Will ETH 2.0 be the downfall or the ultimate bullish catalyst?
Is ETH coming out with a new token?
No.
The term ‘Eth2.0’ or originally known as ‘Serenity’, is just a name or terminology for the project. This upgrade to the Ethereum network is all under the hood, primarily a change to its infrastructure.
The Ethereum mainnet we use today is continued to be secured by (PoW) Proof-of-Work. ETH has been moving towards a (PoS) Proof- of-Stake consensus mechanism via the Beacon chain.
This is known as…
Essentially The Merge is when these two systems finally come together.
Ultimately making ETH more scalable, secure and sustainable!
The mainnet will bring the ability to run smart contracts into the PoS system, plus the full history and current state of Ethereum to ensure that the transition is smooth for all ETH holders and users.
Uhh okay, so what’s the beacon chain?
The Beacon Chain was released on the December 1st, 2020. This will introduce POS to ETH, a new way for you to help keep ETH secure. Validators will stake ETH in order to process transactions and create new blocks in the chain.
Essentially the more people that participate in the network, the more decentralized and safe from attack it will become. This is where Shard chains comes in.
What is Sharding?
Sharding is the process of splitting a database horizontally to spread the load. This will reduce network congestion and increase TPS by creating new chains, known as “shards”.
These “shards” will increase the capacity of the network and improve transaction speed by extending the network to 64 blockchains.
Cool cool cool, so what makes ETH2.0 deflationary?
ETH will undergo a 90% cut of daily emissions from 12,000 ETH/ day to 1280 ETH/ day.
Decreasing yearly inflation of ETH from 4.3% to 0.43%
Not to mention, rewards for PoS validators will go up from 4.5% to 10% — 15% in the months after The Merge.
The best part of this, ETH’s energy consumption will drop by 99.95%!
Imagine how much more smart money can jump into this!
Remember when Tesla no longer accepted BTC due to climate concerns as it uses a PoW consensus mechanism.
What are the current limitations of ETH?
- ETH can only handle about 15–45 TPS (Transactions Per Second)
Kinda feels like this TBH.
2. The current method of mining blocks and verifying transactions is not sustainable
Chart below shows the estimated power of consumption between BTC & ETH PoW vs ETH PoS.
3. High barriers to entry
Gamers around the world HATE us as the prices of hardware increases, making it hard for people purchase GPUs and to cover their ROI.
To wrap it up, ETH going eco-friendly, having high-yielding and deflationary tokenomics may cause a surge in institutional adoption!
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