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Everything You Need To Know About The Upcoming ETH 2.0, Staking And Its Impact on Ether Price

After a series of delays, it has been confirmed that ETH 2.0 will be launched during the 5th anniversary of the Ethereum network with Justin Drake, Ethereum developer offering a 95% likelihood of the event happening this July. ETH 2.0 is the next iteration of Ethereum that is supposed to make the platform a world computer, according to Vitalik Buterin. It will speed up Ethereum by handling more transactions and move the platform from PoW to PoS.

The new protocol, also known as Serenity, has been in the works since 2015, but progress has been slow due to the highly technical nature of the endeavor. The initial launch was set for January 2020, and then it was moved to an undisclosed date in Q2 2020. The delays led to criticism from its own community as one developer Jamie Pitts expressed concerns about the project, saying that there was a lack of strategy and coordination between various teams that were working on ETH 2.0.

This, of course, caused concerns among investors, and the price of ETH was negatively impacted.

Drake’s positive comments on the progress of the protocol were echoed by Ryan Sean Adams, a member of the ETH protocol who expressed more confidence in the launch. Adding that past delays were a result of some changes that sought to consolidate the roadmap with the PoS and sharding and reprioritizing scalability.

With the launch now confirmed, below, we are going to go over a few things you should know about the upcoming ETH 2.0 and the possible impact it will have on the price of Ether.

It Will Consist of 7 Distinct Phases

ETH 2.0 will be a separate platform from the current main-chain and will eventually replace it. It will take seven distinct phases to bring ETH 2.0 to live according to Ethereum wiki maps, and the implementation is expected to take several years. Research on most of the phases is still ongoing without a precise technical specification. However, before developers can build on ETH 2.0, the first three phases have to be completed. These include:   

Phase 0, also known as Beacon Chain: It will serve as a proof of stake chain, which will run parallel to the existing PoW chain. Initially, this chain will be engineered for simplicity and won’t support accounts nor smart contracts.

Phase 1, also known as Basic Sharding: This will help the network process multiple transactions concurrently by dividing the network across multiple shards.

Phase 2, also know as eWASM: eWASM is a rebuild of Ethereum Virtual Machine, which will support PoS and sharding. Here, smart contracts, accounts, and more will be introduced to Ethereum 2.0.

What Impact Could ETH 2.0 Have On The Price of Ethereum?

According to Adam Cochran, the launch of ETH 2.0 is going to be bullish for Ether price. Cochran, who is a professor of information science at Conestoga College, claims that Ethereum’s economic policy will lead to reduced supply, and this will drastically increase demand mainly due to the attractive incentives of staking.

In a lengthy post on Twitter, the professor who is also a former marketing executive at Dogecoin noted that the 3-5% yearly returns from staking would attract large investors who seek stable returns. And since around 10% of all ETH will be locked down through staking, this will create a supply shock, and the scarcity will create a price spike.

Given the possible volatility of the ETH price, there is an increasing demand for simple to use trading and betting platforms. One of them is AlphaPlay platform which allows bets between players on which currency between two is likely to experience gains or losses within a given interval. Here bets can be placed on the following pairs ETH, BTC, EOS, or TRX.  And they are 100% fair since data is taken from Binance. Currently, the platform is holding the token sale of the Alpha Gambling loyalty program, which is running from April 26 to August 8, 2020, where Alpha ERC20 tokens are on sale. All token owners are receiving 6% of all the turnover as bonuses. Additionally, all users are receiving 90% of the turnover as prizes, and another 4% is rewards for active users.

The price spike will drive those same investors into purchasing more Ether to make more, which will, in turn, create a ripple effect, generally causing a market upturn. He foresees at this stage FOMO setting in as retail investors will try not to miss out. But unlike the 2017 bull run, this will happen faster since there are many fiat on-ramps available to millions of users now like Binance and Coinbase. Also, unlike past instances where the price peaks for a short while and drops, he sees this peak going on for a long time since there will be more people using the platform due to its scalability.

The Amount Of Ether Required To Stake

The new protocol will work on transforming Ethereum to a Proof of Stake network. As such PoS networks reward asset holders who pledge their coin holdings to validate and protect the network. For one to participate as a validator, they will be required to have at least 32 ETH currently valued at $6,400.

So far, contracts for staking are under audit, and an announcement is expected soon at a major Ethereum event. According to people involved with the development of the protocol, the number of validators could be as many as millions. One researcher claims as much as 10% of Ether’s total supply currently valued at $2.3 billion could be staked on ETH 2.0.

The announcement has seen investors jump on exchanges to stack up Ether for when staking comes around, and this has been reflected by the positive ETH price movement recently.

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