March 7, 2023
6 min read
We must admit that Bitcoin is the king of all cryptocurrencies; however, another popular project known as Ethereum is worthy of some attention. It is the second-largest cryptocurrency based on its market capitalization of around 117 billion dollars at the time of writing. This particular cryptocurrency is also known as the king of smart contracts.
Ethereum entered the crypto space in June 2015 and was deployed by founder Vitalik Buterin, Charles Hoskinson, and Gavin Wood. Though these individuals except Vitalik have migrated to working on their own blockchain projects, they have significantly contributed to the Ethereum Blockchain and the development of the network.
So what is Ethereum really? Ethereum can be viewed as a type of decentralized blockchain technology. It has smart contracts capability on the internet that allows other applications to be built and run on top of it. Ethereum is also the most actively utilized blockchain technology to date. Additionally, this particular cryptocurrency goes by the ticker ETH, which is the native token that fuels the network. It is also referred to as Ether by many individuals in the crypto space.
Ethereum is also a censorship-resistant blockchain, which means that no government has central control over the network. Its blockchain is open source and available to everyone who wants to transaction and commerce with no gatekeepers. Some of the most robust features and applications on the Ethereum blockchain include banking, commerce, peer-to-peer transactions, and privacy features. For this reason, among others, is why the Ethereum network is very significant as it relates to the future of blockchain technology.
The year 2020 has been a very significant milestone for Ethereum mainly because of its huge Staking 2.0 upgrade, which was announced by the core development team. This network upgrade was one of the most talked-about activities to take place in the crypto space, especially since it is particularly aimed at scaling the entire network.
Moreover, staking 2.0 or ‘phase 0’ is aimed at making Ethereum more scalable so that it can handle more transactions, thus more users simultaneously. It is also aimed at increasing the security of the network, which will result in a more sustainable ecosystem. This means that there will be a faster network with more efficiency and fewer gas costs as more users transact.
It is important to note that the staking 2.0 upgrade will be done in phases since it involves a lot of technicalities that the Ethereum developers should be able to handle with no problem. The first leg of the upgrade is known as ‘The Beacon Chain’, which was launched on December 1, 2020. This will then be followed by Shards Chain and Docking.
The other phases of the upgrade will be rolled out gradually through 2021, but there is no set a date for the final completion of the network upgrade. So as of now, the world is ‘betting on Ethereum’ to successfully scale and complete each phase of the network upgrade.
Originally the Ethereum network used a Proof of Consensus model, which was working fine. However, the developers opted for the Proof of Stake (PoS) model, which is deemed much more efficient. The first leg of the upgrade, which is stalking 2.0 involves the locking up of tokens to earn a reward in return. This blockchain mechanism is known as proof-of-stake (PoS).
PoS is a consensus mechanism that rewards users for validating blocks once they lock up their ETH for a period of time. While Bitcoin uses Proof of Work (PoW) to create new coins. It’s the latter with the Ethereum network upgrade, which will utilize Proof of Stake (PoS), which is more efficient and uses fewer resources too.
Going forward, individuals who use the network can stake their ETH and earn more Ether in return. However, the minimum amount of Ether that can be staked is 32. For some users, this might pose a problem. Nonetheless, there will be validators that allow the deposit of fewer ETH, which will then be staked in a much larger pool.
Theoretically, anyone can participate as a validator without the need for any high-end hardware, but the validators will need to be online consistently to avoid small penalties. The rate of return for staking is expected to be around 4-10% depending on how much ETH a user has staked. Also, if there are any bad actors on the network, a mechanism will be implemented known as slashing. This will reduce the rewards of such bad validators so that they are forced back in line.
In order for someone to take part in staking on Beacon Chain, they will need to join what is known as a staking pool. Staking pools refer to different parties coming together to participate as a single validator. This allows the rewards to be generated much faster compared to when individuals stake by themself.
So, who runs these staking pools? Different operators will run their own staking pools, and users will be able to join by locking up and providing those operators with their ETH. For instance, the Atomic Wallet’s Staking Pool will be run by the Atomic Wallet team, and anyone who uses the Atomic Wallet will be able to participate with their 32 ETH. The benefit of joining a staking pool is the fact that no technical knowledge is required as opposed to being a validator and running a node all by yourself. In short, staking pools will help to eliminate the need for technical skills or experiences when staking your ETH.
Users who stake their Ether in different pools have the advantage of earning passive income from the rewards. This can be a great way to lock up your wealth and live off the rewards, which are not possible with other cryptocurrencies like Bitcoin, for example. Though the rewards are not as high as many other cryptocurrencies that can be staked, Ethereum has a lot of room to grow, which means that the rewards could be worth a lot more in the future. Moreover, it is better to be earning from your assets instead of having them sitting in a wallet for long periods.
While staking looks amazing right now, there are two sides to the story here as there are potential drawbacks to staking 2.0. If there is an unforeseen market crash that occurs, users will not be able to withdraw their funds and convert them to stable assets since they will be locked up for a certain period of time. Even in the event of a smaller market downturn, the rewards from staking might not be enough to cover losses for some users. Whales who have a lot of Ether to stake will more likely benefit rather than the average individual.
In order to participate in staking, users will have to join staking pools with a minimum of 32 ETH. This means that their ETH will be out of their wallet until the staking period ends. Lastly, if a person has less than 32 ETH and wishes to participate, they will have to pool with other third parties that engage in centralized staking. So there are other potential risks at play other than locking up your ETH, which might lose value in a market crash.
In the crypto space, any good news is very influential for just about any project. What this means for Ether is that its price will gradually increase just like it was doing for the past few months in 2020. As a result, it is very much safe to say that staking 2.0 has been positively affecting the price of Ether and will continue to do so.
In the future, Ether will theoretically become more scarce as more users lock up their ETH for staking. On the other side of the spectrum, this will also drive up the price of ETH as well. With a 4-10% interest to all validators depending on the amount of Ether staked, it is believed that this will be attractive to a majority of cryptocurrency users. Furthermore, ETH was already considered very valuable since it is the king of smart contracts and the most actively used blockchain in the world.
At the time of writing, there are thousands of projects built on the Ethereum network, which is why it is the most used blockchain in the world at the time of writing. So how will the staking 2.0 upgrade affect these projects? Technically, other projects that are based on Erc-20 standards should be fine for now, but as the network’s upgrade phases roll out, they might need to add a few tweaks to their smart contracts. This will most likely be a small update by the developers of those projects and should not have a major impact on their tokens.
Another necessary point that project developers might need to take into consideration is the fact that the Ethereum 2.0 upgrade will be rolled out in phases, and new changes might need to be implemented during the upgrade process, but as of now, there is little to no action needed on their end.
One of the biggest problems that most users face right now is a high gas price when transacting on the Ethereum network. There are also many complaints of slow transaction times when the network is congested. Additionally, there are a lot of complaints about the gas prices to complete these transactions on the network. Many individuals tout that Ethereum does not cater to the average user since it costs too much to interact with your favorite Dapps.
Luckily, Ethereum 2.0 is said to tackle these issues so users can expect a solution as the different phases of the upgrade rolls out in a timely manner. In terms of the market, Ethereum 2.0 will certainly drive a positive impact. Users who participate in staking for rewards will contribute to pushing the price upwards since their ETH will be locked, thus allowing the token to become more scarce over time.
Ethereum has a great community of users and developers that is constantly growing every day. Their website and social media accounts can be found by visiting the following links below:
Ethereum Website: https://ethereum.org/en
Ethereum Twitter: https://twitter.com/ethdotorg
Ethereum Youtube: https://www.youtube.com/channel/UCNOfzGXD_C9YMYmnefmPH0g
Ethereum Discord: https://discord.com/invite/CetY6Y4
You can easily purchase ETH in the Atomic Wallet with a Visa or Mastercard. All purchased Ether will be deposited straight into your wallet upon successfully completing a purchase. If you currently hold other tokens such as Bitcoin, you can easily exchange them for Ether as well with the click of a button.
Without a doubt, we do have plans to support the Ethereum Staking 2.0 upgrade in the future, but as of now, it is not available in the Atomic Wallet. As soon as this feature is rolled out and can be implemented, we will notify all our users in the same manner as we execute the upgrade across all platforms. We are very excited about staking 2.0 and will ensure that it is implemented as quickly and efficiently as possible for our users!
Be sure to check that you have the latest version of our wallet installed for the best experience. If you don’t have our wallet installed yet, you can download Atomic Wallet for PC, Mac, Linux, Android, IOS for free!
Staking fundamentally involves committing your cryptocurrency assets to a specific blockchain system in order to earn rewards in return.
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