Advantages and disadvantages of ETH2

ETH2 is a series of upgrades aimed at making the Ethereum protocol more scalable, secure, and sustainable. These upgrades will be launched in phases as shown below, and the completion date is 2023. Before analyzing the positive and negative impacts of the upgrade decision, this article will explain about the upgrade process and how it intends to improve the protocol.


Roadmap ETH2

Convert from PoW to PoS

PoW and PoS are both called consensus algorithms. Unlike centralized databases, the blockchain protocol distributes data to millions of participants according to an encrypted set of rules. In the absence of a centralized authority, a consensus mechanism must be in place to verify transactions and record new information on the blockchain. These mechanisms are often time consuming and energy intensive, although they create a trustless ecosystem.

Bitcoin is based on PoW. In this system, miners use their computational power to solve complex math puzzles. The first miner to solve the puzzle will receive a block reward in Bitcoin. For some, the shortcoming of this consensus algorithm is its high energy consumption. The Bitcoin network consumes more electricity than mid-sized countries like Switzerland, Israel and Argentina.

ETH2 moves from PoW to PoS through the Beacon Chain. Staking is the act of sending tokens and running authentication software. Individuals must stake a minimum of 32 ETH or send it to the staking pools and receive a corresponding income distribution. Alternatively, people can run the authentication software themselves or outsource a cryptocurrency company like Binance or Kraken.

According to the software, the deposited ETH will confirm the transactions and the account is rewarded with additional ETH. Instead of new Bitcoin entering the market through a PoW algorithm-solving miner, new ETH joins through volunteers staking their tokens.

For many people, this method is safer and more sustainable. To do a 51% network attack, someone must own 51% or more of all ETH instead of handling the power on the network. Thus, about 123 billion dollars is needed to consider attacking the network in this way. Additionally, PoS is considered more sustainable because it reduces the need for energy-intensive mining rigs.

Instead, anyone can run the authentication software with 100GB of storage on a laptop, smartphone or tablet. While reducing the amount of energy used is an advantage, Ethereum has to pay a heavy price.

Scalability and shard chains

Once a certain volume is reached, every digital asset will have problems with size. Too much activity leads to network congestion. Bitcoin faced block size debates in 2017, which ultimately led to the Bitcoin Cash hard fork, but also Segregated Witness and Lightning Network used as the solution. Ethereum’s scaling solution involves the addition of shard chains (shards). The shard chain divides the network into 64 chains, increasing the processing power on the base layer 64 times. Combined with zk-rollups, a layer 2 solution similar to Lightning that bundles transactions before settling them on the main chain, Ethereum will scale in the right time.

One downside of the ETH2 implementation is the lengthy time it takes. The shard chain is set to launch this year, but if similar to phase 0, it could be delayed. Currently, the high gas fees on the Ethereum network require a quick solution that the plan cannot fulfill.

Every ETH transaction requires computational power to execute. Therefore, there is a fee for each transaction. This fee is called the “gas price”, a metaphor for cars that need gas to travel. The chart below shows the gas fees of ETH since 2018. Since there are many users joining the network in this bull market, network congestion has caused gas fees to skyrocket. In March, a reddit user claimed to have been charged $ 45 for a $ 100 transaction.

As a result, developers and users can switch to Tron, EOS, Cardano, or another smart contract protocol if gas fees remain rising as it is unlikely that a scaling solution is imminent. High gas fees will hamper the development of Ethereum-based smart contracts until a solution expands. Although this acted as a drag, it was not seen as a disruptive tool.


Average gas price on Ethereum

PoS and centralization

Despite those advantages, the most negative aspect of the transition to Proof-of-stake is the concentration of power it is capable of generating. Proof-of-stake gives an advantage to those who already own significant amounts of ETH. For Bitcoiner, this goes against the character of the entire blockchain space.

First, users must stake ETH until the transition to ETH2 is completed around 2023. The more ETH you have, the more you can stake. The more ETH you stake, the more ETH you earn. Also, a soft fork on the Bitcoin network cannot happen without a majority of miners voting in favor. Though energy-expensive, forcing miners to incur high operating costs creates a more rewarding incentive structure.

Without miners, Ethereum governance is determined by the amount of ETH owned. So in addition to getting more ETH by having more ETH, having more ETH will provide greater voting power. It is unlikely that this transition will result in a group of ETH investors and developers altering the system for their benefit. However, Bitcoin is designed to replace inequality of opportunity in inheritance finance. Proof-of-stake in Ethereum is no different from the accessibility of capital privileges offered to institutional investors and corporations.

Conclude

In short, the transition to ETH2 has many advantages, but no shortcomings.

Pros: Chain shard and zk-rollups provide the scaling solution that the protocol desperately needs. Additionally, Bitcoin detractors will often complain about its energy consumption. Proof-of-stake will make Ethereum more energy-efficient than Bitcoin, despite the cost.

Cons: The shard chain will not be finalized by 2021, and the entire transition will run until 2023. Investors may incur higher than average gas fees for then.

ETH2 allows early investors and large holders to accumulate more ETH than retail investors. It also gives them greater voting power. For the Bitcoinists, this is blasphemy. However, while PoS works as opposed to the properties of blockchain technology, there isn’t anything too dangerous here. In the balance between energy efficiency and absolute equal opportunity, Ethereum developers chose the first.

World’s first Ethereum ETF approved by Canadian regulators

Toronto-based asset management firm Purpose Investments has received approval from Canadian securities regulators to launch an Ethereum ETF exchange, according to a press release April 16.

This happened two months after the Ontario Securities and Exchange Commission (OSC) confirmed the company’s pioneering Bitcoin ETF list in February.

Along with Purpose Investments, two other funds, Evolve ETF and CI Global Asset Management, have both been approved by Canadian regulators to launch ETFs on the same day. This will be the first ETH ETF in North America and one of the first in the world.

In a tweet, a Bloomberg correspondent said the CL Galaxy fund and Purpose ETF will begin trading on April 20. Likewise, Evolve’s Ethereum ETF – which they filed for the first time in March – will begin trading on the same day.

Purpose Investments CEO Som Seif stated that Ethereum is “one of the most exciting technologies” to date:

“While Bitcoin tends to get a lot of attention as it is the first major cryptocurrency, what Ether and the Ethereum ecosystem represent is one of the most exciting new technological visions today in society. “.

The Canadian stock market has demonstrated a significant appetite for crypto assets. The Purpose Bitcoin ETF has raked in $ 100 million on its first day of trading, they’ve also crossed the $ 1 billion mark in assets since launch.

The US Securities and Exchange Commission has yet to approve ETFs as new filings from people like Van Eck and Fidelity continue to pile up.

The correlation between Bitcoin and Ethereum gets closer and closer as ETH reaches a new all-time high

Ethereum’s price action has broken out of its consolidation period on the charts recently. In fact, since the beginning of April the story has been completely different, given the huge bullish momentum forecast for altcoins. The aforementioned increase in value has spurred a rise in price by more than 36% over the past two weeks, which also caused ETH to break down of $ 2,500 resistance, establishing new ATH levels in the process.

At press time, ETH is trading at $ 2,450 with a market cap of $ 282 billion. ETH hit its latest ATH of $ 2,544 a few hours ago after gaining 18% in 3 days. It is worth noting, however, that minor corrections have begun to happen at press time, with the latest price candles flashing bearish signals.

With ETH currently climbing to levels not seen before, the coin’s fundamentals are looking good too. According to data provided by Glassnode, the number of active addresses (MA 7d) just climbed to a three-year high of 34,736,798. The increase in active addresses is always a good indication of the token price and indicates that there are more participants in the market.

While whales can drive prices north, they can also undo the gains and put the token price at risk of a massive sell-off. Interestingly, in the case of ETH, Glassnode also points out that addresses with more than 32 ETH are currently experiencing a significant decline.

The data shows that the number of addresses holding over 32 ETH has just hit a 13-month low of 111,459. The last time such a low was seen was April 12 when the index showed only 111,466 addresses had this amount of ETH.

However, Ethereum continues to trade synchronously and correlate with Bitcoin, with the price of BTC being around $ 62K at the time of writing. Data provided by CoinMetrics has emphasized that the correlation between BTC and ETH continues to be quite high and is notably 0.77 at press time. Over the past three months, the correlation has increased, with a similar increase from 0.55 earlier this year.

A high correlation with Bitcoin may not just be the key to Ethereum’s new ATH capabilities and breaking out of strong psychological drag in the market. As the current non-ATH price discovery continues, the correlation factor may be key to understanding whether ETH is able to maintain such positions or if another price correction is to come.

Almost $ 9 billion of ETH is currently staked on ETH 2.0

The first quarter of 2021 has officially ended. By most measures, ETH had a remarkable first quarter.

The network’s native cryptocurrency ETH outperformed BTC and traditional macro assets by a wide margin, up 156% in the quarter. Several ETH investment products have also been introduced, paving the way to attract more institutional participation in the ETH market.

There are also a number of milestones regarding the Ethereum technology roadmap and the Ethereum 2.0 upgrade process.

In Q1 / 2021, the total value locked on Ethereum 2.0 more than doubled, from 1.5 million ETH staked to 3.6 million at the end of the period.

The amount of ETH staked on Ethereum 2.0

As the number of users sending 32 ETH gradually increased during the quarter, so did the number of active validators protecting the network. The number of active validators exceeded 100,000 as of February 27, 2021, and since then has exceeded 118,000 as of April 12, 2021.

In dollar terms, the total value locked in ETH 2.0 surpassed $ 8 billion in early April, as soon as the ETH price was trading above $ 2,000. This makes the ETH 2.0 network the 5th largest PoS network in terms of staked value.

Not so fast

In about 4 months, ETH 2.0 became a significant competitor to established PoS networks such as Tezos and Cardano. However, one important difference about ETH 2.0 compared to other PoS networks is that the majority of the ETH supply is not used for staking.

Only about 3% of the ETH supply has been locked in ETH 2.0 as of April 12, 2021. Compared to other PoS protocols that boast a stake of almost 80% of the supply, Ethereum 2.0 ranks the lowest with a wide margin.


Stake value and% of the stake on major PoS platforms

Why? Because the majority of the new ETH supply is released on the Ethereum blockchain in parallel, the miners and the PoW consensus algorithm are secure. Furthermore, Ethereum has a thriving decentralized application (dapp) ecosystem that competes with the use of ETH as a staking asset.

As for other PoS protocols, the majority of their native tokens are used by validators to earn rewards on the network. As for Ethereum and Ethereum 2.0, ETH has been brought into operation by users, dapp developers and recently institutional investors in a number of different ways.

Other use cases for ETH

There are a number of new use cases for ETH that have caught the attention of wealthy investors and institutions in Q1 / 2021.

First, ETH is the means of payment for non-fungible tokens (NFT). Buying NFT with ETH has always been doable on Ethereum and has attracted mainstream attention to some extent through the game CryptoKitties in 2017. But recent hype about technical collections Digital in the first quarter of this year has been reaching new extremes.

Writers, artists, athletes, businesses, and even robots have released digital artwork on Ethereum over the past 3 months. Although the number of people interacting with this part of the technology is substantial, but what makes NFT so popular beyond the CryptoKitties craze in 2017 is the participation and endorsement from famous individuals and organizations.

One of the world’s leading auction houses, Christie’s, held a sale of NFTs for $ 69 million on March 11, 2021 and accepted payment for artwork in ETH. The day after this auction, New York-based news agency The Associated Press also sold the NFT artwork for $ 180,000 ETH.

Overall NFT trading volume spiked more than 25 times since December 2020.

In addition to the growing use of ETH as a means of payment for NFT, there are also other cases that are budding and could become an industry trend: ETH is a reserve asset for corporations. .

Software company Meitu is said to have purchased $ 22 million worth of ETH to hold on its balance sheet on March 7, 2021. A few weeks earlier, digital asset commercial bank Galaxy Digital launched Ethereum funds for institutional investors. It raised a total of $ 32 million in March from an affluent group of clients looking to come into contact with ETH without having to custody of the assets.

Finally, the ETH use case that has caught the attention of institutions in the past quarter is staking. According to Pulse Check, more than 8 billion ETH is currently locked in Ethereum 2.0, compared with $ 2.4 billion at the beginning of January. During the last quarter, validators earned as much as 0.25 ETH per month. costs around $ 590 at the time of writing.

Institutional investors keep an eye on Ethereum

On March 25, staking service provider Staked launched a product for institutional investors only.

The new Staked ETH Trust gives investors direct exposure to ETH and the ability to earn around 8% annual interest from staking rewards on their investments. The minimum investment amount is $ 25,000 with a 12-month lock-up period.

According to Staked CEO Tim Ogilvie, products like Staked ETH Trust are running ahead of institutional interest that has begun to spill over to Ethereum and Ethereum 2.0 over the past few months.

Ogilvie said in an interview: “When you see a lot of institutions interested in Bitcoin, I think the very natural next step is how does Ethereum work? There is a wide range of investors who believe that the risk / return on Ethereum is significantly higher than that on Bitcoin.

Q1 2021 highlights some possible use cases for ETH. ETH can be considered as speculative investment, operating in a decentralized financial application (DeFi), used to buy irreplaceable tokens, staked on Ethereum 2.0 for interest, or as a reserve asset. on the company’s balance sheet. Any of these use cases is likely to become the dominant case for Ethereum and its ETH native token over the coming months.

PancakeSwap declared war on Ethereum on the DEX front

Decentralized Exchange (DEX) – PancakeSwap has surpassed the daily trading volumes of some of the leading CEX exchanges over the past 24 hours, proving to be the strongest competitor to the Ethereum DEX.

Binance Smart Chain (BSC) has seen an increase in volume after the continuous increase in gas fees on the Ethereum (ETH) network. PancakeSwap is attracting traders because transactions are cheaper and faster. The price boom of Binance Coin (BNB) may also have received more attention aimed at Binance DEX.

PancakeSwap (CAKE) becomes the first billion-dollar project on Binance Smart Chain, currently ranked second on decentralized exchanges, surpassing the current number one Ethereum DEX, Uniswap. PancakeSwap has had a whopping 3.21 billion USD trading volume over the past 24 hours. Volume has nearly tripled the amount currently traded on Uniswap, to a total value of $ 1.14 billion.

PancakeSwap not only exceeds Uniswap’s trading volume, but also gets more hits during the day. Beat Uniswap with over 300,000 hits.

In addition, the trading volume of BSC’s pet also surpasses the trading volume of some of the leading centralized exchanges. PancakeSwap is currently trading more volume than Kucoin and FTX combined, and has the same number of visitors as OKEx.

The low gas charge on BSC is the main reason for the soaring popularity of PancakeSwap in recent weeks. PancakeSwap also announced a massive token burn of 4.8 million CAKE. The total amount of tokens burned is equivalent to $ 119 million.

PancakeSwap will become a major challenge in the DEX space as Ethereum exchanges are fighting high transaction costs. The success of PancakeSwap is related to the strong increase in BNB.

If Ethereum doesn’t make a strong move against BSC. Chances are, the two-code race between Binance Smart Chain (BSC) – Centralized or decentralized? and ETH was working. The 37% figure is that the Ethereum (ETH) capitalization of Binance Coin (BNB) will not stop there, the crown of ETH will be replaced.

To what extent can Flashbots reduce Ethereum’s gas fees?

The anonymous developer of the Mist protocol, Stephane, has sparked a controversy over the possibility of reducing Ethereum gas fees. Data from Etherscan shows that average gas prices have declined since it soared in the mid-2020s.

Although the current decline seems small, Stephane has predicted that the gas price will drop below 20 by the end of 2021, tweeting: “Flashbots are the cause of the recent drop in gas costs as traders close their PGA bots. surname”.

As noted above, this drop could have come from the wider use of Flashbots, an organization that protects the transparency of the Miner Extractable Value (MEV) ecosystem. In contrast, the Public has Auction (PGA) bots, a way of executing transactions ahead of time on the network, may become less and less available.

Flashbots are actively lowering gas prices. PGA bots have the opposite effect, Stephane said:

With more than 58% of the hashrate already enabled on flashbots, it looks like we are crossing the threshold where the PGA bot is no longer in competition. PGA bots are always beaten by flashbots.

By July, the London Hard Fork is set to integrate EIP-1559 and change Ethereum’s fee model by creating a “burning fee” and a “tip”. Tipping fee will go to the miners. The proposal generated a lot of controversy and objections from these people.

They believe that their income will be severely affected. However, MEW and Flashbots seem to be an alternative that can benefit all users and developers in the ecosystem. As shown by scientist Alex Svanevik in the diagram below, the “Flashbots effect” can be real and its positive effects can be felt across the entire blockchain.

What are Flashbots and what are their implications for Ethereum?

As mentioned, Flashbots is a research and development organization established to minimize negative external impacts and the risk that exists due to minable value (MEV) for hybrid blockchains. smart companion.

As explained by developer Silto, one of the reasons for the rise in Ethereum gas prices was due to the “bidding war” between PGA bots. These entities try to get “same tx” on the Ethereum blockchain, he explained:

“If multiple bots detect a price difference between pools, they generate the same tx, send it to the mempool, but then find out that other bots are on it too and start to increase the gas price on their tx. to be included first, just like in an auction ”.

Bots benefit from the spread if the profits remain below the transaction costs. Miners, as the developer said, will get a “lucrative fee” from this race. Data from Flashbots recorded a profit of more than $ 45.6 million in the past month.

However, Ethereum users have to bear the consequences. Flashbots created an alternative that used 0gwer gas prices and infrastructure to support it:

“Flashbots have generated a ETH note for miners, not only seeing the mempool like any other node, but also connecting to a relay machine (a server) operated by the flashbots. This MEV-Relay is a kind of parallel channel that connects miners directly to bots ”.

ETH is trading at $ 2,160 with 1.1% profit over 24 hours. In the weekly and monthly charts, ETH returns 56.9% and 17.9%, respectively.


Hourly ETH / USDT chart

You could lose all your Ethereum assets

Ethereum and other cryptocurrencies share the same wallet creation method as Ethereum is really secure. In this article we will show you how a bad person can hold Ethereum assets and the tokens you are holding.

Factors come from you

You expose confidential information through software to websites that contain malicious code, which is a common practice used by bad people. We should not visit websites that do not have the highest rating from the online community. Usually these websites will place cheap ads, redirection ads. Software comes from ambiguous organizations, applications that have not passed the stringent testing of Google, or the Amazon or the App Store. File cracking shared software is rampant on the network.

You are always passive holding Ethereum

The things I am sharing here are not because I hate Ethereum but are objective sharing and I wish for good things for everyone, so that they do not lose money for ignorance.

The vulnerability comes from the Private Key

Every Ethereum wallet address has its own private key, and this is something bad people can grop for with software that detects them. Each wallet address has only 64 units including letters and numbers, to prove this you can visit https://www.myetherwallet.com/access-my-wallet and enter a certain Private Key. You will access someone’s wallet and you are now free to spend all assets in that wallet. You can do this on someone else’s wallet and someone else can do it with your wallet. This is the point that Ethereum needs to overcome before they get worse.

Protect yourself and switch to another cryptocurrency, like Bitcoin, before your Ethereum assets confusingly disappear. Bad people can use software by searching and maybe one day your private key will be discovered by bad people’s detector.

The Balancer venture outside of Ethereum, aiming to become Algorand’s Uniswap

Balancer as one of the largest decentralized exchanges built on Ethereum will come to Algorand. It’s another example of a massive DeFi project extending beyond Ethereum to one of the biggest blockchain competitors.

According to a press release, Balancer “will be the first auto market maker (AMM) available to the Algorand community for use”. In doing so, it beat out its bigger AMM rivals Uniswap and SushiSwap.

Like Ethereum, Algorand runs smart contracts – computer code that automates transactions and eliminates the need for third parties – and decentralized applications, meaning it can host a variety of service. Includes a suite of lending, borrowing and transaction without intermediaries collectively known as decentralized finance (DeFi).

The Balancer is an important gear in Ethereum’s DeFi ecosystem. According to DeFi Pulse, it is the 4th largest decentralized exchange in terms of total locked value, referring to the value of cryptocurrencies in US dollars that everyone has stored in the network.

Decentralized exchanges (DEXs) are places where people trade cryptocurrencies and participate in DeFi without having to trust their money to a third party. As an automated market maker (AMM), Balancer uses a liquidity pool so that buyers don’t need to match sellers directly. Smart contracts do this heavy lifting.

However, as long as it is on the Ethereum blockchain, Balancer protocol can only do swaps for ERC-20 tokens, a specific asset class built on top of Ethereum. Later, the expansion to Algorand allowed it to access an entirely new set of assets built on top of that blockchain, known as the Algorand Standard Asset.

“By leveraging Balancer services on Algorand, exchanges will have the ability to create trading pairs with any of the Algorand Standard Assets (ASA),” the DEX wrote in a press release. “As the number of assets issued on the Algorand high performance blockchain accelerates, this presents a great opportunity for mass adoption.”

Balancer is not alone in doing so. Last year, Circle’s USDC stablecoin announced it was expanding into Algorand, adding an easier way for traders to get started on that blockchain.

Of course, the move above does not mean that Balancer is giving up on Ethereum. But it really puts additional pressure on the network as rivals like Algorand, Cardano and Solana exploit Ethereum’s weakness: congestion and high fees.

That congestion is partly due to Ethereum’s first advantage as the original network that captures smart contracts and the applications they create workable. But that’s also because Ethereum hasn’t transitioned from PoW to a PoS algorithm, which is more scalable.

The transition to Ethereum 2.0 is in progress. Phase 0 launched late last year, and Ethereum developers recently hinted that the PoS blockchain might be ready sooner than expected.

The 38% ETH futures spread signals traders predict the price of $ 2,500

Currently, the price of ETH has broken the $ 2,000 threshold, hitting an all-time high this week. Traders have become overly optimistic and are expecting more in the short term.

Some analysts believe that Visa allows transaction payments in USDC on the Ethereum network to initiate the most recent recovery. Meanwhile, others view the current up move of ETH as due to the breakout of the “triangle market structure”.

Regardless of the cause of the recent 25% rally, professional traders look very bullish around this time. The proof is that the futures contract premium skyrocketed, reaching its highest ever level.

This movement increases the risk of mass liquidation due to the excessive leverage of buyers, but professional traders seem confident, as shown by the delta deviation indicator.

ETH price at Coinbase (USD)

Investors can anticipate the cause, as the proposed EIP-1559 protocol improvement proposal, implemented in July, is aimed at overcoming rising gas charges. The upgrade is intended to use a flexible block size instead of the current fixed model, and it is intended to bring network usage below 50%.

To assess whether professional traders are inclined to an uptrend, it is advisable to start by analyzing the futures fees. This indicator measures the distance between the futures contract price and the regular spot market.

3-month ETH futures difference fee on OKEx

3-month futures contracts should typically trade with an annual spread fee of between 10% and 20%, which is the equivalent of stablecoin lending interest rates. By deferring the payment, the seller asks for a higher price, causing a price difference.

ETH futures spreads match its all-time high at 38%, which shows how expensive it is for the leveraged long side. A spread fee of over 20% isn’t necessarily a pre-crash warning, but a buyer’s overconfidence could pose a risk if the market falls below $ 1,750.

It’s worth noting that traders sometimes increase leverage during a rally but then buy the underlying asset (ETH) to reduce the risk of futures contracts.

Sometimes the high leverage of fixed month contracts is a consequence of retail traders buying heavily on perpetual futures. Whales, arbitrage tables and market makers avoid exposure to these contracts due to varying funding rates.

The options market is also tilted in an uptrend

To explain exactly how professional traders are balancing the risks of a sudden market move, we should turn to options markets.

The 25% delta deviation provides instant and reliable “fear and greed” analysis. This indicator compares similar long-call options and will turn negative when the neutral to bearish spread is higher than options of similar risk. This situation is often referred to as “fearful”, although it often occurs after solid rallies.

Negative deviation, on the other hand, leads to higher upside costs of protection and towards an uptrend.

25% delta deviation distribution of ETH option contracts over 90 days on Deribit

For the first time since Feb. 5, the option deviation indicator is leaning in an uptrend, although it’s not far from the -10% neutral threshold. Furthermore, the “fear and greed” indicator has continuously improved over the past 5 weeks.

Part of the reason for such only modest optimism is fear of the possibility of a sharp correction after overcoming the psychological barrier of $ 2,000, similar to that seen on Feb. 19.

Around this time, however, the derivatives markets are doing well and professional traders appear to be building positions as ETH marks a new all-time high.

The first Eth1 and Eth2 merger transaction shows up to 99.98% energy reduction

Blokcchain security provider Sigma Prime announced the first merged transaction between two Ethereum networks.

The transaction is executed by its Lighthouse client solely using the Proof of Stake validator, the company stated in a tweet on March 25, adding that this has seen a drop in Ethereum energy consumption. 99.98%, according to calculations comparing Eth1’s current PoW to Eth2’s PoS.

Sigma Prime claims that it’s an interesting achievement but has yet to be produced as it is still a prototype with much work to be done, adding:

“First of all, you should take this as a signal that the Eth1 and Eth2 developers are actively working together on consolidation.”

This is not the first time such a feat has been created, Sigma Prime pointed out that in August of last year, Teku Ethereum client also demoed a prototype capable of performing any Eth1 transaction in Eth2 environment.

Transactions are part of the initial steps towards Phase 1.5 of the Ethereum 2.0 upgrade roadmap as the “docking” process will merge the Eth1 mainnet with the Eth2 Beacon Chain and sharding system.

The switch to PoS will eliminate Eth1’s energy-consuming mining operations, although the blockchain will still run as part of Eth2 once Phase 1.5 is complete.

A discussion on mining and its power consumption, was raised on Reddit in response to Lighthouse development.

Citing the growing cost of electricity and graphics processors due to a global shortage of chips, Redditor HighlightAccording98 claims that the gains from staking are simpler than mining.

“If I were a miner, I would be sitting on a pile of ETH staked from selling my equipment to collect APY and waiting for the consolidation.”

Currently, staking on Beacon Chain is delivering an APY of 8.2% with 3.6 million ETH deposited.