Will Ethereum 2.0 start a bull run?

Ethereum 2.0 has entered the Genesis startup phase. As of 3:00 p.m. on November 11, more than 50,000 ETH have been deposited into the Ethereum 2.0 deposit contract address, and the startup progress has been completed by 10%.

The deposit contract is like the first door to the Ethereum 2.0 world. Pledgers participate in the creation of the world by depositing ETH, which can also be regarded as a long-term investment to a certain extent. After all, this door currently only allows entry but not exit, and the deposited tokens will become part of the "beacon chain".

The beacon chain is the core of Ethereum 2.0 and can be understood as a "PoS system". It is more like a "supervisor" responsible for verifying data from the shard chain. In the future, the current Ethereum PoW mainnet will also be integrated into the 2.0 network and become one of the shards or main storage contracts.

Ethereum 2.0 is gradually being expected by market investors to be a bull market "booster". When BTC broke through $15,000 six months after the halving, people hoped that ETH could continue to play the role of accelerator it played in the previous bull market.

Theoretically, after switching to the PoS mechanism, the demand for locking and using Ethereum will increase, which will help increase its value. However, completing the 2.0 upgrade will not happen overnight, and investors need to pay close attention to relevant information and carefully assess risks.

The Genesis startup progress bar reaches 10%

Ethereum 2.0 "Genesis Plan" is in full swing. According to OKEx data, as of 3 pm on November 11, there were 52,993 ETH in the ETH 2.0 deposit contract address. According to the specification, the minimum deposit required to start the Ethereum 2.0 Beacon Chain mainnet is 524,288 ETH, which has now completed 10.1% of the total demand.

On November 4, Danny Ryan, a researcher at the Ethereum Foundation, announced the "Genesis Plan" on the official blog. He released the "eth2 v1.0 specification", the core information of which is the deposit contract address (0x00000000219ab540356cBB839Cbe05303d7705Fa). Users who deposit at least 32 ETH to this address can become one of the validators of the Genesis launch of Ethereum 2.0.

Ethereum Foundation announces 2.0 network launch rules

Storing ETH into this contract address, in addition to its historical significance in participating in the launch of Ethereum 2.0, can also be seen as a long-term locked-up investment.

According to the real-time calculation of the ETH 2.0 income calculator, the annual interest earned by participating in the "Genesis" staking storage will be 14.09%. If the minimum deposit is 32 ETH, the principal and interest will total 36.5 ETH after one year. According to the current price of $459.58, the annual income is about $2,072. This staking allows compound interest, and the longer the staking time, the higher the income may be.

Of course, the pledge yield will fluctuate with the change of the total pledge amount. The higher the total pledge amount and the lower the proportion of individual pledges, the yield will also decrease.

The official has set December 1 as the preliminary date for the launch of ETH 2.0. However, the prerequisite for the launch is that the amount of deposited contract coins can reach 524,288 ETH 7 days before the expected time; if the amount does not reach the standard by then, the time will be postponed until the goal is achieved, and it can be launched 7 days later.

At the current price, 524,288 ETH is worth about $240 million. If compared with the locked-in amount of the top DeFi, this number is not high. Currently, the total locked-in value of Uniswap is $3.1 billion, and that of Maker is $2.2 billion.

It must be noted that the reason why participating in the Genesis launch is like a long-term investment is that it is currently irreversible, that is, transferring ETH into the 2.0 deposit contract is currently a "one-way" process - users who pledge at least 32 ETH will receive a "receipt" on the blockchain, which indicates that the pledger is qualified to serve as a validator. Once pledged, it cannot be transferred from the deposit contract to the existing PoW chain.

When can we withdraw and transfer funds? This may require waiting for Ethereum 2.0 to be fully implemented, which will take two to three years.

The beacon chain will "swallow" the current chain

To be more precise, when you deposit ETH into the deposit contract address, your token is no longer the ETH currently circulating in the market, it becomes part of the beacon chain.

The beacon chain is a brand new blockchain and the core of Ethereum 2.0. As is well known to the outside world, Ethereum will shift from the proof-of-work mechanism (PoW) to the proof-of-stake mechanism (PoS). The beacon chain can be understood as Ethereum's "PoS system". Under ideal conditions, this new system can achieve 1,000 times scalability.

If all goes well, the beacon chain will become the new Ethereum. Unlike the current Ethereum network, which is open to miners and developers, the beacon chain will be more like a "supervisor" in the future, with a very clear scope of responsibilities.

Overseas developer Bruno introduced that the beacon chain does not have the data we usually use - it does not store any information stored on the current Ethereum blockchain, including account balances, token-related contracts, DApp status, etc. It only stores two things: the validator list and Attestation (proof information).

In Ethereum 2.0, the beacon chain is the main chain, and many shard chains will be born based on it. The shard chain is where various applications are born and more information is stored. All shard chains need to report to the beacon chain, the "supervisor". Each shard must store the latest state of the hash on the beacon chain block, and the verifier will verify it. Verification is the process of generating blocks.

It seems that Ethereum 2.0 has a clear division of labor. The beacon chain is mainly a channel for validators to participate in staking and obtain income. As "supervisors", they are responsible for verifying large amounts of data from the shard chain, packaging blocks, and building the network.

The launch of the beacon chain is only Phase 0 of ETH2.0. In the next stage, developers will strive to enable the content of the shard chain to reach consensus based on the beacon chain, which will be a huge and complex project.

So the question is, after the new Ethereum mainnet gradually matures, what will happen to the current Ethereum network?

According to the official plan, after Ethereum is fully transformed into a PoS system, the PoW chain will degenerate into a shard or a master archive contract.

As if swallowed and merged, the PoW chain becomes a part of the new system. Once the dynasty changes, the current Ethereum miners will lose their voice. Under the PoS mechanism, computing power becomes unimportant.

Can ETH once again act as a bull market accelerator?

After the transition to a proof-of-stake mechanism, validators who stake ETH on Ethereum will become the “worker bees” of the network, replacing the role of miners.

For market investors, whether this change can stimulate the demand for ETH and thus drive up the price of the currency is a more important topic. In the last bull market, ETH became the engine of growth because it met the rigid demand of ICO.

Since the Ethereum Foundation released the 2.0 deposit contract on November 4, more than 50,000 ETH have been "locked" in this address, and this number will continue to increase until it reaches the genesis start standard of 524,288. Judging from market performance, the continuous "deposits" have brought about an increase in the price of the currency.

On November 4, ETH rebounded after falling to $374, and closed positive for several consecutive days. On November 7, ETH rose to $468, an increase of more than 25% in 3 days. As of 3 pm on November 11, the price of ETH fell back to $459, still more than 20% higher than the previous low. This stage also coincided with the recent surge in BTC.

ETH price has risen by more than 20% recently

"From the perspective of ETH supply and demand, the demand brought by ETH 2.0 will exceed that of the previous ICO and DeFi periods." Blue Fox Notes estimates that the PoS staking mechanism will make the ETH staking amount reach about 30% of the total, and currently, the ETH staked in the DeFi ecosystem accounts for approximately 7.3% of the total circulation.

Another factor to consider is that after the launch of Ethereum 2.0, its performance and scalability will be greatly improved. By then, the decentralized application ecosystem will undoubtedly be more prosperous than it is now, and the demand for ETH will be further expanded. In the long run, ETH is expected to bring good returns to investors due to increased demand.

In the bull market at the end of 2017, ETH was impressive due to ICO. As a hard currency for fundraising, its price continued to rise, and its market value was second only to the "coin king" BTC, becoming an important driving force for the bull market. However, in the eyes of industry insiders, the emergence of ICO is a historical accident, especially after China's strict regulatory ban and the subsequent bear market, the demand for ETH slowed down and the price fell, which to some extent diluted the consensus of coin holders on Ethereum.

As of 2020, the construction of Ethereum network applications has become much more mature than in 2017. In particular, the prosperity of DeFi has freed Ethereum from the impression that it can only be used for ICO. Coupled with the exploration of 2.0, the potential of Ethereum is becoming greater and greater.

There is another factor that makes the market look forward to it - the creation of Ethereum 2.0 just happened to happen in the era after the halving of BTC production. In the past historical rules, the bull market always brews in this cycle. Today, the price of BTC has been rising steadily and has reached the $15,000 mark. Many people believe that the changes in the supply and demand structure brought about by the halving have finally begun to affect the market. In this case, Ethereum, which is moving towards the 2.0 era, is expected to continue to play the role of an accelerator, and work with BTC to heat up the market and give birth to a new round of bull market.

Of course, market investors still need to be vigilant, because Ethereum 2.0 is still in its early stages, and there will be many bumps in the road of exploration, and the possibility of good news turning into bad news still exists. Paying attention to the development progress of Ethereum 2.0 and the construction of network applications may be a must for investors. Careful assessment of risks is an iron rule in any financial market.