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In the letter
- The long-awaited Ethereum 2.0 update is conditional on users pouring a large amount of ETH into its deposit agreement.
- The update is expected to be released on December 1, but only about 18% of the requested amount has been staked.
- If the full amount is not deposited on time, the project will suffer delays. Yet.
The developer team behind Ethereum’s next iteration remained optimistic Ethereum 2.0 it will arrive on December 1st, but for now it doesn’t seem particularly realistic.
According to Dune Analytics, only 95,648 ETH were committed to the Ethereum 2.0 deposit agreement, of the requirement 524,288 ETH: just over 18%. Additionally, to be launched on December 1 as planned, all ETH must be deposited into the contract seven days in advance, according to Ethereum Foundation principal researcher Danny Ryan.
The first phase of the Ethereum 2.0 update, which has already been delayed by almost a year, will see the network begin its transition from a proof-of-work consent protocol to a proof-of-stake one. The proof of work, which is the way the Bitcoin blockchain operates, asks “miners” to solve complex puzzles to verify new transactions, and the first computing rig to solve a given puzzle is rewarded with native tokens.
This poses a problem of scalability, as people who want an edge can simply buy more computing power, allowing them to solve puzzles more quickly; investors have built entire data centers that exist solely to solve puzzles, giving them a better chance of valuable tokens at the cost of huge amounts of electricity.
Ethereum 2.0 aims to do away with this puzzle process altogether. On a proof-of-stake blockchain, the network validates new transactions by choosing a “staker” and the person chosen is determined by the number of tokens they hold. This system requires a certain amount of total tokens to start working, which is why Ethereum 2.0 needs 524,000 ETH. (That’s about $ 243 million worth of Ethereum, at today’s prices.)
Most investments so far they came in large chunks, with Ethereum cofounder Vitalik Buterin himself has committed 3,200 ETH ($ 1.4 million) to Ethereum 2.0. One address, bb84d966c09264ce9a2104a4a20bb378369986db, pledged a whopping 17,088 ETH (roughly $ 8 million).
According to a blog post by Danny Ryan, the “genesis” of the project will only start if the required amount of ETH is in the contract seven days before launch. “If not,” he wrote, “genesis will be activated 7 days after this threshold is reached (whenever it can be).”
Another complication is that the December 1st launch (should it happen) only marks the beginning of the first phase of the Ethereum 2.0 update, and it will not actually switch everything to proof-of-stake modeL.
ETH 2.0 “Phase 0” will lay the foundation for Ethereum’s future proof-of-stake while keeping the existing proof-of-work model intact, at least for now. What if people don’t keep betting on ETH in the deposit agreement e Soon, that future could be a decent way.
