Today, April 13, Ethereum hit its all-time high above $ 2.2K (CoinGecko data). Over the past month, altcoin has risen in price by 18%. A year ago, it was trading at $ 156. Now the capitalization of the cryptocurrency is $ 255 billion, according to this indicator, it ranks second after bitcoin ($ 1.18 trillion), writes RBC Crypto.
Path to the second version
Ethereum 2.0 is a solution that will scale the original blockchain and make it more user-friendly. The main feature of the update is the network’s transition to Proof-of-Stake (PoS) consensus – it will replace the Proof-of-Work (PoW) consensus, which the blockchain is currently running on. The main difference between PoS and PoW is that miners who generate computing power are no longer needed to keep the network running. The health of the blockchain is ensured by the holders of digital coins and are rewarded for this. This process is called staking.
On December 1, 2020, a major update took place on the Ethereum network, and the blockchain entered phase 0 of Ethereum 2.0 testing. Phase zero included only testing the new PoS mechanism, so the network was predominantly test-driven. February 15 Ethereum co-founder Vitalik Buterin announced on the release of the first hard fork, tentatively named HF1, which added support for lightweight clients to the network that can run on smartphones and browsers.
Berlin and London
The next hard fork in the framework of the Ethereum 2.0 update called Berlin will be released approximately tomorrow, April 14. About this on Twitter reported one of the blockchain developers. The hard fork includes four proposals for improving the network, two of which (EIP-2565 and EIP-2929) are aimed at changing the algorithm for calculating transaction fees. In early April, in just a week, the average transaction fee within the Ethereum network increased by 90% amid rising altcoin quotes. The Berlin hardfork aims to optimize Gas (the currency that is used on the ether to pay commissions).
The next London hard fork will completely change the algorithm for calculating transactions within the network. planned for July 2021. It will include a proposal to improve EIP-1559, which was proposed by Vitalik Buterin back in 2018. It assumes that a portion of the transaction fees that miners are currently receiving will be burned. Some miners reacted negatively to EIP-1559 and even promised to hold a protest, which ultimately did not take place.
EIP-1559 will make Gas pricing more predictable and less prone to spikes, explained Anton Bukov, co-founder of 1inch Network. According to him, the relative share of burnt digital coins will be extremely small, so the effect of the procedure will be rather psychological.
What’s next
So far, the exact timing of the full transition to Ethereum 2.0 remains unknown. In March, Vitalik Buterin proposed to speed up the transition to the Proof-of-Stake consensus amid dissatisfaction of miners with upcoming updates. After that developer Mikhail Kalinin published specifications for a quick update, in which he proposed to abandon some functionality, for example, the ability to withdraw funds blocked for staking. Despite the desire of developers to move to Ethereum 2.0 as quickly as possible, the exact date of the blockchain’s transition to PoS is still unknown.
VS quotes changes
The growth in the cost of Ethereum is not so much related to changes in the network, but to the fact that the network is finally scaling, according to Alexander Khvoinitsky, marketing director of the cryptocurrency p2p platform Chatex. He claims that the improvements that have happened to the blockchain in recent times allow projects built on Ethereum to grow.
The hype around the DeFi sector showed that Ethereum can withstand any stress, and this attracts more and more user money and becomes a trigger for the coin’s growth, added Alexander Khvoinitsky. He also noted that the transition to the PoS consensus will add a supply limiting factor and push the cryptocurrency rate up.
The head of the analytical department of AMarkets Artem Deev agreed with the opinion of Alexander Khvoinitsky. In his opinion, Ethereum may rise in price up to $ 10 thousand this year due to the growth of network performance. This will become a record even against the background of the rapid growth in the price of bitcoin last year, the expert added.
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