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Ethereum Devs Launch Spadina Testnet, What Needs to be Perfected for ETH 2.0?

Just when the Ethereum community thought that Medalla was going to be the last testnet before Ethereum 2.0 mainnet’s official release, developers have unveiled yet another.

Ethereum developers have once again launched another testnet, bringing them one step closer to replacing the current Ethereum public mainnet with a new blockchain that will operate based on a Proof-of-Stake (PoS) protocol.

Spadina, a rehearsal launch for Ethereum 2.0

Spadina, the newest addition to the string of testnets developers have unveiled in preparation for Ethereum 2.0’s Phase 0, is said to be a short “dress rehearsal” for validators before the mainnet launch. Released on September 29, Spadina testnet will only be active for 72 hours, and the network will operate in parallel with Medalla, the multi-client testnet that Ethereum launched at the beginning of August.

The main focus for developers and Ether stakers on Spadina is to practice their deposit and genesis chops before Ethereum 2.0. Speaking on behalf of the Ethereum ecosystem, mainnet lead researcher Danny Ryan said:

“The main objective is to give us all another chance to go through one of the more difficult and risky parts of the process – deposits and genesis – before we reach mainnet. If all goes well, it should give us greater peace of mind before we jump into the real deal later this year.”

Just like Medalla testnet, the main problem that occurred with Spadina’s launch was that there were lower participation rates than expected. The first round of validators was reported to be below 35%, with the target for participation levels set at 80%.

However, developers have affirmed that this was nothing to worry about, as the low participation levels are maybe due to the fact that no real Ether is “at stake,” since Medalla and Spadina are a chance for validators and for the community to practice staking in anticipation of the future chain.

Despite the slight drawback, it has been announced that Ethereum developers were quite happy with the outcome of Spadina’s launch, as blocks were handled successfully by the clients in the deposit process. According to Ryan, Spadina testnet’s launch was “90% successful.”

When Ethereum 2.0 mainnet launches, the issue of offline stakers will likely not be a problem anymore, as real ETH will be running on the chain.

Ethereum 2.0 mainnet

Ethereum 2.0 will be launched in three phases so that during each stage, different aspects could be focused on to achieve a highly scalable and healthy blockchain.

The future mainnet will be an upgrade and a replacement of the current Ethereum blockchain, as developers are actively working on making the necessary adjustments to transition from a Proof-of-Work (PoW) protocol to a Proof-of-Stake (PoS) blockchain.

Although an official launch date has not been set, Phase 0 of Ethereum 2.0 is predicted to be in effect before the end of 2020, as disclosed by one of the top client teams staking on Ethereum testnet.

Recently, with most decentralized finance(DeFi) protocols running on its chain, Ethereum’s transaction fees reached new highs, with gas prices hitting 700 gwei. On average, gwei prices are supposed to be around 416. The issue of scalability will need to be addressed and upgraded with ETH 2.0, which is said to increase transaction processing on Ethereum from 15 transactions per second to approximately 100,000 transactions per second.

Will DeFi Migrate to New Blockchain Platforms with the Surge in Ethereum Gas Prices?

With the rise in decentralized finance (DeFi) being one of the biggest hits of the blockchain industry in 2020, experts have questioned whether Ethereum, the underlying infrastructure for most DeFi protocols, could sustain the sheer volume of transactions in the long run.

DeFi hype escalates, gwei soars

The decentralized finance (DeFi) sector has undoubtedly revolutionized the crypto and blockchain industry this year, with over $10 billion in total value locked in its smart contract applications.

Currently, most decentralized finance apps (dApps) run on the Ethereum blockchain. However, as the amount of crypto assets pouring into DeFi has increased, developers and industry experts have questioned whether the Ethereum blockchain could sustain the growing amount of transactions over the long run, as fees have surged.

Over the recent months, Ethereum (ETH) gas prices have soared considerably as more and more projects have onboarded the DeFi bandwagon. Gas prices have even been reported to hit highs of 700 gwei, with the largest DeFi protocol on the market, Uniswap, causing major network congestion when its governance token UNI was distributed to DeFi users following its launch. On average, Ethereum gas prices are usually around 416 gwei.

The number of new users taking to the Ethereum network seems to also have increased with DeFi’s boom, as the number of wallet addresses holding Ether (ETH) recorded a new all-time high recently, at 10,116,076.

In addition, the current number of DeFi projects has more than doubled over the summer, according to data from DeFi Pulse. Whereas the industry used to only have 20 projects, new DeFi protocols have appeared, with the leading projects being Uniswap, Maker, and Aave.

Can Ethereum sustain the DeFi boom?

With the surge in activity on the blockchain, Ethereum co-founder Vitalik Buterin and other industry experts have questioned whether the Ethereum blockchain infrastructure was scalable enough to sustain the DeFi boom in the long run.

Vitalik Buterin had previously addressed the issue of scalability and criticized the yield farming strategy employed by DeFi enthusiasts, saying it was a short-term thing. With Ethereum 2.0 mainnet in the works, Buterin hopes that the issue of scalability will be solved on the chain, through sharding.

The Ethereum co-founder has also broached the issue of high fees on the network and said that it may be gone sooner than expected, hypothetically before ETH 2.0 launch.

Others want in on DeFi

Despite Ethereum 2.0 being in the works to deliver an even more decentralized, secure, and scalable blockchain solution than the current mainnet, DeFi developers have already been scrambling to look for other platforms to host their dApps.

A potential contender is Radix, a first-layer platform that is specifically designed for DeFi applications. Through their consensus model Cerberus, the platform targets the “blockchain trilemma” brought up by Buterin and other blockchain experts to deliver decentralization, security, and scalability solutions for a seamless user experience. The consensus project leveraging a sharding and consensus model is also about to launch its own ERC-20 token.

However, Ethereum has been a high performer this year, with ETH hash rates hitting a new all-time high and surpassing 250 TH/s for the first time in over two years this week.

It also remains dominant on the market, outperforming Bitcoin in terms of gains. Currently, it is trading at $340.04 on the market, as of press time.

Competing with Ethereum

Whether DeFi protocols will run on other networks seem to be inevitable, especially if the issue of high transaction fees and scalability is not addressed and solved by Ethereum. Also, with other projects looking to capitalize on the DeFi boom and profit from it, the adoption of DeFi projects on other competing chains seem to be inevitable. However, gaining the same monopoly as Ethereum will prove to be an ambitious task.

Ethereum Dominates DeFi with 96% of Transactions, Buterin Discusses ETH Gas Fees

Ethereum has set the tone for the decentralized finance (DeFi) boom this year, and according to DeFi analytics, it seems to have dominated particularly during the third quarter of 2020.

Ethereum’s solid performance in Q3 due to DeFi

According to DeFi data analytics DappRadar, most decentralized finance applications and projects operate off the Ethereum network, with ETH’s total value locked surpassing $10 billion at the time of writing. The top DeFi projects are attributed to Uniswap protocol, MakerDAO, Curve, Wrapped Bitcoin (WBTC), and Aave.

Analysts have also observed that 96% of DeFi’s total transactions were carried out on the Ethereum network in the third quarter (Q3) of this year. Uniswap (UNI), MakerDAO (DAI), and Curve were responsible for most of the transaction volume. With Uniswap’s growing popularity, the amount of transactions also spiked momentarily when UNI governance token was first introduced and made freely available for claim for anyone who had ever used the platform.

The DeFi craze has sent Ethereum transaction fees through the roof, hitting an all-time high last month. In Q3, the total amount of miner fees soared from $100,000 to $900,000 in less than an hour. Data from crypto analytics firm Glassnode showed that Ethereum (ETH) miners saw an increase in their revenue, as a response to high gas fees (gwei) on the blockchain network.

Ethereum network fees spike

ETH miners made as much as $166 million from transaction fees in September, surpassing Bitcoin miner revenue, which seems to have decreased in comparison. This suggests that it is way more profitable to mine Ether than Bitcoin.

With the growing amount of crypto assets pouring into DeFi, and industry experts have repeatedly questioned whether the Ethereum blockchain could sustain the growing amount of transactions in the long run.

Co-founder of Ethereum Vitalik Buterin had previously assured that his team of developers was actively working on decreasing ETH gas fees. Taking to his Twitter, he provided an update and said that rollups, a layer 2 cryptographic technique designed to improve scalability on the chain, was currently in the works by devs to increase Ethereum’s performance and decrease network fees. Referencing an example of “healthy transaction activity”, he said:

“When gas prices get back to the troposphere, great things happen. Let’s hope we get rollups out soon so every day can be like this (actually probably even >10x cheaper).”

As transaction fees are going up, other smart contract platforms, such as Binance Smart Chain Radix, among others, on DeFi’s current boom and take on Ethereum as a competitor.

In tandem with the DeFi boom, Ether’s price rallied on the market over the weekend. At the time of writing, it is trading at roughly $375 on CoinGecko and is up by 6.4% in the last week.

Ethereum Transaction Fees Record Lowest Price Since Beginning of DeFi Boom

Ethereum transaction fees recorded its lowest price since July when the decentralized finance (DeFi) boom began. Subsequently, market analysts are speculating on whether the DeFi craze is slowly coming to an end.

Low ETH Gas fees – is DeFi boom ending?

Data from cryptocurrency statistics firm BitInfoCharts indicated that Ethereum gas prices were recorded as low as $0,905. It then surged slightly to $1.029, but the transaction fees were nowhere near the hefty $16 single Ethereum transaction fee observed in early September.

Over the summer, Ethereum transaction fees, recorded in gwei, shot through the roof as DeFi boomed and miners strained to sustain the weight of DeFi protocols running on Ethereum blockchain. However, with Ethereum’s network recently recording lower fees, analysts have pondered the question of whether the decentralized finance craze is slowly coming to a halt.

Fees allocated to Ethereum transactions are awarded to Ethereum miners, who employ computational power to mine and finalize transaction blocks. The reward reaped by Ethereum miners through transaction fees has been reported to surpass that of Bitcoin miners this year, hitting $166 million in revenue.

A recent report released by eToro crypto asset trading platform suggested that the DeFi boom was “real”, and that it was here to stay. It commended the DeFi boom along with altcoin rallies and yield farming as being “the commanding narratives of Q3.” At the time of writing, the DeFi industry currently holds $11.17 billion in total value locked, as per data from DeFiPulse.

Ethereum 2.0’s first phase is coming

With Ethereum having the best run this year, one of its developers for Ethereum 2.0 mainnet, Ben Edgington has hinted that Ethereum 2.0’s first phase – Phase 0 – was only 6-8 weeks away from its official launch. Ethereum 2.0 mainnet is said to operate on a full Proof-of-Stake protocol, as opposed to Proof-of-Work.

Ethereum’s Phase 0 will feature a beacon chain, which is the first building block for the mainnet. On the new Proof-of-Stake blockchain, co-founder of Ethereum Vitalik Buterin also hopes to decrease Ethereum transaction fees with layer 2 solutions and sharding. In that manner, if transaction fees were to be lower on Ethereum, it may also serve to onboard the unbanked.