The new era of ETH 2.0 has opened, what can it bring?
Editor's Note: This article comes fromCointelegraph Chinese (ID: CointelegraphChina), reprinted by Odaily with authorization.
Editor's Note: This article comes from
Cointelegraph Chinese (ID: CointelegraphChina)
, reprinted by Odaily with authorization.
On December 1st, the successful launch of ETH 2.0 phase 0 marked that Ethereum has officially entered a new era of 2.0, and then, Ethereum will start the next three phases one after another. In the face of practical challenges such as network scalability, cost and efficiency, it is particularly urgent to accelerate the upgrade of ETH 2.0. The opening of a new era of ETH 2.0 has a profound impact on both Ethereum itself and the encryption market.
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ETH 2.0 New Era
From PoW to PoS, Ethereum can be described as the pioneer of all blockchain networks. In the past few years, its network and ecological construction have been developed in full swing, but it faces many shackles in terms of ease of use, sustainability, efficiency and security. Based on these, Vitalik has the inspiration to create ETH 2.0 to achieve the ultimate goal of "world-class computer".
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Ethereum 2.0 stage Drawing: Cointelegraph Chinese
The phase 0 beacon chain is considered to be the backbone and core of ETH 2.0. The goal is to introduce the basic PoS mechanism, so that Ethereum will shift from PoW (Proof of Work) to a new Proof of Stake model, fundamentally changing the economic foundation of the network. What is special is that during this period, ETH 1 (PoW network) and ETH 2 (beacon chain) will exist simultaneously and operate in parallel according to their respective mechanisms.
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ETH 2.0 Staking
Amount of ETH in ETH 2.0 deposit contract Source: Dune Analytics
After the beacon chain, Ethereum will start the next three phases successively, realizing functions such as sharding, integration and state execution, and smart contracts in sequence.
In fact, it has been quite a while since the Ethereum 2.0 plan was first released in 2020. The outbreak of DeFi on Ethereum this year has posed real challenges to network scalability, cost, and efficiency, and it is particularly urgent to accelerate the upgrade of ETH 2.0.
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The phase 0 beacon chain of ETH 2.0 will run the POS protocol Casper as planned, setting the tone for a new consensus of the entire system. By staking a certain amount of ETH, users can become verifiers to participate in network operation and maintenance, and reap relatively stable Staking income. Details that require special attention include:
1. Minimum pledge threshold: 32 ETH
The user pledges ETH to become a beacon chain validator, the minimum threshold is 32 ETH, which is about $19,200 at a price of $600/ETH. The rights and status of each verifier are equal, and users who pledge 64 ETH must run two verification nodes, and so on.
2. Currently only one-way conversion, not support reverse operation
After the user pledges the ETH on ETH 1 (PoW network) into the beacon chain, it will be exchanged 1:1 into BETH, and BETH cannot be reversed back into ETH.
3. Phase 0 does not support withdrawal and transferTransaction fees)Phase 0 does not support the transfer of accounts and assets. The BETH of the verifier will be locked at the protocol layer and cannot be withdrawn and transferred. If the verifier wants to withdraw coins, he must wait until phase 2, which means at least 2 to 3 years. This means that users sacrifice a lot of liquidity as a price.
From the perspective of profit, ordinary users must consider the benefits and costs of staking before deciding whether to become a validator of ETH 2.0. In simplified terms, the validator's net income calculation formula is as follows:
= Validator rewards + network transfer fee (
As for the influencing variables, the total number of ETH staked in the network (Total ETH staked), the average online rate of the network (Avg.Network Online), the online rate of validator nodes (Validator Uptime), the base reward factor (Base Reward), the validator The operating mode (hardware/cloud) and ETH price will affect the final net rate of return.
Based on the basic reward factor = 64, the online rate of a verification node = 98%, the annualized net rate of return of the verifier has the following distribution. Among them, the hardware and cloud models take into account the node operating costs, assuming that the price of ETH = $600. According to the current total pledge of 1.31 million ETH, the annualized rate of return of the validator is about 8% to 10%. Other conditions remain unchanged, and the rate of return will decrease as the number of pledges increases in the future.
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ETH 2.0 phase 0 verification node annualized income
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From the perspective of income, compared with some DeFi projects, the staking yield of ETH 2.0 is not very attractive, and it still faces certain operating thresholds and liquidity costs. Talking about what core factors drive market participation, Nervos Foundation co-founder and COO Lu Guoning said:
"The Ethereum community has a group of very staunch supporters who are very willing to support Ethereum for a long time. In fact, the development of Ethereum 2.0 has a lot of uncertainties, and there are certain participation thresholds. What is most needed is Capable supporters make long term commitments. I think this is where Ethereum is very successful and has cultivated a group of staunch supporters. Secondly, some professional agency operators lower the threshold for ordinary long-term investors , to help long-term investors participate in Staking 2.0."
Any opportunity brings benefits but also potential risks. In addition to the stage 0 mentioned above that does not support reverse operations, transfers and withdrawals, Lu Guoning also pointed out about the risks:
"In ETH 2.0 staking, maintaining the availability of validator nodes and avoiding various non-subjective slash penalties due to the immaturity of early technology are all things that must be faced by participating in staking and becoming a validator."
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ETH 2.0 Future Outlook
The opening of a new era of ETH 2.0 has a profound impact on both Ethereum itself and the encryption market. From the perspective of technological upgrading, ETH 2.0 will hopefully improve the ease of use, sustainability, efficiency and security of the network. Regarding this, Wang Dong, the founder and CEO of Loopring, expressed his expectations:
"Ethereum 2.0 will increase the throughput of Ethereum by about two orders of magnitude, but there will also be new challenges for contracts across shards. I think in the long run, sharding and PoS will have far-reaching impacts."
In addition, potential changes in the following areas cannot be ignored:
