Launching Ethereum 2.0 is definitely one of the most important events in the crypto world for this year. The long-planned network upgrade is to ensure better scalability and greater security. will the changes bring the expected benefits?
Ethereum is one of the first cryptocurrencies which enabled the creation of decentralized applications, smart contracts, and tokens based on the ERC-20 protocol. The most distinctive feature of Vitalik Buterin’s project is the constant improvement of platform functions. Ethereum 2 0 is the most awaited upgrade during the history of Ethereum. How does Ethereum 2 0 work? Technically, Ethereum 2 0 is to become Proof of Stake (PoS) based blockchain, the changes are intended to reduce the energy consumption of the network, allow it to process more transactions, and increase the security of the entire system.
Since the uprising, Ethereum has become the most used programmable Blockchain. The interest was so big that the network began to clog. Due to that, it was necessary to improve scalability. The same problems also had Bitcoin (BTC), which is caused by the use of Proof of Work. PoW is an algorithm in which mining is used for block verification. It is a very energy-intensive method, so switch to the Proof of Stake was just a matter of time.
In the Proof of Stake algorithm validators are responsible for securing and creating new blocks. The test network currently has almost 38,000 validators active and together they have accumulated over 1.1 million test ETHWhat conditions do you have to meet to become a validator?
User need to have exactly 32 ETH, not less and no more. Then you have to deposit them on special smart contract. If you can’t get that amount, you can connect with other people. The only technical requirements you have to meet is a computer permanently connected to the network on which the Ethereum 2 0 client and the network validator software will be installed. It may be a physical machine owned by us or a rented cloud service.
If you are interested in staking, the first step is to collect the indispensable number of ETH. You can purchase them on CoinCasso. How to do it step by step?
1. Firstly, you need to register on CoinCasso.
2. The next thing is to verify your account due to the quick and simple KYC process.
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It’s so simple, isn’t it?
All changes will be implemented in stages. Entrance to the new Ethereum blockchain was planned in three phases.
Phase 0: This is the first step to the new Ethereum, called “The Beacon Chain“. Launch of Beacon Chain includes the Proof o Stake introduction, side-by-side with current, main proof-of-work network which will remain unaffected in this phase. Already started in Dec.
Phase 1: Among the new improvements appeared shard chains. These are parallel blockchains that reside in Ethereum and take over some of the network processing work. In Eth 2 0 nodes in the network will be scattered. They will have to download, compute, store, and read each transaction in their subset created after the network reform, not the whole network. Thanks to this upgrade, the capacity will increase. Expected to 2021.
Phase 3: Called “The docking” The final implementation of Ethereum 2.0 where it is merged with the main Ethereum network. This will make the end of the Proof of Work for Ethereum. Expected to 2022.
Proof of Stake (PoS) differs in that instead of miners, transaction validators stake crypto for the right to verify a transaction. It took a long time for the changes to start, but the Ethereum 2 0 network is finally here. Many users wonder how profitable staking ETH 2 0 will be. For ETH holders, Eth 2.0 provides a new opportunity to participate and receive rewards for maintaining the network. For those who wish to run their own validators with 32 ETH, use a provider to stake their 32 ETH, or pool their funds with others, the Ethereum ecosystem will host a number of products and solutions.
The main source of profit for staker is the new ETH coins. The creation of new coins is called inflation. The more people involved in staking, the protocol creates more new coins (we have more inflation). But at the same time, a smaller amount of coins is allocated to a single validator. This means that the increase in new coins is not proportional to the increase in the number of validators. Therefore, the highest growth rates will be with a small number of validators. In turn, the high rate of rewards attracts new validators, which reduces the profit for each of them. What is the most important at this point, is the awareness that we will not be able to withdraw funds from staking for the first few months. What does it mean? That, first of all, in this period the rate of return will only decrease. Secondly, we will not be able to withdraw our capital when the rate of return drops below our satisfactory level.
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