Although prospects looked uncertain until the final hours, Ethereum 2.0 is now cleared for launch next week after raising 524,288 in ETH worth over US$300 million from over 16,300 participants.
A tweet from blockchain researcher Justin Drake announced that the platform’s genesis block on the Beacon Chain will launch on Dec. 1 at 12:00 UTC (8 p.m. HKT and 7 a.m. EST).
The genesis block is now set 🙂— Justin Ðrake (@drakefjustin) November 24, 2020
genesis time: 2020-12-01 12:00:23 GMT
validator count: 21,063
The Beacon Chain, the first phase of the process, can be thought of as a transition blockchain that will allow for the staking of assets and the first steps of migration.
As of yesterday, the tally sat at 636,512 ETH, equivalent to approximately US$385 million, from just over 16,000 participants — or validators, in blockchain parlance. According to BeaconScan, two accounts were responsible for just over 10% of the deposits, with the bulk coming in during the final four to six hours of the campaign.
Reportedly, DeFi lender Celsius Network provided 25,000 ETH, equivalent to around US$15 million, during the Ethereum 2.0 campaign’s home stretch to make sure it made the mark.
“The 25,000 ETH contributed to the proof-of-stake Ethereum network will generate another source of yield for our community,” Alex Mashinsky, Celsius Network’s CEO and founder, told CoinTelegraph. “Ethereum 2.0 will scale everything 100 times faster than now. The ability to move Ethereum from a proof-of-work to a proof-of-stake network will open a world of new ideas and opportunities that couldn’t be achieved before due to scalability issues.”
As a result of this snowball effect, Ethereum saw a price rally by over 10% between Monday and Tuesday this week, surpassing US$600 for the first time in two years.
Why is Ethereum 2.0 important?
The shift from Ethereum over to Ethereum 2.0 will be a fundamental change in how the mega-popular blockchain platform operates, abandoning proof of work, which validates tokens and thus transactions on the chain via an increasingly difficult algorithm, and instead adopting proof of stake, which uses tokens locked into the network for validation. Your validation power on the network will now be tied directly to the number of tokens in your possession.
The need to move to an alternative for PoW comes from the fact that it’s a computationally intensive process, which limits the number of transactions per second the platform is capable of processing. With the DeFi craze of this past summer, the Ethereum network became extremely congested as it simply couldn’t cope with the massive surge in demand and resulted in high gas fees for usage. Given the computational intensity of PoW blockchains, Ethereum and other PoW blockchains are also known energy hogs, with mining farms having to migrate to areas with cheap (and often, but not always, dirty) electrical power to stay in business.
See related article: Will Ethereum 2.0 be blockchain’s iPhone moment?
That being said, PoS isn’t a perfect solution either. As explained earlier by by Forkast.News: “The wealthy can obviously afford to stake a larger amount of tokens and thus gain more control of the network and earn more fees. However, thanks to the selection methods mentioned above, PoS systems are less susceptible to centralization compared to a PoW blockchain where a few entities control most of the mining power.”
Why did Etherum 2.0 get off to a slow start?
During the early days of the Ethereum 2.0 crowdfunding effort, reception was tepid at best. Polls at the time showed that people didn’t have much interest in the project because of the high investment threshold and the cost of staking.
Do you intend to make a 32 ETH deposit by November 24?— Justin Ðrake (@drakefjustin) November 10, 2020
As discussed in our Current Forkast newsletter this week, if one were to think of the staking as an investment, the terms provided by Ethereum 2.0 aren’t exactly competitive. Effectively, the staking involved is tantamount to a term deposit over two years with a 6% yield. While these terms might seem favorable compared to the interest offered by a traditional bank, the earnings offered by Ethereum 2.0 are minuscule compared to the yields offered by many DeFi platforms, which begin at 50% to 60% for the more conservative projects and top out at 200%.
Then there’s the question of if we even need Ethereum anymore. The market in 2020 and beyond is a remarkably different place than in 2015 when Ethereum was first launched, an era when programmable money — the ability to apply smart contracts onto tokens — didn’t really exist.
Ethereum was revolutionary for its time. But in 2020, there are a plethora of viable alternatives to Ethereum and Ethereum 2.0, from Stellar and Solana to TRON and NEO. Will the so-called “Ethereum killers” succeed some day? Ethereum and ETH 2.0’s competition is growing. Perhaps that’s why the crowd wasn’t overly enthusiastic about Ethereum’s crowdfunding campaign — and why it took the last-minute intervention of whales to save it.