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Ethereum 2.0 recently launched its Beacon Chain, concluding Phase 0 of an ongoing scaling effort. Although he expressed confidence in Eth2, Celsius CEO and founder Alex Mashinsky believes the network could lose its spotlight if it doesn’t scale quickly and significantly.
“Ethereum has to prove it can scale its transactions 100x without compromising security or decentralization,” Mashinsky told Cointelegraph when asked about Eth2’s next hurdle after the Beacon Chain was launched. “If he fails to climb, Cardano and Polkadot will take over.”
As of Thursday, the Ethereum network hosts around 13 transactions per second, according to data from Blockchair. A 100-fold increase by now would amount to around 1,300 TPS.
Ethereum has been the primary network for building decentralized applications over the past few years. In 2020, the decentralized finance boom, or DeFi, largely took place on Ethereum as well. This increase in activity has led to high network traffic which has at times resulted in higher rates, a scaling issue also observed on previous occasions.
With Ethereum 2.0’s transition to a proof-of-stake mining algorithm, progress in scaling should be on the horizon soon. Ethereum co-founder Vitalik Buterin previously said he believes the network can scale up to 100,000 transactions per second.
The network upgrade, however, faced months of delays before hitting phase 0 earlier this week. The founder of MyEtherWallet said he expects the next stages of Eth2 will take years to fully unfold. Mashinsky did not provide a specific time estimate, but expressed his vote of confidence in updating the network as a whole.
“I’m a big supporter of ETH 2.0, even though it will take longer than expected to scale and fix all bugs,” he said.
At around $ 590 each at the time of publication, Ethereum’s native token Ether (ETH) also plays into the equation. Phase 0 required stakeholders to block at least 32 ETH each, with a total of 524,288 ETH needed for the launch of the Beacon Chain. As ETH has to remain stuck until it reaches stage 2, which could be years from now, one might wonder how the price of ETH can affect Eth2’s advancement.
As a result, Mashinsky sees higher prices for ETH. He speculated:
“As more and more ETH is blocked for ETH 2.0 or used on different DeFi and CeFi platforms, the scarcity effect combined with the need to join these platforms drives up its price. Almost all DEX exchanges are denominated in ETH, which is a huge plus for Ethereum. “
Eth2’s completion of phase 0 also occurred in a bull market in cryptocurrencies, which recently saw Bitcoin (BTC) break its previous all-time high.
