The Ethereum 2.0 beacon chain genesis block has finally launched after practically years in the making.
The repeatedly postponed update to the second-largest cryptocurrency by market capitalization took its first breath on Dec. 1, just after 12 pm UTC. The launch suffered no hiccups and hit the required stake participation levels to finalize the blockchain.
Vitalik Buterin noted about the launch:
Normal people: we should really put something profound in the first block of the ethereum PoS chain, something about giant leaps for mankind or whatever.
Ethereum community: pic.twitter.com/cOu94fUPE9
— vitalik.eth (@VitalikButerin) December 1, 2020
Ethereum 2.0 Genesis Block is Mined
The largest improvement is the implementation of a network proof-of-stake arrangement. PoS supplements the former proof-of-work only consensus protocol on Ethereum.
By having validators to lock Ether (ETH) into a staking contract, PoS attempts to provide a more energy-efficient way of protecting the network rather than solving cryptographic puzzles using computational resources, like Bitcoin. Bitcoin mining has been criticized heavily for being an energy-hungry process.
Just a week earlier, the scheduled launch date was verified, as the launch of Ethereum 2.0 could only be confirmed after the staking contract had deposited a total of 524,288 Ethers (around $290,000,000 as of writing).
The staking amount was achieved after a painfully sluggish start with just hours to spare to meet the planned deadline of Dec. 1.
16,384 validators deposited ETH into the Etherum 2.0 staking contract since it went live on Nov. 4.
While there were early concerns about low staking participation, transfers to the deposit contract rapidly increased over the last day of contribution near December 1, with more than 200,000 ETH sent to the contract in the last 14 hours of the day.
Vitalik’s Major Contribution
Vitalik Buterin, himself, contributed much of his own wealth to the Ethereum 2.0 staking contract.
About 3,200 ETH, worth $1.5 million, were sent by Buterin to the newly formed deposit contract of the network in preparation for staking.
Buterin’s “VB2” address sent 100 transactions for 32 ether each, totaling 3,200 units of the cryptocurrency, as reported by TrustedNodes. The amount is worth around $1.4 million at press time.
Ethereum’s Scalability Upgrades
With the launch of Ethereum 2.0, Phase 0 has commenced.
As the first phase of Eth2, Phase 0 focuses on the implementation of staking and scalability of Ethereum. With the rise of the DeFi movement and trading of Ethereum-based tokens on decentralized exchanges such as Uniswap, it is imperative that Ethereum is able to scale with growing demand.
As noted by DeFiPulse, the total value of liquidity locked on the Ethereum ecosystem is over $14 billion.
Ethereum 2.0 decreases resource usage, allows the network to accommodate more transactions and improves security.
As a proof-of-stake blockchain, Ethereum may add network sharding after Phase 0. This shifts the way Ethereum operates tremendously towards a scalable option, as gas prices and network traffic have hit all-time highs recently.
In the wake of current market volume, Ethereum network transaction fees have surged, recently achieving an all-time high. It has reached the point where even Vitalik Buterin called the Ethereum network “unusable” for most DApps earlier in the year.
This is thanks in part to the influx of many new on-chain transactions initiated by various decentralized finance protocols (DeFi) that have made their way into the crypto domain in recent months.
And while DeFi has provided investors with financial products through decentralized exchanges by way of various lending protocols that reward liquidity providers, this very facet of the technology has resulted in the creation of an undesirable environment of high transaction fees that, in turn, has gravely affected the value of many tokens.
What’s Next for Ethereum?
The move to PoS paves the way for the introduction of potential proposed enhancements, such as sharding to increase scalability.
Until Phase 1.5 of the Ethereum 2.0 rollout, currently scheduled for late 2021 or early 2022, ETH locked away in the staking contract are likely stay there. With Phase 1.5, we will see a merging of the Ethereum mainnet with the new beacon chain and implementation of network sharding.
Anticipation for the launch of Eth2 has been building during 2020, which has been mirrored in Ether’s price, which began the year at only $130 but is currently riding high at over $500.