Eth2 is Already Among the Largest PoS Chains

Screen Shot 2020-11-24 at 2.44.48 PM

Phase 0 of Eth2 is set to kick off on its targeted launch date of Dec. 1 now that more than 584,224 ETH (or about $350M) is staked in the deposit contract.

The historic threshold was needed to deploy the Beacon Chain, the new primary source of truth for Ethereum as it transitions from Proof of Work to Proof of Stake through a migration known as  ‘Eth2’ or Serenity.

Among the Top

More than 2k unique Ethereum addresses have made deposits into the contract, according to Dune Analytics. There are currently over 21k validators, with total ETH deposited divided by 32 ETH per validator.

For perspective, the number of Eth2 depositors and validators is already higher than validators on some of the top proof-of-stake chains, including Tezos, Cosmos and Polkadot, which have less than 1k validators each, according to stake.fish and Polkadot.js.  For Polkadot though, nominators, who delegate their tokens to validators, are at over 7k.

To be sure, Ethereum validators are those ready to stake now that the chain isn’t live yet. The number will change on next Tuesday’s launch, as 900 validators per day can be added after genesis. 

The total of 688k ETH or about $410M deposited into the Eth2 contract, would make Ethereum the sixth-largest PoS chain by assets staked, according to stakingrewards.com, days before its launch.

1,000x Increase

This migration means that the network will be secured by validators staking ETH, rather than by miners running hardware machines like on Bitcoin. The transition, which in further phases will include a scaling mechanism called “sharding,” is meant to allow Ethereum to handle ‘hundreds of thousands of transactions per second’, upwards of a 1000x increase from its current throughput of ~15 tps today.

Vote of Confidence

With more than 50% of the staked balance deposited in the last 48 hours, this milestone marks a major vote of confidence in Ethereum’s most grueling upgrade to date taking place over the course of at least four phases in what is expected to last at least two years according to developer estimates.

~20% APR

Phase 0 stakers are committing to lock their ETH until Phase 2, expected to take anywhere from 6-12 months on the conservative end. Stakers stand to earn part of ETH issued, which results in annual returns of as high as 21.6%, decreasing as more ETH is staked.

ETH Price

The successful push to lock $350M worth of ETH for an unknown period of time has helped propel the price of ether to prices not seen since 2018, leaving many hopeful community members to believe the next crypto bull run is imminent.

High Reward = High Risk

Still, many eth2 staking teams have voiced that the transition is a tremendous undertaking, one that is likely to be riddled with hiccups and growing pains along the way. Whether it be the new coordination challenges brought about with sharding or the reliance on validators to be online most of the time, staking ETH today serves as a signal of trust in a highly experimental process. 

High APR’s are a direct correlation to the high risk of being the first to test drive the monumental paradigm shift.

For now, the Ethereum community can celebrate knowing that locking 584k ETH is the first check mark on the path to Serenity.

✊ Head to THEDEFIANT.IO for more DeFi news 📰

Leave a Comment

Your email address will not be published. Required fields are marked *