Ethereum 2.0 - What is it and when is it going live?
As you are probably aware, Ethereum will go through its latest update as it transitions into Ethereum 2.0. Ethereum is no stranger to network updates, having gone through multiple iterations already. Before Eth2, it has already gone through the following – Frontier (July 2015), Homestead (March 2016), Metropolis (Byzantium in October 2017 and Constantinople in February 2019), and Instanbul (December 2019).
What will Ethereum 2.0 do?
Ethereum 2 0 is going to bring in a whole host of features into the ETH blockchain. Smart contract expert Joseph Chow describes the difference between ETH1 and ETH2 as the same between a road vs. a highway. ETH 2.0 will greatly improve the scalability, throughput, and security of the whole network without eliminating any data history or transaction records.
The most significant change that ETH 2.0 will be bringing in is the transition from proof of work POW to a proof of stake POS blockchain. Proof of work is a secure yet highly wasteful process that has prevented ETH blockchain applications from scaling up. With POS, ETH2 will be able to turn the entire mining process virtual. Instead of relying on their processor’s strength, proof of stake will depend on the stake that a user locks up in the platform. More the stake, more their “hashing power.”
Along with this change in consensus, ETH 2 0 will be introducing innovations like sharding, zk-rollups, etc. Shard chains, in particular, are an exciting innovation that should scale up Ethereum exponentially. If you want to read more on sharding, then do check out our guide.
Will Ethereum 2.0 be a new coin?
A question that’s on many people’s minds is if Ethereum 2.0 is going to create a new coin or not. After all, many holders still have nightmares of the Ethereum-Ethereum Classic hard fork, forcing them to take note of two new coins. However, this time around, they don’t need to worry about that. There no need to do a token migration, and it doesn’t matter whether your coins are on an exchange or a cold crypto wallet (paper and hardware). However, the whole scenario is going to completely change for stakers. With the advent of POS, stakers will now be able to stake their eth and earn passive income to participate in the overall network activity.
What are the different phases of Ethereum 2.0?
Ethereum 2 0 will be launched using four phases – Phase 0, Phase 1, Phase 1.5, and Phase 2.
- Phase 0: During this stage, Ethereum will be launching the beacon chain and trigger the pos implementation. The beacon chain starts the proof of stake implementation and gets launched when – 524 288 ETH tokens are staked on the deposit contract, and the number of registered validators have crossed 16,384. Each validator must stake 32 ETH into the deposit contract to successfully participate in the system
- Phase 1: During this stage, the main blockchain gets partitioned into 64 shard chains that run parallel to each other. The processing power of the network is channeled across these shard chains simultaneously.
- Phase 1.5: Between phases 1 and 2, the original POW chain gets merged with the beacon chain to create a hybrid consensus system. The original POW chain becomes one of the 64 sharded blockchains.
- Phase 2: Following the POS transition, ETH 2.0 will bring in other features like roll-ups and additional layer-2 fine-tuning.
How will Ethereum 2.0 affect price?
ETH is currently trending in an upward channel formation and is price around $475 at the time of writing. We can expect the smart contract platform to gain momentum and break past the $500 barrier soon. Overall, the ETH 2.0 upgrade should have a positive effect on the price.
The chart above tells us that the exchange inflow has been decreasing significantly. In simple terms, the ether holders are willing to hold on to their tokens instead of transferring them to the exchanges and selling them off. A sudden spike in this metric usually precedes a massive sell-off. Overall this is a positive sign. Plus, the following metric is also extremely positive.
The chart above helps you visualize overall network growth. As you can see, the network is growing in accordance with the hype towards the eth2 launch. This a very positive sign as it shows that the network is growing stronger than ever before. As such, a growing number of new addresses joining will lead to positive price action.
What will Ethereum be worth in 2020?
So, all the signs look positive. What does that say about the 2020 Ethereum price? For that, let’s check out this cool tool from IntoTheBlock called the In/Out of the Money Around Price or IOMAP.
As you can see, the price is sitting on top of a strong support level (~$465). The bulls could use this level to bounce and enter the $500 zone. Following that, a foray into $1,000 is not out of the question.
Ethereum 2.0 is scheduled for a December 1 launch. However, the dedicated deposit contract contains only 20% of the total validator deposits required for a beacon chain trigger. Many industry experts believe that the launch is likely going to be delayed. Ethereum Foundation founder Vitalik Buterin, who has already sent 3,200 ETH to the deposit contract address, stated that – in the worst-case scenario – the minimum Ethereum 2 0 deposit required might be slashed to attract more validators and speed up the overall process. Buterin said:
“In the very unlikely event that eth2 somehow never progresses past phase 0, I would fully support a state-intervention hard fork to add withdrawal support to the deposit contract so stakers can get their funds back.”
While the progress may be slow, this still remains the most significant development in Ethereum history. Remember to keep an eye out on the protocol and do a quick status check on December 1 to see where things stand with the Ethereum blockchain.
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