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Ethereum's Switch to Proof-of-Stake Will be 'Substantial' to the Industry, Binance Research Suggests

Binance’s latest research report published on Oct. 28 stated that Ethereum’s upcoming switch to Proof-of-Stake (PoS) from Proof-of-Work (PoW) is expected to take a ‘most substantial’ portion of the crypto market’s attention.

Governance and rewards

PoS blockchains allow network participants to earn rewards by staking cryptoassets on-chain. Compared to block rewards being awarded to miners in proportion to their hashpower in PoW blockchains, rewards in PoS are distributed in proportion to users who stake their cryptoassets on the network.

Participants involved in staking are incentivized to vote for decisions and enhance governance calls for the chain and the ecosystem. This will encourage participants to engage in online discussions, forums, and communicate with other nodes to develop better standards and best practices.

Although there are physical hardware costs for PoS systems, the costs go nowhere nearly as high as those involved in PoW blockchains.

Risks

Staking rewards are usually denominated in a non-fiat pegged cryptocurrency, which means that it could carry potential volatility risks.

There are also required exposure to governance, where users outside of the large holdings circle may face some risk of being exposed to the whims of larger staking participants. This is due to the fact that large token holders can exert a ‘proportionate amount of power’ in the decision making of the ecosystem.

Users are also encouraged to check if the chain requires un-bonding period and other loss of liquidity towards the count of a balance being staked to avoid risks.

Custody may also be a burden in the case of lost private keys as some staking mechanisms require funds to be directly held on the wallets of nodes participating in staking.

Ethereum 2.0 and Instanbul upgrade

Vitalik Buterin mentioned in a recent conference that there are a few teams already looking into implementing Phase One of Ethereum 2.0, in parallel with all the work involved in Phase Zero to production quality.

After the Istanbul network upgrade, which is expected to happen on the testnet this month and on the mainnet a month from now, Buterin suggested that we can expect to see about 4000 transactions per second in the absolute best case.

The best-case scenario describes where people are just making payments, and everyone is running on a rollup, even in realistic cases, it can reach over 1000 transactions per second.

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Microsoft Patents Cutting Edge Human-Powered Crypto Mining System

Microsoft has filed for a patent for a new cryptocurrency mining system that will purportedly leverage the data collected from people via sensors, as they interact with advertising or exercise, instead of using equipment that requires massive amounts of power.

The technology giant filed the patent with the World Intellectual Property Organization (WIPO) on March 26. The new system proposes using sensors to detect and calculate the amount of energy and time spent on a pre-determined activity, like engaging with an advertisement, and convert that sum into data that can be used by computers to solve computational problems and create new blocks.Microsoft’s new proposed system will maintain a blockchain and its token using the same premise as a traditional proof-of-work (PoW) network without the physical miners and without the heavy computational power expense of their equipment, substituting it with the data gathered and converted from the unconscious activity of people, like Bitcoin Revolution.

Source: W02020060606 – Cryptocurrency System Using Body Activity Data

As outlined above, the system will monitor a person’s physical actions and energy spent via sensors to mine cryptocurrencies. When the sensors detect that the monitored body is exerting themselves physically, it converts the data recorded on the subject and converts them to power to unlock blocks. The system is also purported to monitor mental exertion, mind power used when a person is reading or writing, and convert this into data respectively.

According to the patent application, “Instead of massive computation work required by some conventional cryptocurrency systems, data generated based on the body activity of the user can be a proof-of-work, and therefore, a user can solve the computationally difficult problem unconsciously.”This patent was also published in the United States as US20200097951.

EY, Microsoft and ConsenSys Create a Platform For Enterprises on Ethereum Mainnet

Microsoft continues to make waves in the world of blockchain and has been one of the driving forces behind EY’s open-source Baseline protocol which aims to address privacy issues and encourage enterprise adoption of public Ethereum.

Baseline was created by EY in collaboration with the technology giant Microsoft, as well as ConsenSys, and is specifically designed for enterprises to build applications on top of the Ethereum public blockchain.

According to the announcement on March 4, the Baseline Protocols’ aim is to empower enterprises to adopt the public Ethereum blockchain for complex and confidential processes, without storing sensitive data on-chain.

John Wolpert of ConsenSys and Hyperledger Fabric explained, “This is not a platform. It’s not a product. It’s not a coin, a token. It is a way of using the main net (public Ethereum) that will be acceptable, we think, to very conservative corporate CSOs (chief security officers), CIO, CTOs, where they can finally say, yep, it’s okay to use the main net in this way.”

Tezos Looks Set to Beat Bitcoin In 2020

So far, Bitcoin has outperformed all other major assets this year, and it is one of the best crypto performers in 2020. Although Bitcoin’s price plummeted in March amid a broader coronavirus-induced market sell-off, it is so far up around 30% this year.

But one lesser-known cryptocurrency has nearly doubled since January, with expecting it to rise even higher. Since the beginning of the year, Tezos (XTZ) has risen by 85%, adding to gain made during the previous year and giving the cryptocurrency market capitalization of nearly $1.8 billion.

By market capitalization, Tezos was the 15th most valuable cryptocurrency at the start of the year. However, now the cryptocurrency has broken into the top ten and could move quickly past some rival cryptocurrencies if its run continues.

Tezos has indicated strong gains in 2020 with the current price of $2.68 almost double the price coming into this year.

Tezos is a preferred way for holders to profit

Tezos (XTZ) is one of the most prominent and largest among a fast-growing list of digital currencies recognized as “staking tokens.” Tezos is the most among crypto assets with a market value of at least $1 billion. That is more than double the 37% gain for Bitcoin (BTC), the largest cryptocurrency by market value.

Tezos styles itself as a self-amending cryptographic ledger and utilizes the so-called “proof-of-stake” consensus model. The crypto has emerged as a favorite cryptocurrency and blockchain for tokenized security and real estate tokens.

But Tezos cannot be mined like Bitcoin because it uses proof-of-stake rather than Bitcoin’s proof-of-work.

Proof-of-stake blockchains are normally considered to be less resource-intensive and more scalable as they do not expect miners to solve complicated mathematical problems so that to create the next bloc.

Proof-of-stake blockchains also incentivize token holder participation in network security. If Tezos holders store their funds in certain wallets, then they can stake their XTZ and get additional tokens as a reward for verifying and creating new blocks in the chain.

Joseph Todaro, managing partner at Blocktown Capital, an investment company specializing in digital currencies, said that the strong performance of Tezos is partly because of increased interest in staking-based returns.

Some crypto exchanges provide staking as a service to make it easier for investors to participate. Recently, Tezos has benefited from new listings on the exchanges like Coinbase, Binance, and Bitfinex.

The Tezos rally started in November last year and has been pushed on by key partnerships with financial institutions and the so-called Tezos Foundation, which awards users up to 0.01 XTZ every 12 hours.

Ethereum, which is the second-largest cryptocurrency after bitcoin, intends to upgrade to a staking model in July. Some analysts state that ether has created additional interest among speculators because of the transition to staking.

Latin America’s largest investment bank boosts Tezos with 1 billion STO

Tezos has been one of the best performing crypto assets of this year. The blockchain of Tezos run by the Tezos Foundation has made important achievements in recent years in terms of joining forces with platforms, groups, and banks to further develop Tezos’ potential.

Several partners use Tezos as a part of the solutions applied to everyday life. June last year, BTG Pactual, Latin America’s largest investment bank announced that it plans to use the Tezos blockchain for security token offering potentially worth $1 billion.

BTG Pactual bank partnered with the leading Dubai-based asset management company Dalma Capital to issue $1 billion of real estate securities on the Tezos network. It is, therefore, clear that the Tezos Foundation remains committed to consolidating vital strategic cooperation with the aim of developing real use cases for Tezos (XTZ).

Bitcoin Transaction Fees Soar After Block Reward Halving

Average transaction fees on Bitcoin (BTC) have risen significantly since the halving. On 12th May 2020, the average Bitcoin transaction fee reached USD 2.79, the highest in ten months, and jumped further to USD 5.16 on 14th May. The average transaction cost risen 168% over the past four days alone. This is a phenomenon that has not been witnessed since June 2019.

Since the turn of the year, Bitcoin transaction fees have been on the rise and especially soared ahead of the halving.

The Bitcoin fees surge being posted in news headlines is a sign that the Bitcoin network reached its imposed limits that governs how well it can serve its community.

High Bitcoin Transaction Fees for Consumers

Bitcoin’s average transaction fees increased an astonishing 1,742% since January 1. But the majority of that increase begun on April 28, two weeks before Bitcoin’s halving event.

Normally, transaction fees rise when the Bitcoin network experiences a period of high usage. Transactions compete for limited space in Bitcoin’s blocks. As users are competing to have their transactions included in the next block, this causes a race to the top in transaction fees.

An average transaction fee of $5.16 on May 14 was not intentional by design. But it is because of an overcrowded member pool, whereby all the valid transactions wait to be confirmed by the Bitcoin network. If the member pool keeps being overcrowded, then the fees will keep rising because people mainly want priority over others to be confirmed.

Over the last two weeks, 80MB worth of Bitcoin transactions were recorded on the network. Although the number has managed to go down, it has not managed to remain down. The constant flux with the member pool size shows that Bitcoin has had few opportunities to rest in the past 30 days.

The block reward halving event seems to be responsible for Bitcoin’s sudden influx of activity in the previous few weeks. The backlog of transactions has continued to pile up. The rise in average transaction fees forces Bitcoin users to choose between sending transfers that are fast, but expensive, or cheap, but slow.

Post-Halving Prediction

Bitcoin is back in the headlines as it draws huge attention of millions of consumers, speculators, and investors across the world. It has seen enormous gains since its inception more than a decade ago, although there also has been much volatility along the way. Last week, Bitcoin completed its third halving event. Since the halving, Bitcoin has been on the rise and is currently just under the $10,000 mark.

Over the last week, the cryptocurrency has appreciated more than 10%, rising from $8,600 to trade around $9,500. So far, the post-halving result has contrasted with the general market expectation of a price decline. Traders, investors, and consumers hold a positive long-term outlook of post Bitcoin halving. Of course, fear of missing out has led new investors and consumers to jump onto the crypto bandwagon, thus builds further momentum. This is a likely explanation for the rise in Bitcoin transaction fees.

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Ethereum Founder Vitalik Buterin Says Layer 2 Scaling Solution Has ‘Basically’ Succeeded

Ethereum has been seeing an upward trend, and demand may increase further in anticipation of the upcoming ETH 2.0 update expected in Q3 2020.

Ethereum is scheduled to undergo a major change of its consensus mechanism, transitioning from proof-of-work (PoW) to proof-of-stake (PoS).

Ethereum has been expecting its scaling to occur for some time, and according to Ethereum’s creator, Vitalik Buterin, it could already be happening.

Vitalik Buterin recently tweeted that the Ethereum blockchain network’s “layer 2 strategy has basically succeeded.”

Previously, Buterin identified blockchain scalability has a difficulty for typical blockchain designs because it requires every node in the network to process every transaction, limiting the transaction processing capacity of the entire system.

To solve the scalability issue, the Ethereum creator identified strategies for scaling, including sharding, also known as the “layer 2 protocols,” which allows transactions to go through without every node processing the whole transaction.

Token transfers will continue moving to layer 2 solutions due to the fact that these transactions take up a large chunk of the network activity, according to Buterin.

Scalability: Shard Chain Simplification

Dubbed as “HackMD,” Buterin proposed the ETH2 shard chain simplification in early October 2019. In this proposal, a persistent shard chain will be abandoned, and it is replaced by every shard block which is a direct crosslink.

The number of shards is reduced from 1024 to 64 and the maximum number of shards per slot increased from 16 to 64. The “optimal workflow” is revised that there is a crosslink published for every shard during every beacon chain block. Other simplifications include less shard chain logic required, simplification of EEs, and decentralized exchanges no longer needed to facilitate paying transaction fees across shards.

The simplification proposal does come with limitations. There will be more beacon chain overhead with the attestation aggregation having an overhead of 307,200 bytes per slot in each shard. As there are more pairing from a maximum of 128 to 192 per block, the block processing time will increase by around 200ms.

Cardano’s Shelley upgrade is also expected soon, for June 30. While speculation around the upcoming hard forks, ETH and ADA prices are expected to rise, as people who want to earn staking rewards will push buying pressure.

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Ethereum's Vitalik Buterin Concerned About Security Risks That Come With High ETH Transaction Fees

By now, it is no secret that Ethereum co-founder Vitalik Buterin and his team are busy perfecting Ethereum 2.0 and preparing it for its official launch.

Ethereum 2.0

One of the key elements of the blockchain ecosystem is that it runs on a Proof-of-Stake (PoS) consensus algorithm, as opposed to the conventional Proof-of-Work (PoW). This enables Ethereum blockchain users to reach distributed consensus when mining a block, and for bullish crypto investors to determine the next block.

Digital asset owners can also lock up their accumulated digital coins and get paid for helping the blockchain.

Will An Upgrade Make Ethereum Faster, Bigger, Stronger?

However, Buterin came forward and while he proudly announced that the data capacity of the developing blockchain will be huge, the Ethereum creator admitted that the higher transaction fee on the blockchain-network may cause unintentionally trigger security risks. Buterin, who can boast that he has co-founded the second largest blockchain network in the world, behind Bitcoin, came forward in a tweet and mentioned a research paper provided by highly reputed Ivy League university, Princeton U. Buterin wrote:

“Transaction fee revenue is now nearing half as high as block reward revenue. This actually risks making Ethereum *less* secure because of https://cs.princeton.edu/~arvindn/publications/mining_CCS.pdf. Fee market reform (ie. EIP 1559) fixes this; another reason why that EIP is important.”

In other words, though it may not be a security issue at this point in time, the higher fees that Ethereum 2.0 will run may potentially cause a security problem long term and be threatening for the blockchain network. The analysis conducted by Princeton university addressed this issue and voiced that selfish mining may pose a real threat, especially in cases where transaction fees surpass the block rewards.

The research paper goes on to name several malicious mining behaviors, that are deviant and may negatively impact Ethereum blockchain.

Introducing EIP 1559

The fee market reform that Buterin referred to in his tweet is none other than the “Ethereum Improvement Proposal (EIP) 1559”, which was first introduced in April 2019. The whitepaper proposes upgrades that would make transaction fees on Ethereum more predictable. This would enable the blockchain network to be more flexible, by dynamically alternating the block size based on the number of transactions that are queued and waiting for validation.

Furthermore, to prevent congestion from happening in the ecosystem, the whitepaper proposed charging users during times of high demand. Buterin publicly voiced his approval and support of EIP 1559 fee market reform.

Slow and Steady Wins the Race: Ethereum Surpasses Bitcoin

The market capitalization of Ethereum currently stands at approximately $26 billion dollars. The astonishing thing about this is that the given value does not even include all of the crypto assets founded atop the Ethereum blockchain ecosystems, such as the stablecoins – Tether and USDC – and altcoins.

Also, data from digital-asset data firm Messari showed that Ethereum had now surpassed Bitcoin as the network that settles the most value per day. Ethereum blockchain daily settlement value is estimated to be about $2.5 billion, which makes it the first time since early 2019 that the blockchain has outranked its rival Bitcoin.

Finality: A Necessary Condition for Blockchain Applications in Finance

Settlement finality is critical in the world of traditional finance. The same applies to decentralized finance built on distributed ledger technologies (DLT). DLTs or blockchains are an innovative assembly of existing technology concepts, for example timestamping, chaining of data blocks (initially invented by IBM in 1976) as well as consensus algorithms.

The Proof of Work (PoW) consensus algorithm used by the Bitcoin blockchain is an insightful example of mechanism design to incentivize actors to behave well in the absence of regulation. But not all consensus algorithms are created equal. And this has implications on their usefulness in financial applications.

In this short article on finality, we discuss how the choice of a blockchain and its consensus algorithm is a critical decision when building financial services. What we present is relevant for applications in payments but also in the field of tokenization and financial markets, where transaction settlement constitutes an essential part of the value transfer process. But before we dive deeper into the topic, let us revisit the different types of consensus algorithms.

Probabilistic consensus algorithms

In the world of blockchain, consensus algorithms are in place to establish agreement amongst computer nodes. They, therefore, are an elegant solution to the famous “double-spending problem”. One cannot copy a coin to spend it more than once. This feature of blockchains is particularly crucial in the case of public blockchains where actors are unknown and legal enforceability may not be easy.

In the case of probabilistic consensus algorithms such as Proof of Work (PoW), sometimes nodes on a blockchain network propose diverging versions of the “truth” and create secondary chains. This means that when re-running the protocol with the same participants, one does not always get the same result. The longest chain that had the most significant computing effort associated with it is considered the correct one. During this period, a 51% attack could be conducted to superimpose alternate transactions. There is a window of time where it is not clear which chain is the longest and which transactions are part of the longest chain. And herein, the challenge lies. We can only be sure about the finality of our transaction when it is clear which chain is the longest. That is usually the case only when multiple blocks have been added to it. In the case of Bitcoin, six confirmations (or six new blocks) are required. The probability of transaction reversal decreases with each addition of a new block. At a block per 10 minutes, there is uncertainty about the finality of a transaction for ca. 60 minutes.

How about Proof of Stake?

A word about the famous Proof of Stake (PoS) algorithm: It achieves probabilistic finality through economic incentive design. Block producers are randomly chosen to enter a pool (for example, due to their wealth in tokens or how long they have had them or a combination of the two). Then they get selected to forge new blocks – their wealth being at stake. Block producers have an incentive to validate legitimate transactions only. If they do otherwise, they face the risk of “slashing”, or losing all or part of their wealth. If and when there are enough block producers on a network, the randomness of their selection counteracts possible adversary attacks.

Deterministic consensus algorithms

Deterministic consensus algorithms function differently. Blockchains based on such algorithms have a leader propose a new block of transactions. Once a certain percentage of validators approve the block, it is added to the blockchain and immediately final. An example of a deterministic consensus protocol is the Practical byzantine fault tolerance (pBFT) algorithms such as Tendermint. Blockchains based on this type of consensus mechanism can usually tolerate up to one-third of malicious nodes and still function adequately.

Finality in finance

Why is instant finality so crucial in the world of financial services? The short answer is that it is all about risk. “Finality of settlement ensures that transactions …will, at some point, be complete and not subject to reversal even if the parties to the transaction go bankrupt or fail” (DUSK Network 2019). Creating financial services platforms that cannot guarantee finality increases the systemic risk for all participants. Hence, traditional market standards and legal frameworks require settlement finality by so-called financial market infrastructure providers (FMIs).

A 2012 reference issued by the Bank of International Settlements (BIS) includes principle eight “An FMI should provide clear and certain final settlement … final settlement intraday or in real-time.”. The Depository Trust & Clearing Corporation (DTCC) emphasizes the importance of finality in a recent whitepaper: Transactions executed on platforms where finality is challenging to establish, are “susceptible to being unwound in connection with, among other things, the bankruptcy or insolvency of a counterparty”. Such risk is probably even more noteworthy in the anonymous/pseudonymous world of blockchains than it is in traditional finance where actors are known.

In a recently published draft law for digital securities in Germany states that “blockchain or DLT systems can only be used for maintaining a crypto securities register if they sufficiently ensure the finality of transactions by means of suitable technical measures”. It is not possible to know when precisely a transaction is final on a blockchain that uses a probabilistic consensus algorithm. If blockchains are to play a significant role in financial services, we cannot ignore settlement risk. If we could estimate the possible damage caused by probabilistic algorithms AND they, do not supersede the benefits of using such protocols in finance, the picture changes. But this quantification is complicated. Until such research is complete and can be credibly articulated, we advocate the use of blockchains with deterministic consensus algorithms for financial services applications.

Authors:

Daniel Liebau, Founder Lightbulb Capital, Adjunct Faculty at Singapore Management University

Anish Mohammed, Co-Founder R2 Labs, Head of Research at the Institute of Information Systems at SRH Hochschule Berlin Additional

References

https://arxiv.org/pdf/1711.03936.pdf

https://www.preethikasireddy.com/post/lets-take-a-crack-at-understanding-distributed-consensus

Ripple CTO: Why Ripple Ledger's Consensus Algorithm is More Reliable and Energy Efficient than PoW

Ripple CTO David Schwartz just contributed a post entitled “Beyond Proof of Work: the XRPL Consensus Solution”, in which he talks about reasons why Ripple Ledger (XRPL)’s consensus is more reliable and energy-efficient than Proof of Work (PoW) Consensus.

A Consensus is used to solve the double-spend problem. In bitcoin and Ethereum blockchain networks, they use Proof of work consensus. The proof-of-work chain is a probabilistic solution to the Byzantine Generals Problem, which bypasses the complexity of the traditional Byzantine fault tolerance (BFT) solution. As bitcoin founder Satoshi Nakamoto said,

The proof-of-work chain is how all the synchronization, distributed database and global view problems you’ve asked about are solved.

But PoW has drawbacks. Ripple CTO said:

While proof-of-work, with the massive electrical usage and transaction cost inefficiencies the approach entails, has proven to be a technological dead end, other consensus algorithms continue to innovate to provide better decentralization at lower cost and lower risk. Development continues on XRPL’s consensus algorithm to improve resilience. In this regard, the recently introduced “Negative UNL” feature is set to dramatically improve XRPL’s ability to tolerate validator outages while still making reliable forward progress.

Then comes the XRP Ledger (XRPL) Consensus Solution found by Ripple:

As the only enterprise blockchain company today with payment products in commercial use, Ripple has found that the digital asset XRP enables its users to rapidly and inexpensively source liquidity—while also offering greater scalability than any other digital asset.

In David’s view, the XRP Ledge solution is more reliable and energy-efficient than PoW. He further added:

The XRP Ledger (XRPL) has a fundamentally different design from proof-of-work based blockchains like Bitcoin and Ethereum. The consensus validation system XRPL uses follows an anti-robustness principle that elevates reliability. This provides the system with a built-in safety mechanism: when safe forward progress is not clearly possible, XRPL does not make forward progress.

But the XRPL’s consensus has not been peer-reviewed by industry leaders like Blockstream CEO Adam Back, who criticized Ripple XRP is a ridicuoulsly pre-mined scam with corp marketing.

Ripple CEO Says Bitcoin PoW Energy Use Makes Square Target of Biden’s Climate Change Agenda

Ripple CEO Brad Garlinghouse thinks Bitcoin’s massive energy consumption through proof-of-work (PoW) could make public companies like Square, who invested heavily in BTC, potential targets of US election winner Joe Biden’s climate change agenda. Garlinghouse used the opportunity to highlight XRP’s superior energy efficiency.

President-elect Joe Biden is predicted to realign the United States with the global climate change agenda and could put requirements on public companies to disclose green house gas (GHG) emissions. Ripple’s CEO Garlinghouse took to twitter to single out Square and said Jack Dorsey’s payments company should pay attention after their $50 million dollar BTC investment.

On Monday Nov. 10, Ripple CEO Garlinghouse leant his comments to an earlier tweet from NYT politics that highlighted the incoming president’s previously proposed measure on climate change. The tweet outlined Biden’s promise to rejoin the Paris Agreement, which was snubbed by the Trump administration in 2017.

The Ripple CEO tweeted that President-elect Biden will be much tougher on climate change than Trump and require all public companies to disclose their GHG production. Garlinghouse also singled out Jack Dorsey’s Square, saying the payments firm should pay attention to the new guidelines expected from the Biden administration.

The Ripple CEO said:

“Biden to require public companies to disclose climate change-related activities and GHG emissions in their operations. Love to see the action on climate change – first NYDFS, now this. Public companies holding BTC (ahem Square) — may want to pay attention.”

The power consumption of the Bitcoin proof-of-work (PoW) network has been a huge point of contention for the premier cryptocurrency. In a publication on the Ripple website entitled, “The Environmental Impact: Cryptocurrency Mining vs. Consensus”, Bitcoin’s PoW power consumption is used to highlight the superiority of Ripple’s XRP token.

Ripple compares power usage through light bulbs explaining that every 1 million XRP transactions uses enough power to a lightbulb for 79,000 hours, while 1 million BTC transactions on Bitcoin’s PoW network would power the lightbulb for 4.51 billion hours.

Public Companies Pay Attention

The has been a slew of publicly traded companies that have invested massively into Bitcoin as of late, which according to Garlinghouse may be an issue for them as given the potential incoming green compliance legislation.

Ripple CEO Garlinghouse pointed to Square in his tweet. Last month Jack Dorsey, CEO of Twitter and payments processing service Square, publicly tweeted that Square had invested $50 million of the company’s holdings into Bitcoin purchasing 4,709 BTC.

If Square should take notice of the Biden administration’s incoming plan for climate change, then MicroStrategy who has also purchased 38,250 Bitcoin as its reserve treasury asset—just under $600 million at the time of writing—should definitely sit up and take notice of the Democrat’s green agenda.

More Than 700,000 ETH Staked for Ethereum 2.0 Launch

With the much-anticipated launch of Ethereum 2.0 scheduled for December 1, at 12 pm UTC on the horizon, the number of Ethereum (ETH) locked up in the smart contract needed to transit to a proof-of-stake protocol from the current proof-of-work has surpassed the 700,000 mark, according to leading validator for Proof of Stake blockchains stakefish.

Staking Target surpassed

The validator noted:

“Over 700,000 ETH has already been deposited to launch more than 20,000 ETH 2.0 validators”

This number has already surpassed the target of 524,888 ETH that had to be staked by November 24. Nevertheless, the crypto community had kept fingers crossed as to whether this milestone could be attained because this requirement was enshrined in doubt and speculation.

This journey has not been smooth sailing given that the initial launch of ETH 2.0 was scheduled for February this year, but delays were inevitable. Furthermore, the first week had only 50,000 ETH deposited, and this triggered uncertainty.

Data from on-chain market provider Dune Analytics shows that 2,216 unique depositors have already locked up at least 725,000 ETH for the Ethereum 2.0 launch, and the number continues to grow by the day.

The thrill behind Ethereum 2.0

The unveiling of Ethereum 2.0 is being awaited with bated breath because it will use the proof-of-stake blockchain compared to the current proof-of-work network. The latter requires miners to compete when solving complex mathematical puzzles, with the winner generating the new block.

Nevertheless, the proof-of-stake framework is a consensus algorithm that chooses the next block’s validator based on the amount staked or held. Therefore, the rewards reaped by validating blocks will be determined by how much ETH is staked in the network. If you have staked more Ether into the network, this will also increase your chances of being chosen to stake blocks.

Scalability is expected to increase on Ethereum 2.0, and more energy-efficient solutions are supposed to power cryptocurrency transactions on the new mainnet.

Ethereum has been on a price frenzy even if its value has slightly dropped because of the ETH 2.0 launch and booming decentralized finance (DeFi) sector. New data by Glassnode recently showed that crypto wallets holding more than one ETH hit a record high of 1,170,598 addresses.