This week, there was a major Ethereum update called London. Its integration was successful, as the principle of the formation of commissions changed in the network, and the ETH itself began to be burned.
The event was commented on by the creator of the project, Vitalik Buterin. In a recent interview, he stated that he is “confident” in the next phase of network upgrades – the merger of the current Ethereum network with the Ethereum 2.0 Beacon Chain. This will be the final step towards the cryptocurrency’s transition to the Proof-of-Stake algorithm. Let’s talk about the situation in more detail.
The successful update of the Ethereum network had a good impact on the rate of the native cryptocurrency.
On Saturday morning, ETH surpassed the $ 3,000 mark. It is important to note that there have been no such courses since May 19, 2021, when the cryptocurrency market plummeted.
Hourly broadcast schedule
This means that we can conclude that the asset has already reached its bottom, has gone through the stage of accumulation by investors and is ready to gain momentum.
Ether lags behind its historical rate by 30.7 percent, which means that the cryptocurrency has room for growth even at the scale of the previous maximum price.
Lagging of the ether rate from its maximum
Here is the corresponding figure for bitcoin.
Lagging bitcoin rate from its maximum
What will happen to Ethereum next
According to Vitalik, the successful integration of London is «proof that the Ethereum ecosystem can go through significant changes. » At the same time, the update itself «gave confidence» to Buterin in a successful merger for Ethereum 2.0.
Recall that one of the key components of London was the EIP-1559 upgrade, which introduced a new mechanism for generating commissions for ETH transactions and the gradual burning of coins in each block. According to the ultrasound.money service, more than 8 thousand ETH have already been destroyed by now.
Volume of ETH burned
In the meantime, almost nine months have passed since the launch of Ethereum 2.0 Beacon Chain. This is the debut phase of the Proof-of-Stake transition process, allowing users to participate in staking. For the role of a validator in the future Ethereum network, 32 ETH must be invested in the contract .
We have updated the latest data: now the total number of coins in this contract has already reached 6.7 million ETH or $ 20 billion .
Growth in the amount of ETH in the Beacon Chain smart contract
At the same time, the profitability of staking with such an indicator of coins in the protocol is 6 percent.
Ethereum 2.0 staking profitability
And although this figure may seem insignificant, in most banks in the world, deposits do not bring even such figures of profitability. Accordingly, as the decentralized finance industry becomes more popular, earning cryptocurrency in this way can become significantly more popular. Especially considering that the reward is obtained precisely in coins that can grow in value in dollar terms.
The next challenge for the Ethereum development team is to successfully merge the Beacon Chain with the project’s current blockchain. They then have to release the sharding mechanism needed to improve the scalability of the cryptocurrency in release, Decrypt reports. In fact, we are talking about dividing the blockchain into several separate chains that will work simultaneously and, as it were, distribute the load between each other. At first, the number of so-called shards will be 64, that is, the performance of the blockchain will increase by the same amount.
We believe that in case of further success, the price of ETH will experience an explosive growth – just one combustion mechanism, presented in EIP-1559, is enough for a gradual increase in demand for altcoin, taking into account the reduction in its supply. And even if the asset does not become deflationary in every block, that is, the number of new ETH exceeds the amount of cryptocurrency burned, the rate of ether release has already dropped significantly. And this adds value to the asset in the eyes of investors.
Therefore, here one can only agree with Vitalik Buterin. Although now the developers have to work on the bandwidth of the blockchain and teach it to cope with thousands of transactions per second instead of the current 15. Recall that this will be possible after the transition to PoS.
