Etheruem 2.0 is now backed by more than 3 million ETH
Ethereum (ETH) is switching to a new consensus algorithm. This is called proof of stake (PoS) and means that users inject or deploy Ethereum into the network to validate blocks. The picture shows stacked Ethereum coins.
Ethereum 2.0 is becoming more secure, while Profit Revolution the major Ethereum upgrade is still in development.
The amount of ETH that Ethereum 2.0 is expected to secure in the future has passed the 3 million ETH mark, according to data from Glassnode. At the current Ethereum price, this corresponds to a proud equivalent of 5.28 billion US dollars.
What Ethereum 2.0 is all about
ETH 2.0 is the next generation of the Ethereum blockchain, which, if all goes according to plan, should make the whole thing cheaper, faster and greener. One of the biggest changes here is the move away from a Proof of Work consensus mechanism, which relies on power-hungry miners to process transactions on the network.
Proof of Work (PoS) is also the concept that finds application on the Bitcoin blockchain. It is not uncommon for the leading cryptocurrency to come under criticism for the immense power consumption associated with it. An analysis by Cambridge University showed that Bitcoin miners consume more electricity than the whole of Argentina. A country whose population is, after all, 45 million people.
In any case, Ethereum will move from PoS to a proof-of-stake system. Anyone who has at least 32 ETH at their disposal can participate in order to validate transactions on the network in the future. In return, the corresponding amount of ETH will be clocked to secure the network. In return, the stakers are offered returns of up to 20% in ETH per year.
The assets are clocked on the ETH 2.0 „beacon chain“, which was introduced in December 2020. However, this beacon chain does not do much at the moment and is only the first step in Ethereum 2.0’s very long roadmap, which will take some time to fully implement.
With a complete and successful conversion to proof of stake, however, it is hoped that many problems in the industry can be solved. First and foremost, this means the scaling problems and high transaction fees of the current Ethereum network. Currently, about 14 transactions per second (TpS) are processed on the Etheruem blockchain. According to co-founder Vitalik Buterin, Ethereum 2.0 will process up to 100,000 TpS.