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Ethereum Foundation Rebrands ETH 2.0 to Consensus Layer, Breaking Broken Mental Model to Users

With the evolution of the Ethereum roadmap, ETH 2.0 has emerged as an inaccurate representation, and this has necessitated its rebranding so that a broader audience can comprehend its content.

The Ethereum Foundation explained:

“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.”

The advancement of the Ethereum network calls for more measures beyond protocol development, like a critical shift in terminologies used, according to the Ethereum Foundation.

As a result, Ethereum 1.0 will be renamed as “the execution layer”, whereas Ethereum 2.0 will change to the “consensus layer”. Therefore, Ethereum will be made up of the execution and consensus layers.

Furthermore, rebranding is expected to keep bad actors at bay. Per the announcement:

“Unfortunately, malicious actors have attempted to use the ETH2 misnomer to scam users by telling them to swap their ETH for ‘ETH2’ tokens … we hope this updated terminology will bring clarity to eliminate this scam vector and help make the ecosystem safer.”

With the merge of the two layers slated for Q2 2022, a transition to the proof of stake (PoS) consensus mechanism is expected, deemed more environmentally friendly and cost-effective.

Source: The Ethereum Foundation

The shift is also anticipated to prompt a 1% annual deflation rate, according to research by crypto service provider LuckyHash. The study noted:

“When the quantity of pledge exceeds 100 million, the annual issuance rate will stabilize at 1.71%, that is, the average daily output is about 5600. If by then the upgraded Ethereum can maintain the current burn volume, it can achieve 1% deflation every year.”

Ethereum edged Visa in terms of trading volume in 2021 by hitting $11.6 trillion.

Meanwhile, ETH regained some momentum by up 0.1% in the last 24 hours, hitting $2,385 during intraday trading after plugging to a 6-months low, according to CoinGecko.

Ethereum Adoption Continues to Scale Heights

More participants continue joining the Ethereum bandwagon, given that addresses holding 0.1 to 1 ETH hit record highs.

Market insight provider IntoTheBlock explained:

“Ethereum adoption is not only about big players. The number of addresses holding between 0.1-1 ETH is currently at an at time high (ATH). In the span of 1 year, the number of these addresses increased by 98%, and now they collectively hold 1.78m ETH (increasing by 4.54% in 1 month).”

Source:IntoTheBlock

Therefore, Ethereum adoption isn’t showing signs of slowing down because addresses having 1 to 10 ETH recently attained a new milestone by hitting the 1 million mark.

Booming sectors like decentralized finance (DeFi) and non-fungible tokens (NFTs) are increasing Ethereum’s use cases.

Meanwhile, more investments continue trickling into the recently rebranded ETH 2.0 deposit contract. Crypto analytic firm Glassnode noted:

“The total value in the ETH 2.0 deposit contract just reached an ATH of 9,390,050 ETH.”

Source:Glassnode

Last month, the Ethereum Foundation rebranded ETH 2.0 to the consensus layer to reflect the evolution of the Ethereum roadmap because it had emerged as an inaccurate representation. Furthermore, Ethereum 1.0 was changed to the execution layer.

The consensus layer seeks to transition the Ethereum network from a proof of work (PoW) consensus mechanism to a proof of stake (PoS) framework, deemed more environmentally friendly and cost-effective.

On the other hand, Ethereum needs to break the resistance level at $3,500 for sustained bullish momentum. The second cryptocurrency based on market capitalization has not been able to surge above the psychological price of $4,000 since November 2021 when an ATH of $4,850 was set.

“Ethereum is well-positioned to advance higher as IntoTheBlock’s IOMAP shows a small supply barrier at $3,500. Once $ETH breaks above it, expect fireworks,” according to market analyst Ali Martinez.

Ethereum Validators Hit 300,000, Non-Zero ETH Addresses Reach ATH

The number of validators on the Ethereum network continues gaining steam after hitting the 300,000 mark.

Moreover, staked Ether crossed the 9.5 million level to reach 9,599,919 ETH.

Ethereum 2.0, recently renamed to the consensus layer, intends to transition the network to a proof of stake (PoS) consensus mechanism from the current proof of work (PoW) framework.

Therefore, 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.

The transition is slated for Q2 2022, and the PoS consensus mechanism is expected to make the Ethereum network more environmentally friendly and cost-effective.

Furthermore, this shift is expected to trigger a 1% annual deflation rate, according to research by crypto service provider LuckyHash.

Non-Zero ETH addresses continue to skyrocket

More participants continue joining the ETH ecosystem, given that the number of non-zero addresses is going through the roof. Market insight provider Glassnode explained:

“The number of non-zero addresses just reached an ATH of 75,960,332.”

Source: Glassnode

Meanwhile, burnt Ether edges closer to the 2 million mark. 1,922,687 ETH has already been burned, according to crypto insight provider DuneAnalytics.

Launched in August 2021, the London Hardfork or EIP 1559 introduced a feature where Ether would be burnt every time it is used in transactions. This has been causing a supply deficit, which prompts a price increase whenever demand rises.

This upgrade also eliminated the usage of other digital tokens for fee payment in the Ethereum Network. Only Ether would be used, thus restoring the unique relevance of the ETH cryptocurrency. Inflationary tendencies were also eradicated.

MIT Sees Ethereum’s PoS as Game Changing Tech

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 suggestes 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.

Ethereum 2.0 Continues to Gain Steam, Staked ETH Tops 10 Million

The transition to Ethereum 2.0, which was renamed the consensus layer, continues to gain momentum because the amount of staked Ether is nearly 10% of the entire ETH supply.

Crypto research firm Delphi Digital explained:

“Over 10 million of ETH has been staked in the ETH2 deposit contract, 8.56% of the total ETH supply. With the ETH2 merge slated for end-Q2, yields for staking ETH with validators are expected to increase as transaction fees previously earned by miners will now be earned by validators.”

Source: Delphi Digital

The continuous growth of the ETH 2.0 paints an optimistic picture that investors are still confident about the much-anticipated merge.

Established in December 2020, Ethereum 2.0 intends to shift the ecosystem from the current proof of work (PoW) framework to a more cost-effective and environmentally friendly proof of stake (PoS) consensus mechanism.

The number of validators on the Ethereum network has also been increasing, given that it recently hit the 300,000 mark.

With the transition to ETH 2.0 slated for Q2 2022, 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.

The merge is viewed as a game-changer that will boost Ethereum as a deflationary asset, given that the London Hardfork or EIP 1559 upgrade already set the ball rolling.

Ethereum Beats Bitcoin on the Weekly Timeframe amid Increased Optimism

Ethereum breached the psychological price of $3,000, a scenario not seen in weeks.

The second-largest cryptocurrency based on market capitalization was up by 19.24% in the last seven days to hit $3,005 during intraday trading, according to CoinMarketCap.

This is nearly twice Bitcoin’s surge of 10.4% during the same timeframe. Bitcoin was hovering around $42, 385 during intraday trading.

Ethereum is experiencing a notable leg up just days after recording the largest crypto exchange outflow this year.

Market insight provider IntoTheBlock noted that more than 180,000 ETH left centralized exchanges within a single day. The last time such a magnitude was witnessed in October 2021, Ethereum’s price rose by 15% in ten days, Blockchain.News reported.

Cryptocurrencies leaving exchanges signals bullishness because it illustrates a hodling culture, given that coins are transferred to cold storage and digital wallets, reducing selling pressure.

Furthermore, heightened optimism is being witnessed in the ETH market based on the looming Merge expected within months.

The much-anticipated Merge will serve as the biggest software upgrade in the Ethereum ecosystem because it will prompt a transition from the current proof of work (PoW) to a proof of stake (PoS) framework, which is deemed more environmentally friendly and cost-effective.

This upgrade has been gaining momentum ever since the Ethereum 2.0 deposit contract, which was recently renamed the consensus layer, was launched in December 2020.

More investments have been trickling into this contract, given that staked Ethereum recently topped 10 million, representing 10% of the entire ETH supply.

Therefore, the Merge is seen as a game-changer that will heighten Ethereum’s quest of being a deflationary asset. A previous study by LuckyHash noted that a full Ethereum 2.0 upgrade would trigger a 1% annual deflation rate.

Ethereum Merge Might Happen in August as Testing Enters Final Round

Speaking at the Permissionless 2022 Conference in Florida, the U.S., Ethereum Researcher Justin Drake disclosed that the merge of Ethereum (ETH) might happen in August.

Market insight provider Bankless pointed out. He noted:

“Strong desire to make this happen before difficulty bomb in August. Stars are aligned.”

Meanwhile, Ethereum core developer Preston Van Loon shared similar sentiments that testing was in the final stages and said:

“As far as we know, if everything goes to plan, August—it just makes sense. If we don’t have to move, let’s do it as soon as we can.”

The merge, which will transition the current proof-of-work (PoS) consensus mechanism to a proof-of-stake (PoS), has been elusive because it was slated for June.

Previously, Ethereum lead developer Tim Beiko revealed that the shift would not happen in June as planned. He pointed out:

“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.”

The merge is estimated to be the biggest software upgrade in the Ethereum ecosystem because the PoS algorithm will allow the confirmation of blocks in a more energy-efficient way. After all, it requires validators to stake Ether instead of solving a cryptographic puzzle.

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.

The merge is usually regarded as a game-changer that will give the Ethereum network a new face because it is expected to enhance scalability through upgrades like sharding.

Furthermore, it is anticipated to strengthen Ethereum’s quest as a deflationary asset because the second-largest cryptocurrency’s value is speculated to increase based on slashed supply.

Market analyst Lark Davis had previously opined that he expected the merge to trigger a supply growth rate of -2.8% in the Ethereum network. Moreover, a LuckyHash study noted that the shift would prompt a 1% annual deflation rate.

Will Ethereum Merge Trigger a Shift from Selling to Buying Pressure?

The merge of Ethereum (ETH), which is expected to complete the transition from the current proof-of-work (PoS) consensus mechanism to a proof-of-stake (PoS) framework, has been elusive for quite some time.

Nevertheless, a DeFi educator under the pseudonym Korpi believes it will be a game-changer because it will shift the selling pressure experienced in the Ethereum network, given that structural supply will change to structural buying. The educator explained:

“The Merge is a substantial change in supply or demand forces most people underestimate. Multiple Ms of daily sell pressure on ETH will be replaced by buy pressure. Every day we will need new sellers to prevent the price from going up.”

Source: Korpi

The DeFi educator also acknowledged that if the merge happened today, the $10 million of daily selling pressure witnessed in the Ethereum network would be changed to $8 million of buy pressure. Korpi added:

“Let’s confront structural supply and structural demand on a daily basis. PoW: Daily Sell Pressure: $19M Daily, Buy Pressure: $8.5M, Net: $10.5 of SELL PRESSURE every day. PoS: Daily Sell Pressure: $0.3M, Daily Buy Pressure: $8.5M, Net: $8.2M of BUY PRESSURE every day.”

Source: Korpi

Since the merge will bring both chains together, Korpi believes this will trigger a 90% issuance reduction, which will prompt a supply deficit. The educator noted:

“Every day ~13,200 ETH is issued to miners on PoW chain and ~1,590 ETH to stakers on PoS chain. ~14,790 new ETH daily corresponds to a 4.5% annual issuance rate. At the Merge block, both chains ‘merge’ into one, and the PoS era begins.”

Previously, analyses have shown that the merge will trigger a deflation rate in the ETH ecosystem based on slashed supply.

For instance, crypto service provider LuckyHash stated that a proof-of-stake consensus mechanism would prompt a 1% annual deflation rate, Blockchain.News reported.

Similar sentiments were shared by market analyst Lark Davis who opined that the merge would trigger a supply growth rate of -2.8% in the Ethereum network.

With Ethereum researcher Justin Drake recently disclosed that the merge is expected to work in August because testing was in the final stages, it remains to be seen how things shape up in the ETH ecosystem.

Citi Believes The Merge Will Make Ethereum a “Yield-Bearing Asset”

Citigroup Inc. or Citi, an American multinational investment bank, disclosed that the merge would make Ethereum (ETH) a deflationary asset.

As a result, the second-largest cryptocurrency will become a “yield-bearing asset.”

The transition from a proof-of-work (PoW) to a proof-of-stake (PoS) consensus mechanism called the merge is speculated to be the biggest software upgrade in the Ethereum ecosystem.

Citi’s research report pointed out that the merge would slash the overall Ether issuance by 4.2% annually, making it deflationary. Therefore, shifting to a PoS consensus mechanism would enhance Ethereum’s quest to become a store of value.

Crypto service provider LuckyHash had previously shared similar sentiments by noting that the merge would prompt a 1% annual deflation rate, Blockchain.News reported.

Market analyst Lark Davis was of a similar opinion that a PoS framework would trigger a supply growth rate of -2.8% in the Ethereum network.

By becoming a “yield-bearing asset,” Citi stated that Ethereum would experience more cash flows. As a result, prompt more valuation methods that were not available before.

The report noted:

“Because Ethereum will be both yield-bearing and deflationary, it is less likely to be the blockchain with the highest throughput. Given its “enhanced store-of-value properties,” it is more likely to be where a growing amount of total value locked is secured and transacted.”

In the post-merge era, Citi expects ETH to be more environmentally friendly and energy-efficient. Moreover, Ethereum might experience a scalable future through sharding.

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

Meanwhile, a DeFi educator under the pseudonym Korpi opined that the merge would be a game-changer because it would shift the selling pressure experienced in the Ethereum network

Solana CEO Denies Network Outages Caused by On-Chain Voting

Solana is a high-performance blockchain platform that has been gaining traction in the crypto space due to its fast transaction speeds and low fees. However, in recent weeks, the network has experienced several outages, causing frustration among users and sparking speculation about the cause of the issues.

One theory that gained traction on social media is that Solana’s on-chain voting system is causing the network to become clogged, leading to the outages. According to this theory, the high volume of validator messages and on-chain votes are overwhelming the consensus layer of the network, leading to delays and network downtime.

Anatoly Yakovenko, the founder and CEO of Solana Labs, has denied these claims, calling them “pure ignorance.” He explained that the on-chain voting system is a key part of Solana’s security and efficiency, allowing for high throughput and low fees while maintaining an exceptional level of security.

However, while Yakovenko denied the theory that the on-chain voting system is causing the outages, he did not provide a clear explanation for what is causing the issues. Commentators have pointed out that there is likely no singular cause of the network outages and that proof-of-stake systems like Solana require a lot of network communication to achieve validation.

Despite the lack of a clear explanation for the outages, Solana’s community appears to be growing impatient with the network’s performance issues. Some users have expressed concern that the frequent outages could damage the platform’s reputation and hinder its adoption.

Solana’s team has acknowledged the recent network issues and stated that they are working to improve the platform’s reliability. The Solana Foundation confirmed that the root cause of the recent 20-hour network outage is still not clear, but they are investigating the issue and taking steps to prevent similar incidents in the future.

In conclusion, while the cause of the recent network outages on Solana remains unclear, it is clear that the platform’s team is taking the issue seriously and working to address it. The debate around the role of on-chain voting in Solana’s performance highlights the challenges of building a high-performance blockchain platform that can scale to meet the needs of a growing user base. As the crypto space continues to evolve, it will be interesting to see how Solana and other blockchain projects tackle these challenges and continue to innovate.