few hours from now. The launch of the deposit contract allowed ETH holders to designate their Ether (ETH) for staking, with the 524,288 Ether required to initiate the beacon chain’s launch being surpassed just hours before its deadline on Nov. 24.
According to Beaconcha.in, 878,808 Ether have now been sent to the deposit contract. The beacon chain’s genesis will lay the groundwork for sharding and proof-of-stake.
Ethereum 2.0 Is Go: Genesis Block Of Beacon Chain Winks Into Existence
Ethereum’s proof-of-stake transition takes another step toward completion.
After literally years in the making, the genesis block of the Ethereum 2.0 beacon chain has finally seen the light of day.
The repeatedly delayed scalability and security upgrade to the second-largest cryptocurrency by market cap confidently took its first breath as planned, at just after 12 pm UTC on Dec. 1. The launch suffered no hiccups and immediately reached the required stake participation rate to finalize the blockchain.
Vitalik Buterin joked about how the first block did not include any meaningful messages “about some giant leaps for mankind or whatever.”
Normal people: we should really put something profound in the first block of the ethereum PoS chain, something about giant leaps for mankind or whatever.
Ethereum community: pic.twitter.com/cOu94fUPE9
— vitalik.eth (@VitalikButerin) December 1, 2020
The biggest change is the introduction of a proof-of-stake consensus to the network, which has previously been purely based on the same proof-of-work consensus as Bitcoin.
PoS aims to provide a more energy-efficient method of securing the network by requiring validators to lock Ether (ETH) into a staking contract, rather than solve cryptographic puzzles using computing power.
The planned launch date was confirmed just a week ago, as the seven-day countdown could only be initiated once a total of 524,288 Ether had been deposited in the staking contract.
After a painfully slow start, the staking total was reached with just hours to spare in order to hit the anticipat target of Dec. 1.
The transition to PoS paves the way for future planned upgrades to be implemented, such as sharding to improve scalability.
Currently staked ETH are likely to be locked up until Phase 1.5 of the Ethereum 2.0 rollout, currently planned for late 2021 or early 2022. This will see the current Ethereum mainnet merge with the new beacon chain and sharding system.
Anticipation for the Eth2 launch has been building throughout 2020, and has been reflected in the price of Ether, which started the year at just $130 but is currently riding high at over $600.
The launch will be especially welcomed by those in the decentralized finance community. The explosion of DeFi during 2020 saw a huge increase in traffic and gas fees on the Ethereum network.
Why Ethereum Price Corrected Sharply Despite Today’s Eth2 Milestone
Ether price declined sharply alongside Bitcoin even as the long-awaited Eth2 mainnet launched successfully.
The price of Ether (ETH), the native cryptocurrency of Ethereum, plunged harder than Bitcoin (BTC) in the recent pullback.
After reaching an all-time high on Coinbase, the price of Bitcoin fell steeply by over 9% within several hours. In the same period, Ether corrected by over 11%, following a marketwide pullback.
The deep correction in Ether comes as a surprise because of the Ethereum 2.0 network upgrade launch. On Dec. 1, the Eth2 Beacon Chain released on the mainnet, marking an important milestone for Ethereum.
What Led To Ether’s Sharp Correction?
Eth2 is a key network upgrade for the Ethereum blockchain that improves its scalability and transaction capacity. Prior to the upgrade, the network was able to process around 15 transactions per second.
After the upgrade, Ethereum will be able to scale to thousands of transactions per second, potentially more with sharding over the long term.
This is a fundamentally optimistic upgrade for the Ethereum network because it will allow decentralized applications to operate without the barriers of scalability. It would also allow new decentralized finance cycles to become more sustainable, easing user experience.
Ether’s correction after the Eth2 upgrade could have been expected due to the tendency of the market to buy rumors and sell the news. For instance, when the Eth2 upgrade was confirmed in late November, Ether price similarly dropped from around $620.
Still, the 11% decline in the price of Ether within just two hours has caught many traders off guard. The significance of the Eth2 upgrade and the implications it carries likely led the market to expect more short-term resilience from Ether.
Industry executives have also been highly optimistic about the medium- to long-term growth trajectory of Ethereum after the Beacon Chain release. This likely added to the overall positive market sentiment around ETH.
Joseph Lubin, co-creator of Ethereum and founder of ConsenSys, described Eth2 and proof-of-stake as a monumental upgrade. He said:
“The launch of the #Eth2 Beacon Chain is characteristic of the emergent, open-source ethos that attracts so many to Ethereum in the first place. More than 27,000 validators from around the globe are now participating in the new #Eth2 consensus model. Proof of Stake is a monumental upgrade of the crypto-economic incentives that already make Ethereum an automated, objective foundation for trust. We are collectively deepening the commitment to building a maximally decentralized network.”
What’s Next For Ether?
Traders are anticipating a deeper pullback in the near term, or at least some consolidation. The futures market took a large hit when BTC abruptly dropped, causing havoc across the derivatives market.
A pseudonymous trader known as “TraderKoz” said that Ether would become compelling once it consolidates above $620 again. The $561 level remains a key support level for ETH in the near term if the pullback continues. The trader said:
“We’re getting some nice PA forming around Monday’s range and a nice tag of the weekly open. Wouldn’t be surprised if we consolidate around the midrange here for a bit. I’ll be interested in more longs once we trade above $620.”
Ethereum 2.0 Still Has A Long Road Ahead, MEW Founder Says
Despite its recent Phase 0 launch, the fully realized transition to Eth2 could still be years away from completion.
Ethereum 2.0 launched its Beacon Chain on Tuesday, marking the project’s transition to a proof-of-stake, or PoS, mining algorithm. With Phase 0 now in the rearview mirror, the founder and CEO of MyEtherWallet, Kosala Hemachandra, recently explained the next hurdle for Eth2.
“I think the question should be, what is not the next hurdle for ETH 2.0,” Hemachandra told Cointelegraph, adding:
“Basically, after the beacon chain launch, Ethereum will focus on phase 1 specs. It will go through a lot of iterations similar to phase 0 and tons of bug fixes. It is hard to define a specific issue as the next hurdle since there will be a lot.”
Aimed at scaling the Ethereum network, Eth2 results from years of work and numerous delays. Most recently, facing a Nov. 24 deadline, validators deposited enough total Ether (ETH) coins to enable Tuesday’s Beacon Chain launch, thanks to several last-minute transfers. Phase 1 comes next in Ethereum 2.0’s progression, which Hemachandra believes may not finish until the end of next year.
“With what I’ve seen in the past, I believe ETH 1 will take approximately 1 yr, then 1.5 should take another 6 months,” Hemachandra said. “Phase 2 might take at least 1.5 yrs.”
Hitting the Nov. 24 deadline means validators locked up at least 524,288 ETH total across the board. Since then, that number has grown to more than 900,129 ETH. With the asset trading around $600 at the time of publication, 900,129 ETH totals roughly $540 million.
Given that ETH is a tradable asset involved in the whole ordeal, one might wonder how its price plays into the progression of Eth2. “One thing I like about Etereum developers is the fact that they don’t depend on the price of ETH,” he said, adding:
“Everyone I know is equally motivated towards accomplishing and advancing ETH2 to the next phase. ETH price went through various phases with ups and downs; however, Ethereum development has always been very consistent. I believe it will continue to be like that, and ETH price won’t play any role in the development of Ethereum 2.0.”
In line with Eth2’s transition to PoS, Coinbase recently announced its plan to launch Ethereum 2.0 staking sometime next year.
Joseph Lubin Says Insiders Are ‘Very Optimistic’ About How Fast Eth2 Will Unfold
Joseph Lubin believes Eth2’s development will move quicker than many are expecting, predicting the new protocol will “absorb” Ethereum in “the not too distant future”
Speaking during the Ethereum in the Enterprise — Asia Pacific 2020 conference on Dec. 3, ConsenSys founder and Ethereum contributor, Joseph Lubin, predicted that Eth2 will devour Ethereum in “the not too distant future.”
“People in the know around the ecosystem are very optimistic about how fast things could unfold as the really complicated work has been done in launching Phase 0,” he said.
While the Eth2 roll-out was believed to be occurring in strictly regimented ‘phases,’ Lubin emphasized that the other aspects of Eth2’s roll-out are “proceeding in parallel” — meaning upgrades to the protocol may come much sooner than many onlookers are expecting:
“It is very likely will get a tremendous amount of data availability in the form of shards, as well as move lots of the important functionality from Ethereum 1 to Ethereum 2.0, and essentially see Ethereum 2.0 absorb Ethereum 1 in the not too distant future.”
Lubin predicted that Eth2’s next phase will come online between nine and 12 months from now. He asserted the coming increase in the amount of data availability will enable Layer 2 networks to “massively increase the amount of transactions per second throughput that they can offer.”
“Essentially Ethereum 2.0 represents a massive increase in scalability, so we’re already achieving tremendous scalability with layer 2 networks.”
Lubin also noted that ConsenSys has recently been working on “cutting edge” CBDC and payments projects in partnership with various central banks, including the Hong Kong Monetary Authority, Bank of Thailand, and the Reserve Bank of Australia.
“One of the major important use cases is cross-border payments because the corresponding banking networks and just that whole infrastructure is really creaky and expensive and slow,” he said.
“Retail payments is incredibly exciting. ConsenSys has built architectures that can handle nearly 20,000 transactions per second on an Ethereum-based network.”
“We are in discussions to make that available to some major payment providers, and some of our technologies [are] being used in a hybrid commercial central bank application,” he added.
Vitalik Buterin Outlines Next Steps For Ethereum After Beacon Chain Launch
A lot of the work is done in parallel, meaning scalability is closer than it seems.
Following the successful launch of Ethereum 2.0 Phase 0 — the first concrete step in building the next iteration of the protocol — Ethereum co-founder Vitalik Buterin published an updated roadmap of what comes next for the project.
The current development of Ethereum 2.0 is generally divided into phases. Phase 0 is the barebones Beacon Chain that enables staking but has no effect on the application layer. Phase 1 introduces sharding of data, increasing storage capabilities without directly influencing application performance. Finally, Phase 2 fully introduces transaction sharding and enables the promised thousands of transactions per second of throughput.
Buterin said in March that this roadmap template is a vision for the next five to 10 years. The updated version is more fluid and eliminates terms like “Phase 1” and “Phase 2” altogether. Defining features of each phase are now more independent from each other and incorporate work done for Ethereum 1.x.
Buterin’s roadmap encompasses all Ethereum developments to provide a detailed overview of what’s next for the platform, including approximate completion bars.
The roadmap I made back in March updated with (very rough and approximate!) progress bars showing what has been done and some of the recent tweaks to the roadmap itself.
A lot has been accomplished, but still a lot remains to be done! pic.twitter.com/4zIK4aTNTh
— vitalik.eth (@VitalikButerin) December 1, 2020
Key features of the next major milestone are the transition of Ethereum 1.0 to proof-of-stake, the introduction of Eth2 light clients on Eth1, and data sharding — all of which were previously grouped under Phases 1 and 1.5. An important change in the current roadmap is the realization that the three steps are largely independent and can be worked on in parallel.
Furthermore, enormous scalability improvements can be achieved by executing on the latter two features, as they would enable hosting rollups on a sharded data structure. Rollups are a layer-two technology that offloads computation outside of the chain but guarantees its correctness through proofs stored on-chain.
Due to this, data sharding vastly increases the rollups’ room to maneuver and could enable more than 10,000 TPS as soon as light clients and data sharding are introduced.
However, progress on data sharding and light clients is still at or below 50%, according to Buterin, consistent with estimates that Phase 1 will take at least one year to build.
Progress on stateless clients and the Ethereum 1.x initiative is also at less than 50%, according to the chart. The cryptographic technology of polynomial commitments — which Buterin earlier said is the key to practical stateless clients — is also far from being complete. Similarly, work toward many other advanced types of cryptographic technology and an improved virtual machine is still in its early stages.
After publishing the roadmap, Buterin urged to quickly implement EIP-1559, a proposal to burn the majority of the transaction fees collected by the protocol instead of offering them to miners.
The Challenges Of Eth2 Staking, Explained
1. Remind Me… What Does Eth2 Staking Involve?
This is where someone deposits 32 ETH in order to become a validator in Ethereum 2.0.
The blockchain recently hit a big milestone when enough ETH was transferred into a deposit contract to trigger the launch of the new beacon chain.
Otherwise known as Phase 0 of Ethereum’s ambitious move to a proof-of-stake consensus mechanism, a staggering 524,288 ETH needed to be deposited for the launch to take place.
In 2021, shard chains are going to be deployed — allowing Ethereum to process a greater number of transactions per second. This upgrade has been desperately needed for a while, with network fees recently reaching unprecedented highs due to the popularity of DeFi.
Once the transition to PoS is complete, miners will no longer be involved in verifying transactions. Instead, validators who stake Ether will be responsible for adding blocks to the blockchain, and they’ll receive brand-new ETH as a reward. It’s hoped that this method will be far less energy intensive than proof-of-work.
2. What Are The Downsides For Participants In The Beacon Chain?
Right now, staking ETH is a significant, long-term commitment.
The minimum amount that someone was able to contribute into the deposit contract was 32 ETH — and at one point in November, that was worth an eye-watering $19,877.
These funds are going to be locked until the current mainnet “docks” with the beacon chain. At present, estimates suggest that this milestone may only be reached in 2022, meaning that aspiring validators may have to wait some time until they get their funds back.
One of the biggest downsides with the transition to Eth2 is how this takes a lot of commitment from the thousands of validators who have put their crypto where their mouths are. It’s a leap of faith — not least because several other key milestones related to this project have been hit behind schedule. Should further complications arise, there’s a chance that it could be years before the deposited ETH is released from the one-way contract, and its cash value may have fallen by then.
Serving as a validator also comes with responsibilities… and risks. “Slashing” means that nodes can be penalized for failing to act in the network’s best interests — as a result, there’s a real risk that staking could cause someone to lose crypto instead of earn it. Accidentally waving through an invalid transaction or falling offline can have huge consequences.
3. Can Anyone Get Involved In Staking On Ethereum 2.0?
Because of the limitations set by the deposit contract… not really.
Figures from Etherscan show that there are now more than 126 million unique Ethereum addresses, and 113.6 million ETH currently in circulation. This means that, at present, it’s impossible for every single address to own one whole ETH.
Back in April, research from Adam Cochran showed that 17% of ETH was held by just 10 addresses — and the top 10,000 addresses hold about 94% of the cryptocurrency’s circulating supply. On the face of it, these statistics make it seem unlikely that your average crypto enthusiast has enough ETH lying around to start staking — and mathematically impossible that everyone who’s interested in staking will have 32 ETH.
But there are other barriers to entry that need to be tackled, too. Even those who have 32 ETH to stake may be concerned about how their assets are going to be illiquid for a prolonged period of time. Setting up and maintaining a validator node can also be a complicated business. Although someone may be interested in receiving staking rewards, they may lack the technical knowhow or time to do this themselves.
4. How Can Eth2 Staking Be Made More Accessible For Everyone?
Staking platforms are emerging that help address some of the limitations currently provided by Eth2.
These services can simplify the process of getting involved in Eth2 — and open up opportunities to those who may have a smaller amount of ETH to stake.
However, it’s important for crypto enthusiasts to do their due diligence about these staking services to ensure that their cryptocurrency will remain safe.
Platforms such as Stkr, built by Ankr, to allow anyone to stake in a validator node, with a minimum requirement of just 0.5 ETH. This is 64 times smaller than the contributions that needed to be made to the deposit contract — opening up opportunities to more people. Stkr then brings these funds together in the form of Micropools and allocates them to real-life Eth2 nodes.
Another feature of Stkr that’s likely to bring mass appeal to the world of Eth2 staking is the fact that users receive a synthetic token known as aETH in exchange for the Ether they lock up. These tokens can be used in DeFi applications — or sold at any time.
There can also be advantages for those who have greater amounts of crypto to stake. An unlimited one-click deposit limit means that high net worth users can gain exposure to the next iteration of Ethereum’s mainnet without having to operate their own nodes. Stkr also claims that this approach eliminates the risk of a stake being lost in the event that a node performs poorly.
5. How Does This Ecosystem Work?
There are three key roles within the Stkr ecosystem.
Providers deliver the computing resources that drive the Eth2 nodes — and they pay insurance that acts as a guarantee against poor hardware performance. These funds will be used to compensate stakers if there is an outage, but providers also stand to gain rewards if their infrastructure runs without a hitch. By building a good reputation, they are prioritized whenever new staking funds need to be allocated.
Requesters, otherwise known as stakers, are those who want to lock up their ETH without hosting a node themselves. In time, governors will be responsible for deciding the future direction of Stkr through votes and will be incentivized to work in the platform’s best interests.
Every now and again in the crypto world, trends begin to form. We’ve had the rise of ERC-20 tokens, nonfungible tokens, and DeFi too. In the coming months, attention is going to shift to Ethereum 2.0 as the launch of the world’s biggest proof-of-stake network draws closer. Platforms that allow people from all backgrounds to get involved in staking will be a crucial part of this newly formed ecosystem.
Grayscale Ethereum Trust To Implement 9-For-1 Share Split
The split will take effect on Dec. 17.
Digital asset manager Grayscale has announced a share split for its Ethereum Trust — a move that could make the fund more attractive to individual investors.
In an official press release, Grayscale announced Wednesday that the split will be implemented on Dec. 17, with shareholders of record receiving eight additional shares for each one they currently own. To be eligible for the split, investors need to be on the shareholder record by Dec. 14.
Grayscale says the fund currently has 29,502,100 shares at a value of 0.09284789 Ether (ETH) per share. Following the split, the trust will have 265,518,900 shares worth 0.01031643 ETH apiece.
According To The Press Release:
“The Trust may create new Shares after the date of this press release and up through the Record Date.”
One of the main goals of declaring a split is to make the fund more attractive to individual investors who may feel they’ve been priced out of the market. The split doesn’t affect future gains or even the current value of the fund, which means its effects are purely psychological.
The asset manager has seen record inflows into its funds, reflecting an upsurge in demand for digital assets.
Total investments into Grayscale products reached $1.05 billion in the third quarter, with average weekly inflows into the Ethereum Trust hitting $15.6 million. The Ethereum Trust’s weekly inflows increased by over 73% compared with the trailing 12-month average.
Grayscale’s larger Bitcoin Trust averaged $80.5 million in weekly inflows during the quarter, compared with a trailing 12-month average of $39.5 million.
Excitement surrounding Ethereum is growing following the official launch of Eth2 on Tuesday. Phase 0 of the development roadmap kicks off a multiyear upgrade for the smart contract platform.
Grayscale is positioning itself as a magnet for institutional investment into ETH and BTC during the bull market. On Tuesday, the company announced it will reair its #dropgold advertisement to raise awareness about investing in digital assets.
Dangers Of Hosting Your Own Eth2 Node, Explained
1. What Does Hosting Your Own Eth2 Node Involve?
It means that you’ll become a validator for the newly upgraded Ethereum blockchain — and be responsible for verifying transactions and maintaining the network.
The genesis block of Eth2 launched on Dec. 1, paving the way for long-awaited improvements to the network’s security and scalability. This will involve a shift to a proof-of-stake consensus mechanism, which is regarded as more eco-friendly and eliminates the need for miners.
More than 16,000 validators transferred 524,288 ETH into a deposit contract before a deadline of Nov. 24, paving the way for “Phase 0” to launch a week later. The total value of deposits has grown even further since.
Participants are not going to be able to withdraw this ETH until the current Ethereum mainnet “docks” with this new blockchain — a process that could take several years.
Those who host their own node have had to stake a minimum of 32 ETH (worth about $19,000 at the time of writing.) There are also other costs to consider too, such as gas costs and the expense of finding a reliable hosting provider.
That’s a lot of money to have lying around. In exchange for becoming a validator, they’ll receive rewards for contributing to the upkeep of the network — but with these perks comes responsibility.
2. Is This An Easy Thing To Do Without Any Technical Knowledge?
Operating an Eth2 node can get quite complicated — and wading into this commitment without knowing how things work can result in some costly mistakes.
Even if an inexperienced validator makes some innocent mistakes, some of the 32 ETH they have staked can end up being taken away from them if they have been seen to work against the best interests of the network.
Should 50% of this 32 ETH be deducted, their node will be automatically ejected from participating any further. Given how this would equate to a loss of about $9,500 at current rates, this is best to be avoided.
The problems don’t end here, though. Fully understanding the inner workings of Eth2 can be an uphill struggle to say the least. As the old saying goes, time is money, and you could argue that the effort involved in getting up to speed with this new PoS blockchain may not be worth the hassle given the rise of staking-as-a-service providers.
3. What Happens If The Uptime Of Your Node Is Interrupted?
You could end up being penalized, eliminating any financial reward from operating a node.
It’s worth bearing in mind that you risk being penalized even if the circumstances were outside of your control. A dodgy internet connection — something that’s commonplace for many of us living in residential areas — could result in a slashing event occurring.
Given how these outages can be caused by everything from bad weather to water damage and road repairs, relying on the infrastructure you’ve got at home isn’t necessarily the best idea.
As a result, many of the people who want to operate their own node have decided to pay for an external hosting provider, where they have a greater chance of receiving the type of uptime they need to be regarded as a trustworthy validator.
But again, even this approach isn’t without potential pitfalls. Selecting a hosting provider that can’t guarantee continual service could trigger financial losses, and you may not be eligible for compensation as such downtime is often factored into the terms of service.
If you are going to opt for an external hosting provider, it’s crucial to read legitimate reviews — helping you to form an opinion about whether the company is reputable. Finally, always remember that market-leading solutions may not be the best course of action for hosting a node.
In November, an Amazon Web Services outage affected countless thousands of websites, including the likes of Coinbase, and such an event would have hurt Eth2 node operators too.
4. Are There Any Other Risks That You Should Be Aware Of?
Keeping validator keys secure is essential, as they can be lost or damaged.
Eth2 validators who run their own node run the risk of losing their keys, forgetting the password, or damaging the hardware where the keys are stored. In some cases, the hardware may have been physically damaged — but it’s also possible for crucial data to be lost as a result of a technical fault.
And yes, all of this can result in some more financial penalties — this time for inactivity. Instead of block rewards being reduced, this could result in an ETH stake being permanently slashed.
Security needs to be at the forefront of every single person who wishes to become a node operator. Validator keys can also be stolen by someone who manages to gain access to the computer or remote location where the node is being hosted.
Messages can end up being double-signed — seemingly on your behalf — or a malicious actor could attempt to compromise the network with inaccurate data.
If the security of your node is compromised, it’s possible that it could be a year or two before you regain access.
5. What Are The Alternatives To Hosting Your Own Node?
Companies exist that specialize in validator node hosting — and better still, they can be non-custodial, meaning they have no access to user wallets.
Platforms such as Allnodes provide masternodes, full nodes and staking services for dozens of different blockchains — and have now rolled out support for Ethereum 2.0.
This brand launched in October 2018 when CEO Konstantin Boyko-Romanovsky realized just how difficult it is to host a masternode given the technical expertise required — not to mention the sophisticated hardware and uninterrupted bandwidth that’s needed too.
Allnodes says it now hosts more than 8,400 nodes on behalf of its customers with a value in excess of $130 million — commanding an overall masternodes market share of 13.1%.
Instead of getting bogged down in endless technical manuals, the company aims to handle behind-the-scenes operations so crypto enthusiasts can focus on other things. The registration can be completed in just a few simple steps.
6. How Does A Hosting Provider Tackle The Dangers Of Running Your Own Node?
Allnodes can offer an affordable alternative to doing everything yourself, reducing the risks of financial penalties and slashing.
The company offers an intuitive user interface, and two easy-to-understand hosting plans to ensure that customers can make an informed decision. This is coupled with support teams who are online 24/7, all year round, and free node maintenance with instant and unlimited upgrades.
Validator keys are given multi-level protection to prevent them from being stolen and lost, and all of this is achieved while ensuring that only users have access to their funds. Nodes are monitored for free — with dedicated bots providing regular Telegram and Discord alerts.
But as we mentioned earlier, uninterrupted uptime is the most important thing to look for in a hosting provider. As a result, Allnodes provides enterprise-grade infrastructure — with a guaranteed 99.90% service-level agreement in place.
Staking on Eth2 doesn’t have to be a daunting experience — and with the right tools, even those who aren’t technically minded can enjoy the perks of running their very own node… without the hassle.
DeFi And Eth2 Are Whole New Convos For Regulators, Says Sec’s Hester Peirce
United States SEC Commissioner Hester Peirce wants to focus on new guidance for DeFi and future Ethereum projects.
Hester Peirce, commissioner for the United States Securities and Exchange Commission, explained during an exclusive interview with Cointelegraph that decentralized finance, also known as DeFi, has created new challenges for the SEC.
Peirce, nicknamed “Crypto Mom” for her interest in digital-asset innovation, mentioned that the quickly rising DeFi sector has resulted in a number of unresolved legal issues:
“DeFi has posed a challenge for the SEC in a similar way that the ICO boom did in 2017. What is different here is that the pace of DeFi has actually been much faster. I also think that the legal issues are more difficult to sort out on the DeFi side.”
Although Peirce shared that regulations around DeFi projects may fall outside of the SEC’s purview, some of these projects will likely touch on securities laws.
To Peirce’s point, John Whelan — managing director of Santander Bank and chair of the Enterprise Ethereum Alliance — told Cointelegraph that from a financial perspective, DeFi has the potential to enable autonomous programmable digital securities in the future.
However, this remains a long-term goal, as most DeFi offerings consist of tokens that lack liquidity and are used to fund blockchain projects. Still, Peirce advised caution to those involved in the DeFi space.
During a fireside chat with Whelan for the “Ethereum in the Enterprise — Asia Pacific” online conference, Peirce mentioned that the crypto community must be cautious when building DeFi projects:
“I caution people to think about what they’re building, and to think about whether it looks like the traditional security. If it does, talk to the SEC because individuals can really get in trouble if they develop one of these things. That would be my advice.”
DeFi Challenges SEC By Taking Away Intermediaries
In addition to legal hurdles, Peirce pointed out that the goal behind decentralized finance is removing third-party intermediaries, such as banks and exchanges.
However, Peirce mentioned that the SEC depends on these intermediaries. “Our whole rulebook is built around the notion that you’ve got these intermediaries. So when you take them out of the picture our job as regulators becomes very difficult,” she said.
Not only does this pose a challenge for the SEC, but the lack of intermediaries in DeFi may be to blame for the numerous hacks and fraudulent activities in the space.
A report published by blockchain intelligence firm CipherTrace shows that 45% of all cryptocurrency-related hacks during the first half of 2020 targeted DeFi projects. Moreover, intermediaries must be present in order for DeFi applications to be leveraged by institutions and businesses.
Yet Peirce touched on the notion that the financial industry’s lack of innovation is partly due to regulatory barriers. In her fireside chat with Whelan, Peirce explained that regulatory barriers protect traditional financial institutions from competition, something that she is trying to change. “I want to see what happens when you have a really truly competitive playing field,” Peirce said.
Eth 2.0 Brings Back Case For Safe Harbor Framework
DeFi concerns aside, Pierce seems optimistic about the recent launch of the Ethereum 2.0 Beacon Chain, which will surely bring about new projects within the Ethereum community.
Given new developments in the Ethereum network, Peirce explained that her proposed Safe Harbor framework for blockchain projects will likely develop further. She first announced the proposal in August 2019 and outlined it further in February at the International Blockchain Congress in Chicago.
In a nutshell, the Safe Harbor proposal would grant network developers a three-year grace period to build decentralized projects without worrying about SEC legal action, provided they meet a basic reporting standard at the beginning of that time.
According to Pierce, she is currently working on version 2.0 of the Safe Harbor framework, yet she doesn’t expect the proposal to be ready anytime soon. The commissioner noted that “it may be slower to come out than the launch of Ethereum 2.0.”
Although this is the case, Pierce recognized that Ethereum 2.0 is evidence that there is still indeed a case for the Safe Harbor framework. She further shared hopes that the new SEC chairman will want to work on issues related to digital asset innovation.
Of course, Ethereum 2.0 could present new challenges for the SEC as well. Whelan pointed out that from a technical perspective, the move away from the probabilistic settlement of a proof-of-work consensus mechanism to the deterministic settlement of proof-of-stake might solve technical challenges while prompting new legal questions for the SEC. Whelan said:
“Ethereum 2.0 has settlement finality built in, meaning after some time the update in the blockchain is final and cannot be revisited. This speaks to questions that come up in legal terms, though.”
Peirce said that she hadn’t considered this before. “I think this is a great point. We want that moment when things are done of course, but I have to think more about what this could mean,” she remarked.
Moving Forward With An Exchange-Traded Product Based On Bitcoin Or Ether
With the rise of DeFi quickly taking over the crypto space, Peirce mentioned that moving forward, the SEC should provide guidance around decentralized finance:
“We have brought enforcement actions and I think we’ll continue to bring enforcement actions. The bigger concern, from my perspective, is we have to go after fraud that’s clear. We have to go after people who violate the rules but I think that until we develop a framework that provides guidance, it’s, it’s really problematic to take an enforcement-first approach.”
Another “pressing issue” Peirce pointed out is the need to provide relief around custody for broker dealers and investment advisers. This is important, as the SEC and the Financial Industry Regulatory Authority outlined a claim in July 2019 saying that a crypto custody service may not be able to sufficiently demonstrate that it actually controls the assets it purports to hold.
Even more interesting is that the SEC may eventually move forward on an exchange-traded product based on Bitcoin (BTC) or Ether (ETH). While Peirce mentioned this, she also noted that progress has been disappointing.
Celsius’ CEO Thinks Ethereum Could Lose Its Market Dominance If This Doesn’t Happen
It’s a possible hurdle to cross, but it could take some time.
Ethereum 2.0 recently fired up its Beacon Chain, concluding Phase 0 of a scaling effort years in the making. Although he expressed faith in Eth2, Celsius CEO and founder Alex Mashinsky believes that the network could lose its spotlight if it doesn’t scale quickly and significantly.
“Ethereum needs to prove it can scale its transactions 100x without compromising on security or decentralization,” Mashinsky told Cointelegraph when asked about Eth2’s next hurdle after its Beacon Chain launch. “If it fails to scale, Cardano and Polkadot will take over.”
As of Thursday, Ethereum’s network hosts about 13 transactions per second, according to data from Blockchair. A 100-times increase from now would total roughly 1,300 TPS.
Ethereum has served as the top network for building decentralized applications over the past several years. In 2020, the decentralized finance, or DeFi, boom has largely taken place on Ethereum, as well. This surge in activity has led to high network traffic that has at times resulted in soaring fees — a scaling problem seen on previous occasions as well.
With Ethereum 2.0’s shift to a proof-of-stake mining algorithm, scaling advancements should soon be on the horizon.
Ethereum co-founder Vitalik Buterin previously said that he believes the network can scale to 100,000 transactions per second.
The network’s upgrade, however, faced months of delays before achieving Phase 0 earlier this week. MyEtherWallet’s founder said he expects Eth2’s next phases will take years to fully play out. Mashinsky did not give a specific time estimate, but he did give his vote of confidence in the network upgrade as a whole.
“I am a big believer in ETH 2.0, even if it will take longer than expected to scale and solve all the bugs,” he said.
At approximately $590 apiece at the time of publication, Ethereum’s native token, Ether (ETH), also plays into the equation.
Phase 0 required interested parties to lock up at least 32 ETH each, with a total of 524,288 ETH needed for the Beacon Chain launch. Because the ETH must remain locked until Phase 2 hits, which could be years from now, one might wonder how ETH’s price might factor into Eth2’s advancement.
Mashinsky Sees Higher Prices For ETH As A Result. He Posited:
“As more and more ETH is locked up for ETH 2.0 or used on different DeFi and CeFi platforms the scarcity effect combined with the need to join these platforms pushes its price higher. Almost all DEX exchanges are denominated in ETH, which is a huge advantage for Ethereum.”
Eth2’s completion of Phase 0 also came amid a rising crypto bull market, which recently saw Bitcoin (BTC) break its previous all-time high.
‘Ethereum Only’ Investors Are Growing, According To Grayscale
The asset manager says Ethereum’s mass appeal is growing.
Bitcoin (BTC) got many investors hooked on crypto, but it’s Ethereum’s Ether (ETH) that’s beginning to garner more attention, according to Grayscale.
In a phone interview with Bloomberg, managing director Michael Sonnenshein said 2020 has seen a significant rise in “Ethereum only” investors, underscoring the asset’s growing appeal beyond the development community.
“Over the course of 2020 we are seeing a new group of investors who are Ethereum first and in some cases Ethereum only. […] There’s a growing conviction around Ethereum as an asset class.”
Grayscale manages a class of funds that provide investors with direct exposure to the cryptocurrency market. Although Grayscale’s Bitcoin Trust remains the most popular fund, its Ethereum Trust has also seen a sharp rise in net inflows.
In the third quarter, weekly inflows into the Grayscale Ethereum Trust averaged $15.6 million. Net investments in the larger Bitcoin Trust averaged $55.3 million per week. The Grayscale family of funds saw record inflows at the end of October.
Earlier this week, Grayscale announced that its Ethereum Trust would undergo a nine-for-one split on Dec. 17, a move that could make the fund more attractive to investors. As Cointelegraph reported, shareholders on record as of Dec. 14 will receive eight additional shares for each share held.
A big part of Ethereum’s broadening appeal is the explosion of decentralized finance, or DeFi, applications being built on top of the blockchain. Bloomberg Intelligence strategist Mike McGlone said Ethereum “appears to be maintaining platform leadership status” in this emerging market.
Ether price has gained more than 353% year-to-date but remains at less than half of its all-time high.
Speaking to the future of Ethereum, Sonnenshein said the smart contract platform “has along the same lines of the staying power Bitcoin has.”
Ethereum Becoming More Than Crypto Coder Darling, Grayscale Says
While Bitcoin’s record-high grabs attention, its crypto compatriot Ethereum is continuing to broaden its appeal beyond the software programming crowd.
Before this year, most investors’ first stop was Bitcoin, according to Michael Sonnenshein, managing director at Grayscale Investments LLC, which has investment products that track both and allows investments from institutional and accredited investors only. But the Ethereum blockchain, the most actively used in the world, and its Ether token are getting more attention, he said.
“Over the course of 2020 we are seeing a new group of investors who are Ethereum first and in some cases Ethereum only,” Sonnenshein said in a phone interview. “There’s a growing conviction around Ethereum as an asset class.”
DeFi, of course, has been the hottest thing in crypto this past year, Ethereum also got users to pledge enough digital currency to enable a system upgrade. And Ethereum “appears to be maintaining platform leadership status,” according to Bloomberg Intelligence strategist Mike McGlone.
While Bitcoin’s approximately 170% year-to-date gain would look good by just about any measure, Ether is up about 360% amid a boom in decentralized finance, or DeFi, which often uses its blockchain to power in what many instances have been described as blatant money grabs similar to those seen during the crypto bubble of 2017.
The Grayscale Ethereum Trust, which tracks Ether’s price, has 29.6 million shares outstanding compared with 5.2 million at the end of 2019, according to data compiled by Bloomberg. Inflows went from $20.1 million in the fourth quarter of 2019 to $204.1 million in the third quarter of 2020. And in the third quarter, over 17% of inflows into the Grayscale Ethereum Trust came from new institutional investors, according to a report from the company.
That doesn’t mean it’s smooth sailing. Cryptocurrencies remain volatile — Ethereum is currently trading around $600, well off its February 2018 closing high of $937. While in the past two weeks, it’s has three 10%-plus moves, the token continues to amass interest. And the Grayscale Ethereum Trust has encountered issues as the price got disconnected from the net asset value.
“The development of the asset class has continued to solidify itself,” Sonnenshein said. “Ethereum has along the same lines of the staying power Bitcoin has.”
Ethereum Fund To Debut On The Toronto Stock Exchange
First conceived by Vitalik Buterin in Ontario, Ethereum is now available to Canadians in the form of a fund on the TSX.
Next week, Canadian digital asset investment manager 3iQ will be launching an IPO of an Ethereum exchange-traded trust, The Ether Fund, on the Toronto Stock Exchange (TSX) under the ticker QETH.U.
The maximum offering for the launch is $100 million, and the closing date of the offering will be no later than December 10, 2020. 3iQ counts more than $400 million CAD under management, and maintains a focus on Bitcoin, Litecoin, and Ethereum.
In a press release on Thursday, 3iQ noted that this listing comes with a patriotic backstory.
“The concept of Ethereum was developed in Canada in 2013 and subsequently launched by a group of technologists from all over the world,” the company said.
Ethereum’s co-founder and figurehead, Vitalik Buterin, is Canadian-Russian, and his family moved to Toronto when he was six years old.
Traders south of Canada’s borders have demonstrated a remarkable appetite for publicly available Ethereum investment vehicles. Despite a price premium which at points creeped upwards of 500% relative to net asset value for ETHE, Grayscale’s Ethereum trust, the digital assets behemoth reports that more and more investors have been piling in.
These funds and trusts are the preferred investment method for many traders who are unable or unwilling to provision their own cryptocurrency custody and security options.
Additionally, traders have enjoyed a proliferation of new fund offerings across the globe in recent months. In November alone, Gold giant VanEck launched a Bitcoin exchange traded note product in Germany, the VanEck Vectors Bitcoin ETN, and 3iQ also introduced The Bitcoin Fund to Canada.
Ethereum 2.0 Beacon Chain May Speed Up Enterprise Blockchain Adoption
Eth2’s rollout could result in enterprises flocking to a more secure and scalable Ethereum network.
The highly anticipated security and scalability upgrade to the Ethereum network launched as planned on Dec. 1, marking a huge milestone for the Ethereum community. On the surface, the Eth2 Beacon Chain will help ensure an increase in scalability and capacity across the Ethereum network.
However, the initial launch of the Beacon Chain signifies much more than promised network benefits, and could potentially drive enterprise blockchain adoption even further.
Corey Petty, chief security lead at Status — a globally distributed collective working to build products, tools and infrastructure for Eth2 clients — told Cointelegraph that Phase 0 of the launch of the Beacon Chain represents a significant milestone because many core building blocks such as networking and a proof-of-stake consensus will now be rolled out:
“Beacon Chain is a fundamental requirement for the latter phases of Eth2 and should be tested in isolation. We expect the other phases to be rolled out more quickly after that, while the gradual and phased rollout allows us to ‘soft-start’ the network.”
Proof-Of-Stake Consensus Perks
Although the Ethereum 2.0 network has been launched and is currently being tested in isolation, there is much to be said about the advent of a reliable proof-of-stake, or PoS, network, which Eth2 hopes to demonstrate.
According to Petty, Ethereum 2.0’s Phase 0 activation shows that a significant threshold of Ether (ETH) holders were confident enough to stake 32 ETH each, worth approximately $332 million combined. These funds cannot be accessed until Phase 2 is completed, which Petty noted should be between 2021 and 2022.
Petty further said that Ether holders’ willingness to stake for Phase 0 shows they believe the upside of Eth2 is greater than the downside of losing approximately $19,000.
The promises of Eth2 would ultimately allow the network to overcome its dilemma of sacrificing security for decentralization or scalability, which has been the case for Ethereum since its creation in 2015.
The network previously relied on a proof-of-work consensus mechanism that made it vulnerable to possible 51% attacks, whereby a malicious group of miners may make changes to the network if they control the majority of the computing power. A recent 51% attack on the Ethereum Classic protocol resulted in $5.6 million worth of ETC being double-spent.
Ben Edgington, lead product owner at ConsenSys, who has been working on developing Eth2 from day one, confirmed to Cointelegraph that Ethereum has been working toward a PoS consensus mechanism since its earliest days. According to Edgington, the Beacon Chain has been in development for two years, noting that this is the coordination layer intended to keep the Ethereum network secure and organized.
As such, Edgington explained that a PoS consensus is more secure than a PoW consensus due to the fact that an attack on the chain will result in stake taken away from network stakers. “We can now put a precious cost on attacking the chain,” he said.
Echoing Edgington, Petty noted that security is achieved by active participation in the consensus algorithm. He remarked that once more devices can run on the new network, the Ethereum ecosystem will become more secure, decentralized and scalable.
Enabling Enterprise Applications
With a PoS consensus mechanism in place, it’s notable to point out that Ethereum 2.0 will enable enterprise-grade applications to run on a decentralized network. This important development provides an alternative to other major enterprise applications that use private, permissioned networks such as IBM’s blockchain, which is powered by Hyperledger Fabric.
In addition to a more trusted and reliable network, Petty explained that Eth2 will enable secure transactional throughput that “more than quadruples Visa’s centralized capacity of 24,000 transactions per second.” This is expected to be the case thanks to the use of rollups.
According to Edgington, rollups are similar to sharding in the sense that the solution provides scalability. He explained that rollups allow for some transactions to be taken off-chain, while leaving just enough transactions on chain to ensure trustlessness. “Something must be on chain to show third-party operators are being honest. This allows for high throughput while ensuring security of the network,” he said.
Specifically speaking, Petty shared that Eth2 will be able to scale approximately 100,000 transactions per second. In addition, the network will provide security, decentralization and lower gas fees. As a result, more enterprises will flock to the Ethereum network, according to Petty, who added:
“Eth2 will work to solve the trilemma that has kept enterprises on the periphery of the Ethereum ecosystem and further open the gates for them to run decentralized applications (dApps) securely and efficiently at scale.”
For example, Ethereum has been an important component of the Baseline Protocol, which is being leveraged by Coke One North America, or CONA, for cross-organizational supply chain transactions. The Baseline Protocol works well with tamper-resistant state machines like the Ethereum mainnet.
John Wolpert, technical steering committee chair for Baseline Protocol, told Cointelegraph that Eth2 will eventually ensure that the Ethereum network won’t slow down under load. “The network won’t slow to the point where a business-to-business workflow has to stop and wait for too much time for on-chain confirmation of any given workstep,” he explained.
Enterprises will not benefit immediately
Wolpert further pointed out that the Eth2 Beacon Chain won’t have an immediate effect of baselining techniques, noting that there is enough headroom on the current public network for projects currently in the works. Meanwhile, Wolpert explained that the successful deployment of the Beacon Chain should give enterprises the confidence that Ethereum is a reliable mainnet to manage baseline proofs.
John Whelan, managing director of Santander Bank and chairman of the Enterprise Ethereum Alliance, further told Cointelegraph that enterprises will start seeing the benefits of Eth2 in terms of scalability, privacy and genuine settlement finality.
However, Whelan also mentioned that the Beacon Chain’s having launched does not mean it is running smart contracts. “We still need the other phases of Eth2 to realize its potential in terms of scalability and cost reduction. However, Eth 2.0 is real. It is not vaporware,” he said.
MyEtherWallet Now Offers In-App Staking For Ethereum 2.0
One of Ethereum’s most popular software wallets, MyEtherWallet is joining other crypto businesses by giving users access to Ethereum 2.0 staking.
Through a partnership with node-hosting service Staked, MyEtherWallet now offers its browser and mobile wallet users the option to stake ETH tokens into the Ethereum 2.0 Beacon Chain deposit contract, a smart contract that lays the foundations for Ethereum’s revamped blockchain infrastructure.
MyEtherWallet “users need to stake 32 ETH to participate. Staked will run a validator node for them, making it easy for the users who don’t have the technical knowledge to participate, so no further action is required on the user’s part,” MyEtherWallet CEO Kosala Hemachandra told CoinDesk.
Staking Ethereum 2.0
Staking ETH for the upgrade requires an Ethereum node, so Staked hosts this node and provides software for users to manage their deposits on MyEtherWallet. Staked and MyEtherWallet claim the service is non-custodial (meaning users keep control of their keys), though similar services through exchanges like Coinbase require relinquishing custody.
These stakers will become validators in the new network, the transaction processors who will replace miners under Ethereum 2.0’s new proof-of-stake design and who are paid in ETH for their services.
To become a validator, Ethereum users must stake at least 32 ETH in the Beacon Chain deposit contract. MyEtherWallet stakers will receive validator rewards in ETH, but those rewards cannot be withdrawn at least “until phase 2 (around two years),” Hemachandra said.
The Ethereum 2.0 Beacon Chain contract went live in the first week of November. After receiving enough ETH to kick-start Phase 0 of the migration to Eth 2.0, the Beacon Chain officially launched on Dec. 1.
Since the launch, a handful of exchanges, including Coinbase and Kraken, have announced they will allow users to stake through their exchange accounts. MyEtherWallet represents the first Ethereum wallet to open up staking to its users.
Ethereum Smashes Past $600 As CME Unveils ETH Futures Product
Ethereum reclaims $600 price levels as the CME announces Ether futures citing “client demand.”
Ether (ETH) has followed the breakout above $20,000 for Bitcoin (BTC) on Dec. 16, boosted by some big news from the Chicago Mercantile Exchange (CME). The CME just announced that it will be launching Ether futures in 2021.
“Based on increasing client demand and robust growth in our Bitcoin futures and options markets, we believe the addition of Ether futures will provide our clients with a valuable tool to trade and hedge this growing cryptocurrency,” said Tim McCourt, CME Group global head of equity index and alternative investment products.
“Ethereum is the second-largest cryptocurrency by both market capitalization and daily volume. The introduction of listed Ether futures to our time-tested, regulated CME Group derivatives marketplace will help to create a forward curve so Ethereum market participants can better manage price risk.”
Such news is an extremely bullish event for the market’s maturity, as it opens the gates for institutions and other parties to trade and invest in cryptocurrencies outside of Bitcoin. Notably, BTC futures launched exactly three years ago at the previous all-time high price in December 2017.
Ether’s price is up by 7% in the past 24 hours and is currently aiming to make a new yearly high.
Ether Testing The Resistance Zone For The Fourth Time
Ether is showing significant strength in recent months, as it’s testing the resistance for the fourth time. This strength is partly being fueled by Bitcoin’s strong movements, as that one just broke the all-time high.
However, the chart itself is shouting for more upside due to recent developments.
First of all, the $480 area had to be tested once, and that held as a support zone, after which a strong bounce toward $630 occurred. This resistance zone failed to break, which resulted in finding another support zone.
Similarly, with Bitcoin, the support was found through a double bottom construction with bullish divergences. In the case of Ether, this support was found at $530, which is another higher low as a result.
All those higher lows and renewed momentum are resulting in the fourth test of the resistance zone. Most likely, the previous tests have made this resistance weaker absorbing the selling volume, so a breakout is all but guaranteed, particularly as Bitcoin has already done so.
Therefore, ETH will likely hit a new yearly high if Bitcoin consolidates and doesn’t make any sudden movements.
Could Ether run to $1,000 and above in the coming year?
Ether above $1,000 is a likely outcome if ETH sustains the current momentum, as the chart shows. However, if Bitcoin makes a fake-out above $20,000 and drops back in the range, a correction toward $430 to $470 would still be a very bullish outcome for Ether.
In that perspective, the next impulse wave is most likely going to bring Ether toward the region of $800 to $850, while even $1,150 to $1,200 is a possibility. The latter depends on the strength of the markets.
However, Ether showed that it broke the accumulation range back in November, after which a new higher high was made. Since this higher high, the recent resistance at $300 flipped for support, which resulted in the current impulse move. The primary question is whether this impulse wave will top out soon or whether it’s going to continue to $850.
Ether’s BTC pair is looking bullish, as it broke through the crucial resistance of 0.025 sats earlier this year. This rally resulted in continuation toward the 0.04 sats resistance but failed to break through that zone in one go.
However, it marked another higher low as the correction ended at the 0.025 sats area. The bottom of this correction was confirmed by a bullish divergence on the daily time frame, which is frequently a strong signal for trend reversals.
Such higher lows are considered to be very bullish, as they can open the floodgates to new higher highs and continuation of the uptrend. The U.S. dollar chart is already making higher highs and higher lows, but the momentum is partly due to Bitcoin’s strength.
If the BTC pair of Ether breaks above the 0.04 sats region, continuation is likely to occur toward the 0.055 and, possibly, 0.08 sats area. In that perspective, a very bullish 2021 is on the horizon for cryptocurrencies as a whole.
When will Ethereum 2.0 Fully Launch? Roadmap Promises Speed, But History Says Otherwise
The new Ethereum 2.0 roadmap review: What updates have been added, and how soon can they be implemented?
On Dec. 2, shortly after the long-awaited release of Ethereum 2.0, platform founder Vitalik Buterin announced an updated roadmap. At first glance, it does not differ much from the previous version from March.
However, it brought some clarity on current progress and further stages, giving grounds for estimating how soon a full-fledged transition to proof-of-stake and the launch of sharding can be expected. Just a spoiler: The full implementation of Ethereum 2.0 will not be coming soon.
Formally Ethereum 2.0, But Not Yet
Dec. 1 marked a pivotal event for the entire crypto industry as the first block of the new Ethereum network was generated, the one developers had been preparing to see through for the past few years. Ethereum 2.0 is expected to become a super-fast, reliable version of the previous blockchain, all thanks to so-called sharding and the transition to the PoS consensus algorithm.
In fact, the update that came out under the name Ethereum 2.0 is not entirely what its namesake claims to be, and the Beacon Chain, its first phase, is actually Phase 0. The Beacon Chain is needed exclusively for the development and testing of innovations that, if successful, will be introduced into the main Ethereum 2.0 network.
Thus, the second upgrade is more fundamental, as the platform will finally let go of proof-of-work and will be fully supported by the stakers. Simply put, Phase 0 — aka the Beacon Chain — lays a basis for implementing staking and sharding in the next upgrade, or as figuratively explained by the Ethereum team, serves as “a new engine” of the future spacecraft.
Even though Ethereum formally switched to version 2.0, the network still depends on the computing power of miners. The developers also launched PoS in parallel to gradually recruiting the stakers necessary to ensure the stable operation of the network.
Praneeth Srikanti, Investment Principle At Consensys Ventures, Discussed With Cointelegraph The Structure And Functionality Of The Beacon Chain:
“The new beacon chain runs on Casper POS for itself and the shard chains — and would ultimately be managing validators, choosing a block proposer for each shard and organizing validator groups (in the form of committees) for voting on the proposed blocks and managing consensus rules.”
Srikanti added that the PoS mechanism is already live on the Beacon Chain and that it requires attestations for shard blocks and PoS votes for the Beacon Chain blocks. The network is now ready enough for users to join and become validators. To do so, they need to have 32 Ether (ETH) in their accounts, locked for transfer and exchange until the network fully transitions to new characteristics.
The rewards that validators receive for supporting the new blockchain will also be locked until the release of the next phase, meaning that stakers will probably be able to access their funds no earlier than 2021 or 2022. Commenting on how the changes in the Ethereum 2.0 roadmap can affect stakers, Jay Hao, CEO of OKEx, told Cointelegraph:
“While it does most likely mean that users will have to wait longer until they can withdraw their ETH from staking, there are still many advantages to staking ETH. To start with, stakers are supporting the move to ETH 2.0 and the ETH community.
They will earn generous rewards when they do withdraw and, it is always possible (especially in this fast-paced industry) that other solutions will appear that expedite this new timeline.”
The implementation of shards — another unique invention of Ethereum, thanks to which the network will be able to provide services to hundreds of millions of users — will also be available only in future versions of the blockchain.
It’s expected that there will be 65 of them in the new Ethereum network, with the Beacon Chain acting as a control blockchain. The paradox is that sharding is not applied to the Beacon Chain, which will actually be the focal point of the network.
The Ethereum development team has been repeatedly criticized for missing deadlines and constantly delaying the updates. So, what is the real state of affairs at this time? Judging by the progress bar that the developers of Ethereum have added to the new roadmap, the implementation of the second update is not expected anytime soon.
Work on the most important tasks necessary for a full transition to a new network — namely, Eth1/Eth2 merge implementation — is in its early stages, with about 15% completed. Things are more positive on the sharding frontier, with about half of the work already done, judging by the progress bar.
The good news is that the new roadmap is missing Phases 1.5, 2 and others that were present in previous versions of the document. This means that a full-fledged transition to a new network can be expected sooner and that the next phase will be the final one, combining all of the most important updates.
Earlier, it was expected that shard chains would appear in Phase 1, and only after that, in the second phase, would SNARK/STARK transactions become possible. Now, all of these updates are expected to be launched under Phase 1, and some progress has already been made toward that end.
The organization of the teams’ work has also changed from step-by-step to parallel. The new roadmap suggests that the execution of each task is organized autonomously and is not disrupted in the event of difficulties with the other segments. In other words, different teams can work on different tasks at the same time, which may speed up the transition to the new network.
Some of the tasks can be expected soon, as indicated by the roadmap. In particular, the developers have already done the bulk of the work on implementing the EIP 1559 protocol, aimed at stabilizing the cost of commissions on the network and gas repricing.
In addition, the release of EVM384, which will allow for faster operations of the Ethereum Virtual Machine, is in the process of transitioning to a more advanced version called “Ethereum-flavored WebAssembly,” or Ewasm.
Interestingly, Ewasm is the only major implementation missing in the new roadmap. It will probably come as part of the upgrade called “VM upgrades,” and its implementation will not be carried out in the next phase.
It’s expected that Ewasm will manage the work of smart contracts and make the network more decentralized.
Layer-two solutions advancing scalability and security such as SNARK/STARK operations, post-quantum crypto and the launch of CBC Casper — an improved version of the protocol that will mark the final transition of the network to the staking model — remain among the solutions that are likely to appear much later on.
When will Eth2 fully launch?
Looking at how fast the relevant updates were implemented in the previous versions of Ethereum roadmaps, it turns out that the planned and real release dates are about a year apart, at the very minimum.
Thus, for example, according to the estimates made by the developers of large blockchain software company ConsenSys in May 2019, the release of the Beacon Chain blockchain was supposed to have happened back in 2019.
Regarding the Ewasm release, the full-scale launch of the machine is supposed to occur in 2020 or 2021. This means that it should be expected to come no earlier than 2021 to 2022 — the time frame that coincides with the one set by the Ethereum developer team for the Ethereum 2.0 mainnet release.
Still, the full scope of work that needs to be done before the Ethereum 2.0 blockchain becomes fully complete can make it challenging to set predictions. Meanwhile, some suggest that upgrade releases could be delayed for an even longer period of time.
YouTube crypto blogger Boxmining recommended adding one to two years to the previous estimates, suggesting that the market will see Casper and sharding in full glory only in 2022 to 2023.
A more pessimistic forecast suggests that it might take years before the market will see the final version of Ethereum 2.0. Himanshu Bisht, marketing head at Razor Network — which operates on a PoS consensus algorithm — told Cointelegraph that such a timeframe is realistic: “Mainnet Ethereum will need to ‘merge’ with the beacon chain at some point.
This will be the start of a new phase of the Ethereum ecosystem in a true sense. However, we might not be able to see this before February, 2022.”
Nir Kshetri, a professor at the University of North Carolina-Greensboro and a research fellow at Kobe University, agreed that the Ethereum 2.0 transition is likely to take a fair bit of time. According to him, the EVM upgrade is a challenging process, as he further told Cointelegraph:
“Organizations are likely to be effectively locked in EVM and it is difficult to break the self-reinforcing mechanism. There are already millions of existing smart contracts and enormous amounts of tools and languages, optimizations. On top of that convincing Ethereum users that the PoS is safe and secure is a challenge of another magnitude.”
Paolo Ardoino, chief technology officer of crypto exchange Bitfinex, told Cointelegraph that the full transition to Ethereum 2.0 could take three years, although he doesn’t rule out a faster development:
“I think that after this initial phase, it is likely that the pace of Ethereum 2.0 development will improve over the coming year. We wonder if full Ethereum 2.0 transition will be complete up to 3 years from now, but we expect token transfers will likely be available earlier than that.”
On the other hand, a streamlined organization of Ethereum client operations and the work of developers, as well as immense assistance from the community, can significantly reduce the time frame of the roadmap.
In general, as the Beacon Chain explorer shows, the deployment of the new PoS network is proceeding successfully. At the moment, more than 33,000 users have become stakers, with almost 1.1 million ETH staked so far.
Eth2 Becomes The Fourth-Largest Staking Network, And It Keeps Growing
Eth2 already ranks as the fourth-largest staking network by TVL despite launching six weeks ago and with withdrawals still yet to be enabled.
Ethereum 2.0 has already emerged as the fourth-largest proof-of-stake network by total value locked in staking within roughly six weeks of the Eth2 deposit contract going live.
Despite withdrawal functionality not yet enabled and no precise estimation for its full launch date, nearly $1 billion worth of Ether (ETH) has already been designated for staking. According to crypto data aggregator Staking Rewards, more than 1.5 million Ether or 1.35% of Ethereum’s supply has been deposited for staking.
Ether staking rewards are currently estimated at approximately 13.20%, meaning that a single stake of 32 ETH would earn $2,725 over one year at the current price of around $645.
Polkadot, the brain-child of Ethereum co-founder Gavin Wood, is currently the largest staking network by total value locked. Since Polkadot’s mainnet launch in May, the network has seen 67.51% of its supply designated for staking, valued at nearly $3.4 billion. Cardano, a rival network from fellow Ethereum co-founder Charles Hoskinson, ranks as a close second, with 65.53% of its supply locked since July for a staking TVL of $3.37 billion.
Tezos launched staking in 2018, and has the highest rate of network participation among staking networks ranking among the top 50 crypto assets by capitalization with 79.43%. Tezos has a current staking cap of $1.38 billion. Since its mainnet launch last year, Cosmos has also emerged as a top proof-of-stake network, with 71.77% of its supply locked up for a staking TVL of $915,593,114.
While Ethereum 2.0’s developers are yet to provide a precise date for when users will be able to withdraw their staked Ether, staking service provider Rocket Pool recently estimated the function may go live during the first quarter of 2021.
Crypto Enthusiasts Could Make $122K Per Year Mining Ethereum With This Setup
All you’d need is 78 NVIDIA GeForce RTX 3080 graphics cards… and a decent air conditioning system.
Simon Byrne has taken at-home crypto mining to a whole new level as he looks to capitalize on Ethereum’s (ETH) potential.
As first reported by Anthony Garreffa, Byrne has set up an ETH mining rig consisting of 78 GeForce RTX 3080 graphics cards. Although the RTX 3080 is marketed toward high-end PC gamers, crypto miners are using these powerful specs to enhance their capabilities.
With each card using roughly 300W of power, Byrne’s setup uses 23.4KW of energy. And that doesn’t even factor in associated costs like AC. All said, his electricity bill is estimated to run up to around $2,166 per month.
The RTX 3080 launched in September at a price of $699, but supply shortages have caused the per-unit cost to swell to $1,199. At the shortage price, that’s a price tag of $93,522 for Byrne’s setup.
Still, these costs could be offset by the operation’s mining capability. One GeForce RTX 3080 graphic card has a hash rate of around 83MH/s using Ethash, which should generate roughly 0.22236870 ETH per month, according to Garreffa. All 78 cards would therefore generate 17.3 ETH per month, which is equivalent to around $12,352 at today’s prices.
Stripping away the electricity costs, that’s roughly $10,200 per month or $122,000 per year. And that’s not factoring in Ethereum’s price potential during the next bull market.
Ether’s price zipped past $700 over the weekend, the first such move since mid-2018. The return of altseason, as some have predicted, could send ETH’s price even higher over the medium term as investors cycle from Bitcoin to other large-cap cryptocurrencies.
Ethereum Layer-Two Network To Offer Batched Tether Payments
Hermez, an Ethereum scaling solution, has partnered with Tether to offer cheaper USDT transactions via zk-Rollups.
Popular stablecoin Tether (USDT) is the first token to go live on the Hermez layer-two network, the company announced on Monday.
As part of the collaboration, batched USDT transactions will be possible once the Hermez network officially launches in early 2021. David Schwartz, project lead at Hermez, told Cointelegraph:
“Hermez network is run by permissionless coordinators who will decide the transactions included in each batch, based on incentives (fees).”
Back in December 2020, Delphi Digital published a report showing that layer-two rollups accounted for less than 1% of the entire daily decentralized exchange trading volume. For Hermez, the small proportion of DEX transfers happening outside layer one is something that will change in 2021.
The clamor of layer-two adoption has grown in recent times, especially amid periods of activity spikes on the Ethereum network resulting in expensive gas fees. Indeed, the last such occurrence caused disruptions to project teams looking to launch their platforms.
Apart from the decentralized finance boom, Tether-dominated stablecoin transactions account for a large percentage of Ethereum’s network activity. As of publication, Tether and Uniswap account for over a quarter of Ethereum transactions in the last 1,500 blocks, according to ETH Gas Station data.
Commenting on the issue of fee predictability for batched transactions via zk-Rollups, a Hermez spokesperson explained:
“Fees are expected to be predictable after the bootstrapping transitory period, since a batch it’s the same scarce resource as an [layer-one] block today, fees need to be enough to incentivise a coordinator to include your transaction in the batch. The main difference is that now batches can have 2,000 tx each.”
According to Hermez’s announcement, coordinators need to hold HEZ, the network’s native token, to participate in processing transactions. Hermez also said 40% of the value generated via its services will go into providing Gitcoin grants for open-source layer-one developmental efforts via its proof-of-donation mechanism.
Speed Vs Quality? Ethereum 2.0 Optimism Is High, But The Road Is Long
The foundation was laid for Ethereum 2.0 in 2020, and expectations are positive for the future of the smart contract platform in 2021.
Ethereum has consistently followed a roadmap for its continual evolution to a proof-of-stake consensus protocol, and 2020 saw the groundwork for Ethereum 2.0 soundly laid.
The smart contract blockchain has firmly established itself as a platform backed by the second-most valuable cryptocurrency in the world, Ether (ETH), and has become a primary resource for developers to build blockchain-based applications and tools.
The emergence of the decentralized finance sector has been largely built on top of the Ethereum blockchain, adding credence to the platform’s decentralized functionality.
The surge in the use of the blockchain has come at a steep price though, as network speed and transaction costs are directly affected as more users and platforms are added to the blockchain. This is a driving force behind the transition to Eth2, which is already underway.
There seems to have been plenty of positive sentiment toward the ongoing shift to Eth2 in 2020, and there’s a sense of great anticipation for the project at the dawn of a new year. So, what are the main hopes for the next step in Ethereum’s evolution in 2021?
Eth2, In A Nutshell
Ethereum 2.0 is the next step in the blockchain’s move from a proof-of-work consensus protocol to a proof-of-stake algorithm.
This is an integral part of Ethereum’s development to make the blockchain more scalable, secure and sustainable. The goal is for it to support thousands of transactions per second in order to make applications faster and cheaper to use.
Security is a chief concern, and a move to proof-of-stake needs to ensure that the protocol is more secure against all forms of attack. Last, but not least, the shift away from PoW is integral in limiting the environmental effect the Ethereum network has.
The network, in its current state, requires a lot of computing power and electricity to remain sustainable.
The first phase is the Beacon Chain, which is responsible for introducing PoS to the protocol and was launched on Dec. 1, 2020. Eth2 users can now stake ETH and become a validator of the network.
Being a full validator requires users to stake 32 ETH and will see those users process transactions and create new blocks on the chain. This is imagined as the future of securing the Ethereum network and will eventually replace the current energy-sapping PoW consensus mechanism.
With the Beacon Chain live, the next step is the launch of shard chains, which is earmarked to take place sometime this year.
Without getting into the finer details, sharding allows a database to be split up to spread workload. Ethereum will use shard chains to reduce network congestion and increase transaction speed. It will also greatly reduce the hardware requirements of running a node. The plan is to create 64 shard chains.
The Beacon Chain will eventually assign certain shard chains to various validators, which will spread out the work needed to validate the Ethereum blockchain. The first iteration of these shard chains won’t handle transactions or smart contracts but will store and manage data on the network.
The long-term goal is to combine shards with rollups, which essentially bundle transactions off-chain to be subsequently submitted back to the mainnet. This should greatly improve the transaction processing capability of the Ethereum network.
A Vote Of Confidence
Cointelegraph reached out to a couple of individuals working at the front line of Ethereum’s ongoing development. Ben Edgington, lead product owner of Teku — an Eth2 client created by ConsenSys and designed for enterprise and institutional stakers — has been directly involved in the research and development of Eth2.
A major talking point of the ongoing shift to Eth2 has been the amount of ETH staked in the Beacon Chain contract. Edgington told Cointelegraph that the community’s willingness to participate in staking has been very positive for developers:
“The amount ETH already staked is an immense vote of confidence, not only in the Beacon Chain, but also in the future of Ethereum. I am impressed by how much has come in so quickly, and greatly encouraged by the commitment of the Ethereum community to what we have built, and will be continuing to build.”
Edgington added that the launch of the Beacon Chain was arguably the most difficult part of the Eth2 project and was a huge milestone that has boosted confidence for the upcoming stages in Ethereum’s journey.
Viktor Bunin, protocol specialist at blockchain infrastructure provider Bison Trails, told Cointelegraph that the ongoing staking of ETH shows there’s a lot of support from the community in the future of the protocol, adding:
“I was surprised that the inflows have continued to be so large and think there’s a chance that the queue to enter Eth2 does not run dry for all of 2021, meaning there is always a wait for a validator to join the network because so many are trying to join simultaneously.”
Lubin And Buterin Have High Hopes As Well
In early December 2020, ConsenSys founder Joseph Lubin suggested that the transition to the next phase of Eth2 could happen faster than expected, given that the Beacon Chain was live.
“People in the know around the ecosystem are very optimistic about how fast things could unfold, as the really complicated work has been done in launching Phase 0,” Lubin said during the “Ethereum in the Enterprise — Asia Pacific 2020” conference.
Lubin added that the Ethereum Foundation is expecting shards to drastically improve data availability on the Ethereum blockchain when they are deployed. He went as far as saying that Eth2 could absorb Eth1 “in the not too distant future.”
Ethereum co-founder Vitalik Buterin gave some insights into the ongoing development of the ecosystem in an online meetup hosted on YouTube by Ethereum Buenos Aires on Dec. 29, 2020. He highlighted key goals for the Ethereum ecosystem in the coming 12 months.
A primary concern is the current cost of transactions on the blockchain, which Buterin said is still a sticking point: “We need to be working very hard on making sure that there’s more space for transactions so that we don’t have this dynamic where everyone is bidding for a very small amount of space so that only very few transactions can get in.”
Buterin also said that the aim for Ethereum is to be able to support hundreds of millions of users within the next few years, but right now, the blockchain can only support 15 to 45 transactions per second.
Buterin then went through a medium-term scalability roadmap and highlighted the potential for rollups to allow the network to process 1,000 to 4,000 transactions per second. When Eth2 sharding and rollups are deployed together, Buterin highlighted the potential for 25,000 to 100,000 transactions processed per second.
The Ethereum co-founder closed by saying that by the end of 2021, he hopes to see the current development roadmap of both the Eth1 (PoW) and Eth2 (PoS) chains completed and to have testnets running for the complete integration of the two chains along with sharding capability, adding: “Potentially, the light client support for the proof-of-stake chain even before the merge could be used to provide better light client support for the proof-of-work chain.”
Ethereum Developers Trust The Process
According to those involved, a common theme that has emerged during the ongoing evolution of Ethereum has been a focus on quality. Although timelines have been established, developers have been more concerned with building and implementing upgrades that are not rushed.
Bunin told Cointelegraph that various Ethereum users, developers and companies that he’d been in contact with over the past few years have expressed unhappiness with the length of time it took to launch the Beacon Chain but that they were excited by the news of the launch:
“They did not take shortcuts with the Phase 0 design and were not afraid to go back to the drawing board after failed attempts or upon discovering new optimizations. They will and should continue to optimize for the best design rather than speed of execution.”
As Buterin mentioned in December 2020, the roadmap for 2021 includes development goals for both Eth1 and Eth2. The latter includes work on shard chains, which promise to improve the scalability of the protocol. Edgington said he was hoping to see shard chains launched by the end of the year but that it will be dependent on the sheer scale of work to be done in 2021:
“The design for sharding is well advanced and I expect we’ll make excellent progress towards implementing it this year. I’d personally hope to see shard chains launched in 2021, but we don’t yet have a target date. In addition, we have brought forward the merger of Eth1 and Eth2 in the roadmap, so we will be working on that in parallel with sharding.”
There is no denying that there is pressure to deliver these performance-improving upgrades in 2021. DeFi was a major subject in 2020 and has added some strain to the Ethereum blockchain.
However, Edgington reiterated the view that the community of developers would not be reactive to these kinds of pressures in their approach in the new year: “There’s always been a sense of urgency, irrespective of DeFi! […] The tension between doing things right, and doing them quickly is always present, but I feel that we are in a reasonable place.”
Bunin also believes that the development of shard chains won’t necessarily be expedited and said that developers’ mindsets are optimized for quality because they “are building the financial infrastructure of the next century.”
He added: “My expectation is that shard chains will be launched by the end of 2021, but I am also comfortable if they are delayed.”
Futures Debut To Test Ether’s Bitcoin-Beating Rise To Record
An eightfold rally in Ether over the past year to a record faces possible turbulence from the impending launch of CME Group Inc. futures for the largest cryptocurrency after Bitcoin.
The contracts set to debut from Feb. 8 evoke memories of 2017, when the start of Bitcoin futures coincided with a peak in the leading digital asset ahead of a spectacular bust. A Federal Reserve Bank of San Francisco analysis posits the derivatives opened the door for bearish investors.
The listing of Ether futures may also see “negative price dynamics,” Nikolaos Panigirtzoglou, global market strategist with JPMorgan Chase & Co., wrote in a note Tuesday. Initial volumes are likely to be low, he added.
Ether so far is unruffled. It climbed to an all-time high of about $1,573 Wednesday and has trounced Bitcoin’s 25% advance in 2021. The token is popular for so-called decentralized finance, which skirts traditional intermediaries such as banks. As ever with digital coins, speculators may also be trying to ride Ether’s momentum for quick gains.
Ether may not suffer the same fate as Bitcoin back in 2017, said Vijay Ayyar, head of Asia Pacific with crypto exchange Luno in Singapore.
“For all you know, major players may be looking to get long exposure through futures, now that there is an institutional-grade product to do so,” he said. “Smart traders moved to Ether when Bitcoin topped out around $40,000 and have made more money.”
In the background, Ether could also be affected by progress toward an upgrade of the affiliated Ethereum blockchain so it can process more transactions. The way the upgrade is done may curb supply of the tokens.
In the Federal Reserve Bank of San Francisco analysis from 2018, authors including Galina Hale and Arvind Krishnamurthy wrote that the rapid run-up and subsequent fall in Bitcoin after the introduction of futures “does not appear to be a coincidence,” adding that the contracts “allowed pessimists to enter the market, which contributed to the reversal of the Bitcoin price dynamics.”
Bitcoin surged to a record close to $42,000 in early January but has since dropped back about $6,000. It was steady at $36,000 as of 8:55 a.m. in London. Ether was at approximately $1,531.
The climb in prices and growing profile of cryptocurrencies remain controversial. Some warn digital coins are prone to mania and that investors can lose everything. Others sense a maturing asset class attracting long-term investors seeking to hedge a variety of risks.
Ether futures are expected next week pending regulatory approval, according to the CME, which also offers Bitcoin futures and options.
Exchange Temporarily Halts Ether Withdrawals As Gas Fees Hit New Highs
Average gas fees hit a new all-time high of $17.5 per transaction on Feb. 3, triggering some exchanges to halt Ether and ERC-20 withdrawals.
Japanese cryptocurrency exchange Liquid has temporarily disabled Ether (ETH) withdrawals as the altcoin hits new all-time highs.
According to a Feb. 4 announcement, Liquid has halted withdrawals for ETH and some ERC-20 tokens due to a massive spike in transaction costs, or gas fees. “Service will be resumed once gas fees return to normal levels. All other crypto currencies are operating as per normal,” Liquid said.
On Feb. 4, ETH price posted another high of above $1,600, following propelled growth of nearly 20% over the past seven days. The growing price has been steadily driving transaction costs higher, hitting new historical highs.
According to data from YCharts, gas fees reached an average $17.5 per transaction on Feb. 3.
As previously reported, gas fees started to see significant growth in early January 2021 when Ethereum broke its previous record of above $1,400.
The latest spike in gas fees has had a massive impact on a number of decentralized finance projects, with some DeFi transaction fees surging above a$1,000. Fees on major decentralized exchanges like Uniswap and SushiSwap surged to abnormal levels of between $40 and $75. Looking for lower fees, DeFi users have reportedly turned into Ethereum alternatives like Flamingo.
Kain Warwick, founder of Ethereum-based synthetic asset issuance platform Synthetix, expressed confidence that surging ETH fees will even drive transaction volumes higher:
“Obviously we need to see what the user behaviour is when fees are not subsidised by I strongly suspect that the tx volume will only increase from here. Right now you can’t do much but sit and mash the mint button.”
At publishing time, Ether transaction volumes amount to $44 billion, up from $37 billion on Jan. 28. The second-largest cryptocurrency is trading at $1,639, up 6.3% over the past 24 hours at the time of writing.
Ethereum Futures Are Now Trading On CME
The Chicago exchange has now traded 77 ETH contracts after going live on Sunday.
The Chicago Mercantile Exchange (CME) has launched its much-anticipated futures contracts for ether (ETH), the native cryptocurrency of the Ethereum blockchain network.
Announced in mid-December, trading in ether futures went live late Sunday, with the February contract registering an opening price of $1,669.75. At the time, the spot price stood at around $1,600.
The Chicago-based exchange has traded 77 contracts so far, with most activity concentrated on the February expiry. The futures contracts are legal agreements to buy or sell the crypto asset at a predetermined price at a later date.
CME’s ether futures are cash-settled and based on the exchange’s reference rate that includes data from major cryptocurrency exchanges Bitstamp, Coinbase, Gemini, itBit and Kraken.
The world’s first regulated ether futures product may draw more institutional demand for the second-largest cryptocurrency by market value, boosting the recent price rally.
“The earliest traditional financial institutions that bought BTC are already looking at ETH, if not bought already. And rightfully so. The most used crypto network + future of finance + a potential deflationary monetary policy narrative make it extremely compelling,” Qiao Wang, cryptocurrencies researcher and investor and co-founder of Messari, tweeted on Sunday.
Wang foresees ether rallying to $5,000 and higher in the long run. Ether is trading near $1,632 at press time, a 1% gain on the day, having reached record highs above $1,700 on Friday.
The cryptocurrency has more than tripled in value since the CME announced plans to list futures contracts on Dec. 16, mimicking bitcoin’s surge from $6,000 to $19,783 seen in the weeks leading up to Dec. 17, 2017, when the exchange began trading bitcoin futures.
While bitcoin topped out on the same day and subsequently moved into a year-long bear market, ether is likely to remain bid. “The market is now more mature, the macro is different, and there are different players involved,” trader and analyst Alex Kruger tweeted last week, ruling out a significant crash in ether.
Wang also voiced a similar opinion Sunday, warning that betting on an ether bear market would be “the worst trade of your life.”
Patrick Heusser, head of trading at the Swiss-based Crypto Finance AG, foresees ether leading the broader market higher. “I have turned long on ETH/BTC over the weekend and reduced some DeFi exposure,” Heusser told CoinDesk. “I see no connection to the ETH futures listing and a specific price action linked to it.”
Crypto Influencer Warns Ethereum Fees Will Drive Users Away
Crypto YouTuber Lark Davis is urging Ethereum’s to launch ETH 2.0 quickly, warning its devs must act soon to prevent rival networks from taking over amid high gas fees.
Prominent crypto influencer Lark Davis, or “The Crypto Lark,” has warned that Ethereum’s competitors will continue to syphon away users should Eth2 fail to launch soon amid ever-increasing gas fees.
Despite predicting five-figure Ether prices in 2021, Davis’ Feb. 19 video, Davis asserts Ethereum’s skyrocketing fees has meant that only “rich investors” can afford to the network, prompting smaller users to switch to competitors like Binance Smart Chain (BSC).
Davis noted BSC is currently enjoying a surge in popularity, with volumes for BSC-based DApps catching up to their Ethereum-based rivals.
Describing the current gas fees prices as “totally loco,” Davis urged Ethereum’s developers to expedite the launch of Eth2 in response to the skyrocketing to prevent a further exodus of users to cheaper alternatives:
“But we’re now to the point where ETH 1.0 – oh we need ETH 2.0 so soon, come on Vitalik, get it going, man – ETH 1.0, most regular users are priced out of using the majority of applications on Ethereum. […] A transaction on Uniswap costs $50 on average these days and that is just crazy.”
Eth2’s Phase 0 was launched in December 2020, allowing Ethereum users to lock up their Ether for staking. Robust scaling capabilities are slated for activation with Eth2’s launch of Phase 1, which is expected to introduce sharding toward the end of 2021 at the earliest.
Average Ethereum transaction prices have skyrocketed to their highest ever levels of around $30 according to Bitinfocharts.com. At the time of the crypto market flash crash in late trading on Monday, Feb. 22, the average gas fee was as high as $50.
Ethereum’s High Gas Fee Crisis Won’t Be Solved By EIP-1559: Coin Metrics Report
Consistently full blocks are the primary reason that gas prices have reached all-time highs.
A report by analytics provider Coin Metrics has delved into the world of Ethererum transaction fees noting that they’re still at highest-ever levels and even a much touted approaching network upgrade is unlikely to alleviate the problem.
According to the Ethereum Gas Report by Coin Metrics, median fees on Ethereum have been consistently over $10 for most of 2021. Comparatively, the average Ethereum transaction fee reached just $5.70 at the height of the 2017/2018 bull run.
It attributed some of this increase to the increase in ETH prices themselves which will make gas more expensive. Since the beginning of 2021, ETH has surged 125% to current prices despite a correction of 19% from its all-time high of $2,050. However, over the same period, the median gas price has increased by 532%.
Different types of transactions require different amounts of gas — a simple ERC-20 token transfer uses much less gas than a complex smart contract operation for an automated market maker for example. However, it noted that rather than DeFi being the root cause of the high gas fees, it is simply more transactions in general.
“Since January 2020, the amount of gas used per transaction has trended downwards. This shows that increased transaction complexity is not responsible for high transaction fees.”
Ethereum transactions are currently auctioned, with those paying more gas taking miner priority and getting faster transactions than those that have set a lower gas limit.
The report noted that the current high fees are because the blocks are consistently full, around 95%, and have been since mid-2020 and the DeFi boom. For March 2021, Ethereum blocks have been 97%-98% full, the research found.
It explained that miners need to specify which transactions to include when mining new blocks and each block can only include a limited number of transactions (on average 160 to 200) due to the maximum block size.
“So miners naturally prioritize the transactions with the highest gas prices since they will earn them more money if these transactions are included.”
The report concluded that the highly anticipated EIP-1559 network upgrade, which has been designed to change the auction mechanism and burn some of the fees, is unlikely to solve the problem of high gas costs, and only scaling solutions will be the true long-term fix.
Coin Metrics explained that the upgrade will only help make fees more predictable as the cause of high fees is the scalability problem.
“If Ethereum can only process a few hundred transactions (on average) per block, there’s going to continue to be high fees as long as DApp usage keeps increasing. Gas prices will continue to be high as long as there’s high competition for block space.”
Ethereum Co-Founder Vitalik Buterin Becomes Billionaire As Ether Hits $3K
Vitalik Buterin’s crypto holdings have doubled since January 2021 to surge above $1 billion.
Vitalik Buterin, a co-founder of the world’s most popular smart contract platform, the Ethereum blockchain, has officially become a crypto billionaire.
Buterin’s public Ether address, which he described as his main wallet back in 2018, has hit $1 billion on its balance following Ether’s meteoric rise above a $3,000 price mark on Monday.
At the time of writing, the address holds around 333,500 Ether (ETH) now worth $1.029 billion, according to on-chain data from Etherscan, as ETH more than quadrupled in value from around $700 at the beginning of 2021.
At publishing time, the world’s largest altcoin is trading at $3,144, up 8.6% over the past 24 hours, with gains of 36% over the past seven days, according to data from CoinGecko.
According to some online crypto players, 27-year-old Buterin now could be the youngest self-made billionaire in the cryptocurrency industry.
— JUSTIN (@justintrimble) May 2, 2021
Amid surging prices, Buterin has been generous with his crypto holdings. In late April, the Russian-Canadian programmer donated 100 Ether and 100 Maker (MKR) tokens to a COVID-19 relief fund for India.
Institutional Investors Load Up ETH, With Its Share Of AUM Hitting A New Record
Institutional investors continue to exit BTC in favor of ETH, with Ether investment products now representing more than one-quarter of institutional crypto AUM.
Institutional demand for Ethereum continues to surge, with Ether products now representing more than one quarter of the assets under management (AUM) of crypto investment products.
According to CoinShares’ June 1 Digital Asset Fund Flows Weekly report, the past week saw significant institutional inflows of $74 million as investors sought to capitalize on the fall out from the recent crash in which many crypto assets lost more than 50% of their value.
More than 63% of institutional inflows were injected into Ether products, or $46.8 million of the total. Ether products now represent 27% of the combined AUM for crypto investment products — the highest share yet.
Significant inflows were also made to products offering exposure to multiple crypto assets ($11.1 million) as well as funds targeting Cardano ($5.2 million), XRP ($4.5 million), and Polkadot ($3.8 million).
Outflows from Bitcoin products have slowed, with roughly $4 million in capital exiting the markets — down from last week’s $110.9 million in outflows. Over the past three weeks, $246 million has exited BTC investment products.
Despite Bitcoin’s 30-day inflows of $47.9 million currently equating to roughly one-third of Ether’s $147.7 million, Bitcoin still dominates year-to-date inflows with nearly $4.4 billion compared to Ether’s $973 million.
However, Ether’s recent momentum has given rise to renewed speculation as to whether Ethereum is gearing up to flip Bitcoin, with Ethereum currently beating out crypto’s honeybadger by transaction count, volume, and fees, and trade volume.
According to CoinGecko, Ether is currently the second-most traded crypto asset with $38.8 billion in daily volume, ranking behind only Tether’s $103 billion. Roughly $32.9 worth of BTC changed hands over the past 24 hours.
Record $141M Outflow From Bitcoin Products Signals Institutions Are Bearish On BTC: CoinShares
Institutional investors withdrew a record $141 million from Bitcoin investment products this past week.
The latest report from analytics firm CoinShares shows that outflows from institutional Bitcoin (BTC) investment products continue to surge.
According to CoinShares’ Monday “Digital Asset Fund Flows Weekly” report, institutional investors are continuing to reduce Bitcoin exposure, with BTC investment products seeing a record outflow of $141 million this past week.
The data follows heavy institutional selling amid May’s dramatic crypto market meltdown, with institutions having withdrawn nearly $100 million from crypto products between May 10 and May 16 before outflows briefly slowed toward the end of last month.
Trade volume for BTC products is also sharply declining, with the first week of June seeing a 62% drop in trade activity compared to May’s weekly average.
Despite describing institutional sentiment toward BTC as having turned bearish since early May, CoinShares highlighted the outflows represent less than one-tenth of 2021’s inflows:
“The outflows represent 8.3% of the net inflows seen this year and remain minimal on relative terms to the outflows seen in early 2018.”
Since the start of 2021, more than $4.2 billion in capital has flowed into Bitcoin products, with BTC currently representing 65.9% of all capital locked in crypto investment products.
The declining institutional demand for BTC has again coincided with increasing institutional appetites for Ether — with Ether (ETH) representing more than 26.8% of the combined assets under management currently locked in crypto investment products after receiving inflows of $33 million this past week.
CoinShares also noted investors are seeking exposure to XRP and Cardano (ADA) investment products are attracting interest, with XRP’s inflows totaling $7 million — its largest weekly inflow since April — and ADA’s inflows tagging $4.5 million.
According to data from CoinGecko, Ether continues to have usurped Bitcoin’s status as the most-traded non-stablecoin crypto asset in the broader crypto markets.
Roughly $37.4 billion worth of Ether traded hands over the past 24 hours — second only to stablecoin Tether’s (USDT) $75.5 billion in daily trade. By comparison, Bitcoin has processed $32.9 billion in 24-hour trade volume.
Ethereum Investment Products See Largest Weekly Outflows On Record — CoinShares
Despite recording high weekly outflows, Ether funds have generated $994 million in inflows this year. The total assets held in ETH funds are nearly $11.1 billion.
Institutional investment managers continued to sell cryptocurrencies like Bitcoin (BTC) and Ether (ETH) last week, though the magnitude of the outflows have declined substantially from previous weeks, offering early signs that the worst of the market sell-off has subsided.
CoinShares’ weekly fund flows report showed a $21.4 million drawdown over the previous seven days, compared with a $94 million outflow the previous week. Ether products registered their biggest weekly drawdown at $12.7 million. Funds dedicated to ETH had been outperforming Bitcoin in recent months, reflecting pent-up demand for the second-largest cryptocurrency.
All said, institutional investors have been net sellers of digital assets in four of the past five weeks. The period ending May 24 saw the biggest weekly outflow at $97 million, according to CoinShares data.
“While sentiment has weakened over the last month investors on the whole remain committed given the magnitude of inflows seen this year,” the report says, alluding to the fact that crypto investment funds have raised $5.8 billion this year alone. That’s within 13% of the $6.7 billion inflows registered in all of 2020.
As Cointelegraph reported, crypto holdings among institutional managers reached record levels during the height of the bull market earlier this year. Naturally, many investors have been taking profits following the most recent bout of market volatility.
Nevertheless, the weekly fund flows report suggests market sentiment is gradually improving. Case in point: The Bitcoin Fear & Greed Index has rebounded from extreme lows despite remaining on the bearish side. Meanwhile, Bitcoin’s price pierced above $41,000 on Monday, marking a 12% gain as markets eyed recovery above key technical levels. The price of Ether also recovered 9% to hit $2,566.
Ethereum London Hard Fork Goes Live
The much-talked-about London upgrade has finally happened on the Ethereum network as ETH arguably moves closer to becoming a deflationary asset.
The London hard fork arrived almost on schedule at 12:33 pm UTC on Thursday at block height 12,965,000, ushering in the Ethereum Improvement Proposal (EIP) 1559.
With the upgrade triggered, Ethereum will now undergo a significant overhaul of the network’s transaction fee market and other parameters such as gas refunds among others.
Under EIP-1559, each transaction on Ethereum will involve burning the base fee, which automatically decreases the Ether (ETH) circulating supply. Several exchanges, including Binance, announced a temporary pause to deposit and withdrawals on the Ethereum network due to the London hard fork.
Some proponents of the upgrade say it will catapult Ether to becoming a deflationary asset, as each transaction will trigger a portion of the total coin supply to be removed from circulation forever.
As previously reported by Cointelegraph, Ethereum co-founder and ConsenSys founder Joseph Lubin described the London upgrade as a part of a journey toward making Ether become “ultrasound money.”
The London upgrade and the subsequent activation of EIP-1559 is a mile marker of sorts in the transition to Ethereum 2.0, which will move the network from a proof-of-work consensus to a proof-of-stake consensus.
After the London upgrade engineers block elasticity and overhauls the transaction fee market, the Shanghai hard fork scheduled to happen later in the year will be the next focus point on the agenda.
The excitement surrounding the upgrade has coincided with a steady increase in the ETH spot price. With a price hovering around $2,610 at publication time, the second-largest crypto by market capitalization is at its highest price level since early June.
Ether clocked an all-time high above $4,200 back in mid-May right before the crypto price crash that saw Bitcoin (BTC) lose about 50% and altcoins declining by over 70% on average.
Vitalik: ‘More Confident About The Merge’ Following Ethereum’s Successful London Upgrade
The London upgrade has been a success, and now all eyes are on the even more eagerly awaited merge with Eth2.
Ethereum co-founder Vitalik Buterin has hailed the London hard fork a success, adding that it has given him more confidence over the upcoming merge to the Ethereum 2.0 chain.
Speaking to Bloomberg News from Singapore, Buterin said that the Ethereum Improvement Proposal (EIP) 1559 is “definitely the most important part of London.” The upgrade, which went live on Thursday, has tweaked the fee generation mechanism resulting in a portion of the fees being burnt.
At the time of writing, more than 3,500 Ether (ETH) worth around $9.8 million had already been burned since the upgrade launched.
Buterin stated that the successful deployment of the London upgrade is “proof that the Ethereum ecosystem is able to make significant changes.” He added that the upgrade:
“Definitely makes me more confident about the merge.”
According to the official documentation, the current Ethereum mainnet will “merge” with the proof-of-stake (PoS) Beacon Chain, marking the end of proof-of-work for Ethereum. This is planned to precede the rollout of shard chains and is unlikely to happen this year, though Eth2 researchers are working on ways to accelerate the timetable.
Once merged, the new mainnet will have the ability to run smart contracts on PoS, eliminating the power-hungry mining operations and potentially lowering the network’s energy consumption by 99%.
Apart from fee burning, the London upgrade also ushered in variable block sizes, which means that users are less likely to have to wait as long for transactions to be processed in fixed blocks when under heavy loads. The blocks can now expand or contract dynamically to match the number of incoming transactions. Buterin said that this would vastly improve the user experience:
“Now it gets much easier to send a transaction that will get included in the next block and that’s very important to user experience.”
The developments have been positive for Ether market sentiment, with Forbes running an article on the upgrade claiming that ETH may even flip Bitcoin (BTC).
At the time of writing, Ether was trading up 3% over the past 24 hours at a little under $2,800, according to CoinGecko. ETH’s price has increased by an impressive 37% over the past fortnight and is up a whopping 280% so far this year.
Ethereum Network Burns $395K ETH Per Hour After London Upgrade
At current burn rates, 2.3 ETH per minute, or $6,600, is going up in smoke.
Approximately 2.3 Ether (ETH) is being burnt every minute through the new transaction fee mechanism introduced in Ethereum’s London upgrade on Thursday.
The highly anticipated London hard fork went live on Thursday this week, ushering in the Ethereum Improvement Proposal (EIP) 1559 upgrade that adjusted gas fees. Part of that adjustment introduced a mechanism that burns some of the base fees collected.
The total amount of ETH burnt since the upgrade went live is roughly 3,395 ETH, according to the various counters available. Etherchain reports an average burn rate of 2.36 ETH per minute. This equates to $6,596 per minute, or around $395,000 of ETH going up in metaphorical smoke every hour at current prices.
An alternative counter called Ultrasound.money reports a total burn of 3,390 ETH worth a whopping $9.5 million at the current ETH prices of around $2,800. The tracker reports that the popular nonfungible token marketplace OpenSea is the top ETH burner with 374 ETH, or just over $1 million dollars, destroyed since the upgrade was launched.
In second place was Uniswap’s v2, which has burned 263 ETH, worth $740,000 at the time of writing. Uniswap founder Hayden Adams commented on the burn rate stating that if things continue at the same rate, the protocol could burn as much as 350,000 ETH, or almost $1 billion, per year.
It’s been 2 hours since the launch of EIP-1559
@Uniswap (v2+v3) is doing its part burning ~80 ETH so far
❤️❤️ At this rate, Uniswap alone is burning 350,000 ETH – close to $1b worth – per year
Congrats to everyone who made EIP-1559 happen. Huge win for Ethereum
— Hayden Adams (@haydenzadams) August 5, 2021
The Bankless DeFi newsletter threw around some figures in an attempt to predict the impact on the future supply. Since the base fee is anywhere between 25% and 75% of the total transaction fee, manual calculation and predictions are difficult.
It modeled burn rates within this range, using data on fees generated in 2021, and concluded:
“Annualizing these figures, this means that between 800,000 — 2.4 million ETH is projected to be burned in 2021.”
When combined with the reduction in block reward issuance from the merge to proof-of-stake, the fee burning could lead to Ether having a deflationary supply, which would see it fulfill the increasingly used meme of “ultrasound money.”
Ethereum Network Congestion Temporarily Shuts Down Crypto Gaming Casino
Funfair Technologies-owned KingTiger Casino is now on the lookout for new solutions for hosting “a new range of features and games” for its participants.
Congestion on the Ethereum network has forced an online casino to temporarily close shop. The development came into light after KingTiger Casino’s official website announced the company’s temporary closure of services. According to KingTiger’s statement:
“We have had to temporarily close our casinos due to the Ethereum network congestion, making it impossible to run our games in their current format.”
The crypto-centric online casino is currently on the lookout for new solutions that can host “a new range of features and games” for its participants. Although the casino services have been temporarily suspended, the platform is allowing users to access their digital wallets.
The parent company, Funfair Technologies, still allows users to create new wallet accounts, and KingTiger maintains that the non-custodial wallet owners will be able to retain control over their assets. Clarifying its stance, the casino said:
“You may keep any funds in there as long as you like or move them out to another ERC-20 address.”
The gambling site was powered by the FUN token, an in-house initiative by Funfair Technologies running on smart contract technology.
Funfair’s leadership did not immediately respond to Cointelegraph’s request for comment.
The recent London hard fork was aimed at Ethereum’s inherent problem related to network scaling and fluctuating transaction fees. In addition, the rise of nonfungible tokens and decentralized finance imposed further stress on the Ethereum network.
The upgrade has already created 800 deflationary blocks that were formed when Ether (ETH) burns overtook mining rewards, effectively decreasing the supply temporarily.
After the successful fork, ETH’s price rocketed up to $2,800 to eventually break the $3,000 mark.
Transaction fees remain high, however. According to BitInfoCharts, average transaction prices are still around $20, with Uniswap fees as high as $33.
Ethereum Supply Flips Briefly Into Deflation As Gas Fees Spike
A spike in gas fees and ETH burn rates have produced almost 800 deflationary blocks so far.
The theoretical deflationary properties of Ethereum’s London upgrade last week have already been seen in action on the blockchain, with almost 800 “deflationary blocks” produced.
A spike in the Ethereum transaction fee burn rate has resulted in at least two hours when the supply was deflationary. The network has come under heavy load over the past couple of days, which has resulted in a lot more gas being burnt.
As of 22:00 UTC, ETH Burn Bot recorded an instance when 545 Ether (ETH) was burned within a one-hour period. With Ethereum issuance reported at 532 ETH per hour, it resulted in the asset seeing deflation of minus 13 ETH for that brief period.
A larger deflationary burn was detected by ETH Burn Bot a couple of hours later, in which 945 tokens were burned within the hour resulting in a temporary negative issuance of -417 ETH. It calculated this as an annualized deflation rate of -3.12%.
945.1184 $ETH burned last hour.
Issuance: 528.0000 ETH
Net Change: -417.1184 ETH
2021-08-10 22:00-23:00 UTC
Last Block: 13000300
Cumulative : 24,942.1282 ETH
— ETH Burn Bot (@ethburnbot) August 10, 2021
When the amount of ETH burned is greater than the mining reward, deflationary blocks are produced and the supply temporarily decreases. This has been observed on a tracker from advisory firm Carbono, which is currently reporting that there have been 791 deflationary blocks so far and defines them as blocks where the burned fee exceeded the mined ETH.
When the London hard fork was deployed on Thursday, it introduced the highly anticipated Ethereum Improvement Proposal (EIP) 1559 upgrade that adjusted the transaction fee calculation system. Part of that adjustment introduced a mechanism that burns a portion of the base fees collected.
According to ultrasound.money, which tracks the amount burned, 25,600 ETH has been burned at the time of writing. At current prices, this equates to around $80 million in just under a week.
The Ethereum economy is not expected to see sustained deflation until the fee burning is combined with the reduction in block reward issuance as a result of the merge to proof-of-stake at some stage in 2022.
The news is not all good for Ethereum users, however, as gas prices have increased again. According to BitInfoCharts, the average transaction price has climbed to $20 from a low of around $4 in late July. Etherscan’s gas tracker is reporting as much as $28.60 for a token swap on Uniswap.
The surge in demand for Ethereum block space has been driven by nonfungible tokens, with the OpenSea marketplace, Gala Games’ Vox and Axie Infinity all in the top four for gas burning with a combined total of 2,200 ETH, or $7 million burned so far.
Happy 21st Crypto ETF Filed For 2021 With Kryptoin’s ‘Ethereum ETF Trust’
The Kryptoin Ethereum ETF Trust plans to issue its common shares on the Chicago Board Options Exchange’s BZX and will value them based on the CF Ether-Dollar U.S. settlement price.
Delaware-based Kryptoin Investment Advisors has joined a score of other crypto ETF hopefuls by filing for an Ethereum exchange-traded fund (ETF) with the United States Securities and Exchange Commission (SEC).
The crypto investment firm previously tried and failed to get a Bitcoin ETF greenlit back in 2019. The firm came back with another attempt this April, filing for a Bitcoin ETF that was set for a verdict by July 27 but is still under review by the SEC.
According to a Thursday filing, the Kryptoin Ethereum ETF Trust plans to issue its common shares on the Chicago Board Options Exchange’s (Cboe) BZX Exchange under a ticker that will be announced before the start of trading.
The ETF will hold Ethereum (ETH) via custodian Gemini Trust Company, LLC and will value its shares daily as determined by the CF Ether-Dollar U.S. settlement price, which is an “independently calculated value based on an aggregation of executed trade flow of major ETH spot exchanges.”
“The Trust’s investment objective is to provide exposure to Ethereum at a price that is reflective of the actual Ethereum market where investors can purchase and sell Ethereum, less the expenses of the Trust’s operations,” the filing read.
The ETF will not buy or sell ETH directly. When it sells or redeems its shares, it will do so in baskets of 100,000 shares at the Trust’s net asset value (NAV).
Kryptoin joins asset manager VanEck and New York-based Wisdom Tree investments in filing for an ETF that offers ETH exposure in 2021. According to Bloomberg’s ETF Research Analyst, James Seyffart, there have been a total of 21 crypto ETF applications this year.
Eric Balchunas, senior ETF analyst at Bloomberg, noted on Twitter that as Kryptoin filed for a spot Ether ETF under the 1933 securities act, it may be a while before a verdict is delivered.
Kryptoin just filed filed for an Ether ETF. This would be physically backed so is under 1933 Act so prob on ice for a while. Not sure what # filing this, it’s def over 20 tho. pic.twitter.com/WY66O3pjO2
— Eric Balchunas (@EricBalchunas) August 12, 2021
SEC Chairman Gary Gensler suggested earlier this month that he may be open to approving ETFs exposed to regulated futures contracts under the Investment Company Act of 1940.
“When combined with the other federal securities laws, the ’40 Act provides significant investor protections,” he said.
Ethereum Could Pave Way For $100,000 Bitcoin, Bloomberg Analyst Asserts
“If Bitcoin were to catch up to Ethereum’s performance this year, the No. 1 crypto’s price would approach $100,000,” believes Mike McGlone, senior commodity strategist at Bloomberg Intelligence.
Ether (ETH) has outperformed Bitcoin (BTC) in terms of year-to-date market performance, rising more than 320% against BTC’s 54% returns. But according to Bloomberg Intelligence senior commodity strategist Mike McGlone, Bitcoin could soon catch up to Ether’s gains, which might even push its per-unit price to $100,000.
“If Bitcoin were to catch up to Ethereum’s performance this year, the No. 1 crypto’s price would approach $100,000,” the analyst tweeted on Aug. 9 as BTC price broke above $46,000.
While McGlone did not dwell on the factors that would have Bitcoin match Ether’s yearly gains, his earlier report on cryptocurrencies cited a few catalysts that could propel the benchmark crypto’s prices to the six-figure club. The report notes:
“About 80% of Bitcoin and Ethereum, the majority of the Bloomberg Galaxy Crypto Index (BGCI) performance comes from the broader perception of the first-born crypto as a global digital-reserve asset, plus accelerating digitization of fintech and the monetary system.”
Trillions Of Dollars Waiting On The Sidelines
Bitcoin backers believe that it can compete with the U.S. dollar to become a global reserve asset. A big reason is the cryptocurrency’s fixed supply cap that, to proponents, makes it more sound money than the greenback (the Federal Reserve printed $3.1 trillion in 2020 alone.)
As a result, Bitcoin closed last year 260% higher, reflecting that investors treated it as a tool against dollar-led inflation.
In a survey earlier in 2021, Goldman Sachs also noted the pent-up demand for Bitcoin among institutional investors, including pension funds, global sovereign wealth funds and foundations. Nonetheless, even as they had trillions of dollars in reserves, accredited investors were kept from putting those funds in the Bitcoin market by the lack of clear crypto regulations.
Analysts at Autonomous Capital Management stated that a regulated Bitcoin exchange-traded fund would speed up Bitcoin adoption among institutions. In addition, they stated that while investors treat Bitcoin as a highly volatile asset, its lack of correlation to traditional risk factors will be like music to their ears.
The Autonomous Analysts Added:
“If we were to assume that Bitcoin gets the same weighting as the current gold weighting in investor’s portfolios, its price would be 2.8x times higher or roughly $112,000.”
Despite its adoption prospects on Wall Street, Bitcoin’s dominance has fallen severely after topping out at around 73% in December 2020. It now stands at 47.17%, reflecting that traders have shifted around their investments to other digital assets.
Ether, in particular, has become the biggest benefactor of the falling Bitcoin dominance index. Its dominance in the cryptocurrency industry has climbed from 10.06% in December 2020 to 20.05% at the time of writing.
Part of the reason behind Ether’s rising dominance originated from the explosion of nonfungible tokens (NFT), which are digital files whose originality and scarcity can be validated by a public ledger.
In addition, a boom in the decentralized finance space — consisting of lending, borrowing and other financial services built atop the Ethereum blockchain — has pushed the adoption of Ether among the crypto masses.
Ethereum developers are also taking steps to scale the blockchain. On Aug. 5, Ethereum updated its software with its London hard fork in the hopes of becoming a full-fledged proof-of-stake protocol in the future.
The update also added deflationary pressures on the supply, with the EIP-1559 improvement proposal bringing a fee reduction feature. On the first day alone, EIP-1559 enabled the elimination of $2 million worth of Ether tokens.
As of Aug. 9, the feature burned about $5.5 million worth of ETH, as per data fetched by the website Ultrasound Money.
McGlone noted that Ether’s past performance indicates that it could surpass Bitcoin in terms of market cap by 2022 or 2023. Nonetheless, the analyst maintained his $100,000 price target for Bitcoin.
“Though we see Bitcoin on that path, there appears little can stop the process of Ethereum flippening,” he said.
To date, Ethereum has surpassed Bitcoin in terms of network transactions and total transaction fees, data from Blockchain Center shows.
Ether Held On Centralized Exchanges Hits 3-Year Low
Only 9.4% of ether is held in centralized exchanges, the least since 2018.
The proportion of ether (ETH, +1.16%) held on centralized exchanges (CEXs) dropped to 9.4% of the total supply today, the lowest in three years, according to data from crypto intelligence platform OKLink.
* Out of the 117 million ether in circulation, only 11 million were held on addresses related to CEXs, OKLink data shows. Ether is the second-largest cryptocurrency by market capitalization.
* That level is the least since February 2018, when about 9 million of 97 million ether were held in CEX addresses, according to OKLink data.
* The main factor for the outflow is decentralized finance (DeFi), Eddie Wang, senior researcher at OKLink, told CoinDesk.
* Wang pointed to wrapped ether (WETH) being the top address in the Ether Rich List, as well as deposits and liquidity pools of popular DeFi protocols to explain the outflow of ether from CEXs.
* Wrapping ether is the process of converting it to ERC-20 tokens, which renders the digital asset easy to swap and transfer. Because of these features, WETH is a key driving force for DeFi.
* WETH represents 5.7% of total ether in circulation, according to intelligence platform TokenView.
* Ethereum 2.0 might be another factor, Wang said. More than 6.5 million ether are locked into 2.0 deposit contract addressing, according to Dune Analytics.
* OKLink has built its own database of addresses, which are classified into categories like centralized exchanges, decentralized exchanges, miners and pools based on their behavior, Wang said.
Ethereum Founder Is Skeptical Of Dorsey And Zuckerberg Plans
Jack Dorsey and Mark Zuckerberg may be making big plans in the cryptocurrency space, but Vitalik Buterin doesn’t see them as likely to gain much traction.
The engineer widely recognized as the inventor of Ethereum, the world’s most-used blockchain, cast doubt on Square Inc. chief executive officer Dorsey’s plan for the company to create a new business focused on decentralized financial services that uses Bitcoin. The largest cryptocurrency, Buterin said in an interview on Bloomberg Television, doesn’t really have the functionality to do that as it was designed largely to be a “currency of the house.”
“On Ethereum there’s native functionality that allows you to essentially directly put ETH or Ethereum-based assets into these smart contracts, into these lock boxes, where there’s then arbitrary conditions that can govern how those assets get released,” said Buterin, who is one of crypto’s most well-known developers. “Jack is basically going to have to essentially create his own system that enforces those rules.”
Zuckerberg’s idea to turn his Facebook Inc. into a “metaverse company” was also met with skepticism by the crypto mogul. “Metaverse” refers to a vision of an internet-enabled virtual world where people have avatars and interact with digital assets and even corporeal objects via augmented reality.
Zuckerberg is clearly trying to anticipate the next phase of the internet “before the rest of the world goes in some different direction and Facebook is sort of left in the dust,” Buterin said. He noted that Zuckerberg has also been involved with the widely scrutinized Facebook-backed cryptocurrency project Libra — now called Diem.
There’s “just a huge amount of mistrust” about Facebook, Buterin said, so constructing its own platform could prove ill-fated. He recommended Zuckerberg build on the existing blockchain instead.
Blockchain and crypto have grown rapidly over the past decade, with concepts that are beginning to challenge dominant players in areas like finance, technology and consumer products. Established companies from Facebook and Twitter Inc. to JPMorgan Chase & Co. and Goldman Sachs Group Inc. have been working on ways to incorporate blockchain into their existing businesses. But many young-fast-moving companies have sprung up in the space that show potential for disruption.
Buterin says blockchain technology poses a major threat to Facebook, Twitter and other social networks. He said we could see the established companies eventually losing out to the upstarts.
And he continues to have big plans for the Ethereum network. When asked where he sees it in five to 10 years, Buterin replied, “hopefully running the metaverse.”
Most Used Blockchain Averts Crisis After Software Flaw Is Fixed
A flaw in the most popular software used to verify transactions on the Ethereum network nearly triggered a crisis for the world’s most widely used cryptocurrency blockchain.
About half of the Ethereum ecosystem split into a separate chain after a bug in the Go Ethereum, or Geth, software effected users who hadn’t implemented an update meant to fix the mistake, said Maddie Kennedy, a spokesperson at the cryptocurrency research firm, Chainalysis.
“This could’ve been a big problem, but it isn’t,” Kennedy said.
About 75% of all users on the Ethereum network utilize Geth as a node to mine the blockchain’s native token, Ether, and to create software that runs functions such as decentralized applications.
At its worst, the split — or fork — could have caused a so-called double-spend attack where the same Ether cryptocurrency would have traded twice during any transaction or trade, according to the news site Decrypt. This would’ve created counterfeit currency and possibly a sharp drop in its value.
Fortunately, most traders using Geth swiftly upgraded their systems, allowing most of the blockchain to remain on the primary network, instead of pivoting to the forked version, said Kennedy.
While the parallel network still exists, it will eventually disappear as more users of Geth upgrade their systems, she added.
Ether rose for the first time in four trading sessions during New York hours, gaining about 4.6% to $3,272. The second-largest cryptocurrency by market value after Bitcoin has surged more than 300% this year.
Bug In Ethereum Client Leads To Split — EVM-Compatible Chains At Risk
“Stay away from doing [transactions] for a while till confirmed, unless you are sure you are submitting to latest Geth,” advised Andre Cronje.
A major consensus bug has affected more than half the Ethereum network’s nodes, causing those running older versions of Geth to split from the main network.
According to Ethereum software developer Marius van der Wijden, an unknown individual or group exploited a vulnerability affecting earlier versions of Geth, one of Ethereum’s software clients. According to the developer, Geth clients and Ethereum nodes running software v1.10.7 or earlier are at risk of splitting from the network.
“Users that run validators need to update their nodes quickly (in the next 10h I think) as they would otherwise vote on invalid committees,” said van der Wijden.
A chain split has occurred on the Ethereum mainnet. The issue was resolved in the v1.10.8 release announced previously. Please update your nodes, if you haven’t already!
— Go Ethereum (@go_ethereum) August 27, 2021
Binance Smart Chain’s Twitter account and others had previously warned Geth clients to update to v1.10.8, which claimed to have a hotfix for the vulnerability in the earlier versions. Ethereum Virtual Machine- or EVM-compatible chains may also be at risk. According to data from Ethernodes.org, 74.6% of all Ethereum nodes are running Geth, with only 28.4% of Geth clients currently running v1.10.8, meaning roughly 53% of all nodes on the network are potentially at risk.
“Stay away from doing [transactions] for a while till confirmed, unless you are sure you are submitting to latest Geth,” advised Yearn.finance founder Andre Cronje
Though software bugs have previously threatened nodes on the Ethereum network, this incident seems to be one of the biggest affecting a major blockchain. In August 2020, roughly 12% of the network’s nodes were unusable after a bug compromised half of the Parity nodes and all OpenEthereum nodes.
At the time of publication, the price of Ether (ETH) seems to be unaffected by the split. Data from Cointelegraph Markets Pro shows the ETH price is $3,241, having risen more than 4% in the last 24 hours.
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