Tag: POS

Ethereum to Undergo 4 Phases to Tackle the Scalability Issue after Merge

by Blockchain News

The much-anticipated Merge saw the light of day yesterday, September 15, setting the ball rolling for a proof-of-stake (PoS) consensus mechanism in the Ethereum (ETH) network.

Since the Merge is the first step towards solving the scalability trilemma, the second-largest cryptocurrency will have to undergo four more steps to solve this issue, as reported by Bloomberg. 

The four phases include the surge, the verge, the purge, and the splurge. Per the announcement:

“The Surge: Implementation of sharding, a scaling solution which will lower the cost of bundled transactions on Ethereum.”

The report added:

“The Purge: Elimination of historical data and technical debt. The Splurge: Miscellaneous updates after the first four stages to ensure smooth functioning of the network.”

The time frame for these stages is not well defined, but Sameep Singhania believes it might take two to three years. The co-founder of QuickSwap pointed out:

“It’s hard to talk about the timelines of the following four stages because all of them are still under active research and development. But, in my opinion, it will easily take 2-3 years before all phases are complete.” 

Aditya Khanduri, the head of marketing at Biconomy, also opined that the purpose of the four upgrades was to make Ethereum cheaper, faster, and more scalable.

Upon the completion of the remaining four phases, Ethereum co-founder Vitalik Buterin pointed out that the network would be in a position to process 100,000 transactions per second.

Therefore, the merge is seen as a stepping stone toward future improvements. Developers involved in the Merge noted that switching from a proof-of-work (PoW) to PoS would make ETH easier and friendlier to design future updates that lower gas fees.

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Crypto Venture Capitalist Breaks Down Potential Winners and Losers from Ethereum Merge

by Blockchain News

Paul Veradittakit, a Partner at Pantera Capital which is a crypto investment firm based in California, talked about on Sunday what he thinks about winners and losers from the Ethereum “Merge.”

In an interview published by Forbes on Sunday, the media inquired whether the Ethereum merge would happen in September as planned earlier and requested which tokens would rise or fall as a result of the upgrade.

Veradittakit assured the public that the merger will happen – the transition from proof of work to proof of stake through a merging of two blockchains.  

The executive said the merge will bring a lot of visibility and growth to Ethereum.

“The Ethereum ecosystem is about to flourish, and people are going to see Ethereum, layer 2s. I also think it could be helpful for DeFi and potentially lead to some other use cases like NFTs on Ethereum as well. Therefore, it will probably focus a bit more on Ethereum. The other layer 1s have to evaluate how it goes and figure out what their differentiators are going to be after the merger,” Veradittakit explained.

Optimistic Remains About the Merge

Next month, the launch of Ethereum’s crucial update, the Merge, will signify the transition from the Proof-of-Work-based consensus mechanism to the more sustainable and less wasteful Proof-of-Stake system.

There has been a growing buzz within the crypto community about what the consequences that the Merge may bring for the blockchain network founded by Vitalik Buterin.

Some crypto experts have, however, urged that Proof of Work will live on after the merge.

The update, which is scheduled to be launched on 15th September next month, is expected to revolutionize the blockchain network, making it more scalable, cheap, and accessible.

The upgrade is expected to bring significant changes with the likes of mining, which could disappear. Miners, who have invested in infrastructure to mine on proof-of-stake networks, are most likely to become redundant after the merge.

Some believe that even after 15th September, the Proof of Stake consensus will continue to exist alongside the Proof of Work consensus, mainly to allow for a less traumatic transition and to take care of things in case the merge fails to complete its upgrade.

Some argue that miners could try using their pricy rigs on other networks. In recent weeks, Ethereum Classic (ETC) has witnessed a veritable price explosion. ETC, the hard fork of Ethereum created in 2017, will still maintain the Proof of Work system.

Ethereum’s proof-of-stake is considered more environmentally friendly, as it can validate transactions without consuming so much energy. The proof-of-stake mechanism is estimated to use 99.95% less energy than its proof-of-work chain.

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Ethereum Hits a Monthly High above $1,500, Merging Events Continues Engulfing the Market

by Blockchain News

Ethereum (ETH) returned to levels last seen in June based on renewed momentum following those upcoming potential merging events. 

Market insight provider Santiment explained:

“Ethereum’s return above $1,500 for the first time since June 12th appears to be happening as the crowd has little belief in this rebound. Despite this, the average ETH return of 30-day traders has ballooned to +28%, the highest since August 2021.”

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Source: Santiment

The 30-day return for Ethereum traders also hit an 11-month high, suggesting that the renewed momentum has driven their profits to levels last seen in August 2021.

Furthermore, ETH supply in profit also soared by 56%. On-chain insight provider Glassnode stated:

“Over the last month, almost 7.8% of circulating supply of ETH has transacted on-chain and changed hands. The total ETH supply in profit has now increased to 56%, after hitting lows of 41% prior to the current price rally.”

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Source: Glassnode

The second-largest cryptocurrency was up by 3.8% to hit $1,511 during intraday trading, according to CoinMarketCap. 

During a recent developers’ call, September 19 emerged as the most probable date for the merge.

Therefore, these upcoming events have been making airwaves, triggering a bullish momentum in the Ethereum market because the merge is anticipated to be the biggest software upgrade in the ecosystem.

The merge is expected to transform the Ethereum network to a proof-of-stake (PoS) consensus mechanism from the current proof-of-work (PoS) framework, which has been elusive for a few years.

The PoS algorithm will enable the confirmation of blocks in a more cost-efficient and environmentally friendly way because validators will stake Ether instead of solving a cryptographic puzzle. 

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Ethereum Hits a Monthly High above $1,500 as Merge News Continues Engulfing the Market

by Blockchain News

Ethereum (ETH) returned to levels last seen in June based on renewed momentum following those upcoming potential merging events. 

Market insight provider Santiment explained:

“Ethereum’s return above $1,500 for the first time since June 12th appears to be happening as the crowd has little belief in this rebound. Despite this, the average ETH return of 30-day traders has ballooned to +28%, the highest since August 2021.”

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Source: Santiment

The 30-day return for Ethereum traders also hit an 11-month high, suggesting that the renewed momentum has driven their profits to levels last seen in August 2021.

Furthermore, ETH supply in profit also soared by 56%. On-chain insight provider Glassnode stated:

“Over the last month, almost 7.8% of circulating supply of ETH has transacted on-chain and changed hands. The total ETH supply in profit has now increased to 56%, after hitting lows of 41% prior to the current price rally.”

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Source: Glassnode

The second-largest cryptocurrency was up by 3.8% to hit $1,511 during intraday trading, according to CoinMarketCap. 

During a recent developers’ call, September 19 emerged as the most probable date for the merge.

Therefore, these upcoming events have been making airwaves, triggering a bullish momentum in the Ethereum market because the merge is anticipated to be the biggest software upgrade in the ecosystem.

The merge is expected to transform the Ethereum network to a proof-of-stake (PoS) consensus mechanism from the current proof-of-work (PoS) framework, which has been elusive for a few years.

The PoS algorithm will enable the confirmation of blocks in a more cost-efficient and environmentally friendly way because validators will stake Ether instead of solving a cryptographic puzzle. 

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Cardano Elbows Ripple to Take 6th Position, Thanks to Heightened Development Activity

by Blockchain News

Cardano (ADA) has been scaling the heights because it is now the sixth-largest cryptocurrency after dethroning Ripple (XRP) with a market capitalization of $20.71 billion, according to CoinMarketCap. 

Cardano is going through the roof based on factors like increased development activity. Market insight provider Santiment explained:

“Cardano is one of many altcoins that have enjoyed a great start to the week. Development activity has hit AllTimeHigh levels, as ADA’s team worked on innovating while prices were suppressed.”

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Source: Santiment

Cardano is a proof-of-stake (PoS) blockchain, which is designed to be a scalable, sustainable, and flexible network for running smart contracts needed when developing decentralized finance (DeFi) applications and new crypto tokens.

Therefore, Cardano is one of the sought-after networks in the development arena based on the latest trend of flipping Ripple’s market capitalization of $20.14 billion.

Market analyst under the pseudonym Tajo Crypto pointed out:

“Cardano pumped more than 25%, so it flipped XRP to become the 6th largest crypto by market cap. Cardano is doing well with over 5 million assets minted from its network recently. Cardano is also getting ready for the Vasil upgrade in June. ADA is doing well.”

ADA was up by 18.66% in the last seven days to hit $0.6124 during intraday trading, according to CoinMarketCap. 

Therefore, Cardano seems not to be relenting in its quest to flip other cryptocurrencies. For instance, it elbowed Polkadot (DOT) from the seventh position in January 2021. As a result, it became the biggest proof-of-stake network. 

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Ethereum Unlikely to Merge in June, Despite PoW Undergoing

by Blockchain News

The much-anticipated merge of Ethereum will not occur in June as planned, according to Ethereum lead developer Tim Beiko.

Beiko took to Twitter and tweeted:

“It won’t be June, but likely in the few months after. No firm date yet, but we’re definitely in the final chapter of PoW on Ethereum.”

This revelation comes days after the first shadow fork that served as the merge trial went live on the Ethereum mainnet.

The shadow fork was to stress test syncing and state growth on the ETH network, as revealed by Ethereum Foundation developer Parithosh Jayanthi. 

The merge will act as the biggest software upgrade in the Ethereum ecosystem by shifting the current proof of work (PoW) framework to a more cost-effective and environmentally friendly proof of stake (PoS) consensus mechanism.

Furthermore, validators will take up the role of miners when it comes to the confirmation of blocks based on the amount of ETH staked, acting as collateral against dishonest behaviour. 

Despite the PoW consensus mechanism on the Ethereum network is in the final stretch, Beiko did not give a precise date when the merge would happen, but he opined that it would happen a few months after June. 

A transition to the PoS will improve scalability by enabling upgrades like sharding on the ETH blockchain. 

The merge is being waited with bated breath because it will enhance Ethereum’s quest to be a deflationary asset. Its value is expected to continue increasing with time on the foundation of slashed supply. 

The second-largest cryptocurrency was up by 1.97% to hit $3,108 during intraday trading, according to CoinMarketCap. Ethereum reached an all-time high (ATH) price of $4,850 in November last year, but it has not yet reclaimed this level so far this year. 

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First Shadow Fork Launches on Ethereum Mainnet,Transition to PoS Gains Steam

by Blockchain News

The move from proof-of-work (PoW) to proof-of-stake (PoS), known as the merge, attained a landmark achievement after the first shadow fork went live on the Ethereum (ETH) mainnet.

As a the merge’s trial, the shadow fork is a means of stress testing state growth and syncing on the ETH network, according to Ethereum Foundation developer Parithosh Jayanthi. He added:

“We additionally wanted a way to check if our assumptions work on existing testnets and/or mainnet.”

Moreover, some information will be shared by both the shadow fork and the main Ethereum network. As a result, some transactions might emerge on both chains. 

Having already processed 1,558,014 transactions at an average block time of 13.8 seconds, the shadow hardfork showcases what the merge will entail, according to the block explorer page by Ethereum Foundation developer Marius Van Der Wijden.

Deemed as a historical event, Van Der Wijden came up with the shadow fork idea so that it could help with testing the merge. 

The merge is slated for Q2 2022 and will act as the biggest software upgrade in the Ethereum ecosystem. Validators will take up the role of miners when it comes to the confirmation of blocks based on the amount of ETH staked, given that it acts as collateral against dishonest behaviour. 

Market analyst Lark Davis recently noted that the merge would prompt a supply growth rate of -2.8% in the ETH network. He explained:

“At -2.8% supply growth a year post Merge, Ethereum will see about 3.3 million ETH a year burned. By the end of the decade total ETH supply will drop under 100 million. Or put another way, we will burn the equivalent of ALL ETH currently sitting on exchanges.”

Therefore, the merge is viewed as a game-changer that will make the ETH network cost-effective and environmentally friendly and boost the second-largest cryptocurrency as a deflationary asset.

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EU Parliament Committee Rejects Proposal to Limit Proof-of-Work Crypto

by Blockchain News

The European Parliament’s Economic and Monetary Affairs Committee voted Monday, a move that quashed the ban on the popular cryptocurrency Bitcoin across the European Union (EU).  The committee voted against the ban on Proof-of-Work mechanisms underlying major cryptocurrencies like Bitcoin and Ethereum.

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The committee decided to keep out the rule of the proposed Markets in Crypto Assets (MiCA) framework, the EU’s comprehensive regulatory package for governing digital assets.

The rule, which was introduced to the draft last week, aimed to limit the use of cryptocurrencies powered by an energy-intensive computing process known as proof-of-work across the EU’s 27 member states. The proposal was eventually repealed as a result of widespread opposition from the sector.

Dr Stefan Berger, EU parliamentarian in charge of the MiCA legislative framework, talked about the announcement on Twitter social media platform: “First stage win at #MiCA in committee! By accepting my proposal, members have paved the way for future-oriented crypto regulation. It is now a matter of accepting the report as a whole in the final vote & sending out a strong signal for innovation.”

However, Dr. Berger stated that the controversial paragraph has been withdrawn, but that a final decision had not yet been reached.

Switching to Proof of Stake

The use of Proof-of-Work (PoW) cryptocurrencies was uncertain following the draft of the European Union’s (EU) proposed legal framework for managing virtual currencies, known as the Markets in Crypto Assets (MiCA) framework.

The clause, which could have forced PoW cryptocurrencies to shift to more environmentally friendly mechanisms, failed to get the votes required in the parliament.

Major crypto assets like Bitcoin and Ethereum rely on PoW, a consensus mechanism underlying the digital assets that require a lot of energy to operate.

In recent months, the computing process has come under intense examination from legislators because of worries about the usage of energy. While the popularity of Bitcoin has grown, the controversy over its energy consumption and environmental impact has intensified.

As a result, some of the major cryptocurrencies like Ethereum and Dogecoin have shown intentions to migrate from the current Proof-of-Work (PoW) to Proof of Stake (PoS) crypto consensus mechanism. PoS refers to processing transactions and creating new blocks in a blockchain in an environment and efficient friendly manner.

However, there is still no consensus in the crypto community about the PoS model being better than PoW. Some users and well-known names in the market, like Jack Dorsey, have highlighted that the new method does not provide as much security to the network as proof of work offers. Meanwhile, there is no sign that Bitcoin, the world’s largest cryptocurrency, will migrate to the PoS system.

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MIT Sees Ethereum’s PoS as Game Changing Tech

by Blockchain News

Ranked sixth among the top 10 technological breakthroughs of 2022, the Massachusetts Institute of Technology (MIT) views Ethereum’s proof of stake (PoS) consensus mechanism as a game-changer that will prompt the adoption of energy-saving technology. 

Per the announcement:

“Proof of stake offers a way to set up such a network without requiring so much energy. And if all goes as planned, Ethereum, which runs all sorts of applications in addition to the world’s second-largest cryptocurrency, will transition to it in the first half of 2022. The shift has been projected to cut energy use by 99.95%.”

The MIT acknowledged that Ethereum’s PoS framework would be instrumental in changing the narrative about cryptocurrencies using vast amounts of electricity. For instance, Bitcoin (BTC) used more energy than Finland last year.

Ethereum 2.0, recently renamed to the consensus layer, was launched in December 2020 to transition a PoS framework from the current proof of work (PoW) consensus algorithm.

Since then, it has gained steam as more investments continue trickling in, given that the number of validators recently hit 300,000 and staked Ether crossed the 9.5 million mark. 

With “The Merge” slated for the second quarter of this year, MIT noted that Ethereum’s transition would become the centre stage of triggering energy-efficient technology even though other networks like Solana, Cardano, and Algorand are already using PoS blockchains. 

The report noted:

“With proof of stake, validators don’t have to vie against one another, spending big on energy and computing hardware. Instead, their cache, or stake, of cryptocurrency allows them to enter a lottery. Those who are chosen to gain the authority to verify a set of transactions (and so earn more cryptocurrency).”

The other top ten breakthrough technologies included Covid variant tracking, a long-lasting grid battery, artificial intelligence (AI) for protein folding, and malaria vaccine, per the MIT Review. 

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Eth2 is no more after Ethereum Foundation ditches name in rebrand

by Cointelegraph

The Ethereum Foundation has removed all references to Eth1 and Eth2 in favor of calling the original blockchain the “execution layer” and the upgraded Proof of Stake chain the “consensus layer.”

Ethereum’s long-awaited transition from a Proof-of-work mining model to a Proof-of-Stake (PoS) consensus mechanism is expected to go live around in the second or third quarter of this year.

Announcing the change the foundation cited a number of rationales including a “broken mental model for new users,” scam prevention, inclusivity and staking clarity.

In a Jan.24 blog post, the Ethereum Foundation noted that the branding of Eth2 failed to concisely capture what was happening to the network via its series of upgrades:

“One major problem with the Eth2 branding is that it creates a broken mental model for new users of Ethereum. They intuitively think that Eth1 comes first and Eth2 comes after. Or that Eth1 ceases to exist once Eth2 exists.”

“Neither of these is true. By removing Eth2 terminology, we save all future users from navigating this confusing mental model,” the blog post added.

Under the new terminology, the combination of the execution layer (Eth1) and the consensus layer (Eth2) will be labeled as Ethereum, while individual features such as the beacon chain, merge and shared chains are now referred to as “upgrades.”

Eth2 rebrand: The Ethereum Foundation

The foundation also stated that its re-branding of Eth2 would help “bring clarity to eliminate” scams in which malicious actors dupe victims — unaware that their Ether (ETH) will automatically switch to Eth2 following the merge — into swapping Ether (ETH) for fake ETH2 tokens.

“Unfortunately, malicious actors have attempted to use the Eth2 misnomer to scam users by telling them to swap their ETH for ‘ETH2’ tokens or that they must somehow migrate their ETH before the Eth2 upgrade,” the post read.

The news saw a relatively apathetic response in the r/Ethereum subreddit, with most users joking about the change, or complaining about the length of time the merge was taking.

“Don’t care what you call it, just fucking ship it soon plsss” said Redditor ghfsgiwaa.

User Kristkind stated that the attempted rebrand has come “too late”, noting that the term Eth2 has already been widely adopted by the media and users:

“Everybody in the media, even the crypto-related one, runs with the term 2.0 or simply Eth2. And honestly, I think it is better that way, because [it’s] way easier to get for the (semi-)layperson, than ‘consensus layer’, which needs you to understand the architecture of the network.”

Relat Ethereum white paper predicted DeFi but missed NFTs: Vitalik Buterin

Following the merge and transition to PoS scheduled for later this year — for real this time — the remaining milestone of Ethereum’s current roadmap is the shard chains upgrade that is set to into effect in late 2022/early 2023.

The introduction of shard chains will see Ethereum’s network load spread across 64 new chains in order to enhance its scalability and capacity.

Despite 2022 gearing up to be a bullish year for Ethereum fundamentally, the price of Ether has taken a hefty hit amid the current downturn across stock and crypto markets, dropping 40% over the past 30 days to sit at around $2,437 at the time of writing.