Ethereum 2.0 brings a new market of tens of billions of dollars. All you need to know about PoS pledge is here

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Author: Dabai / Source: Vernacular Blockchain


This is the original 1744th issue of the vernacular blockchain

Author | Vernacular Blockchain

Produced | Vernacular Blockchain (ID: helloBTC)

The Ethereum Beacon Chain officially updated the Bellatrix fork upgrade last night (September 6). After the upgrade, the price of ETH soared to more than $1,678. However, it then fell back to around 1500, all but eroding Bellatrix’s upgraded gains. However, the Ethereum Foundation clarified that the Bellatrix upgrade is not a merger, but a key step in providing the Switch needed for the merger.

In fact, Ethereum, which is positioned as the world computer, has set four development and upgrading plans from the beginning, which are Frontier (frontier), Homestead (home), Metropolis (metropolis), Serenity (serenity) four stages. At present, the entire network has reached the fourth stage. The first three stages belong to Ethereum 1.0, which is the current execution layer, and the last stage is what we often call Ethereum 2.0. The main task of this stage is to Ethereum switched from the current POW proof-of-work mechanism to a more energy-efficient POS mechanism.

The concept of ETH 2.0 was proposed by the development team in 2017, and the upgrade is planned to be completed in 2020. But as of today, the upgrade plan for Ethereum 2.0 has not been fully implemented.

Later, with the continuous discovery of new problems and the development and improvement of the underlying technology of the blockchain, the Ethereum Foundation now combines the Rollup technology to divide the last stage of Senerity into three stages as follows:

  • Launch of Beacon Chain: Launched on December 1, 2020, it is a key feature of the network’s move to a PoS consensus mechanism.

  • Merge the beacon chain with the Ethereum main network, i.e. switch POW to POS.

  • Expand the shard chain.

Currently, Ethereum’s upgrade is in the second consolidation phase. Today, let’s summarize the essence of the vernacular blockchain in the past about the merger of Ethereum pledges, and let’s review the old and learn the new 🙂


Birth of POS

Consensus algorithm is the core element of blockchain technology. From the perspective of classification, there are those based on block production, finality distribution, and those based on node selection. In the early days of blockchain development, mainstream blockchain networks were all based on POW consensus algorithms, including Bitcoin, Ethereum, and Litecoin.

Due to the resource waste of block production in POW, the research on PoS-based consensus algorithms has developed rapidly after 2017, and in 2018, various public chains based on PoS consensus algorithms have been gradually launched.

So how to understand the importance and evaluation system of consensus algorithm? How to recognize the current mainstream consensus algorithms and the development behind them? Next, what are the trends and obstacles in the development of consensus algorithms? For details, please see: Is the consensus mechanism known as the “soul of the blockchain” going to undergo a huge evolution?


The tortuous development of POS

2019 has been called the “Year of Equity”, with many companies working on the development of products, services, projects, investment products, and seeking initiatives to develop commercialization and advance equity models.

It has to be admitted that the pan-PoS ecology (including DPoS, master node system, etc.) occupied a considerable proportion in the blockchain projects at that time. For a mechanism that is more flexible than PoW, what issues need to be considered in the development of PoS?

This article: Is the PoS ecosystem worth tens of billions undervalued? These major issues that may need to be resolved before the outbreak will introduce you to the status of the proof-of-stake project at that time, who will participate in it, whether it will become a traditional financial accessory, and how to introduce tax, legal and regulatory mechanisms.

All blockchain networks have one thing in common: transactions need to be verified. Bitcoin, for example, uses Proof of Work (PoW), so-called block production, which requires a lot of electricity. Proof of Stake (PoS) is another consensus mechanism. It has different evolutions and hybrid models. We call these staking, or Staking.

Token pledge enables token holders to gain some decision-making power on the blockchain network, as well as vote and earn income. This is very similar to how people earn interest by holding money in a bank account, giving money to the bank to invest and earning a return.

There is no doubt that the development of the Staking Economy was one of the biggest trends in blockchain in 2019.

Staking in POS, whether it is an institution or an individual, can be carried out by coin holders, which is an important way to participate in network construction. The fundamental essence of Staking Economy is to encourage token holders to actively participate through incentives with annualized returns. But this does not mean that the staking economy of PoS is mature. There are still many problems that need to be solved urgently, and continuous exploration and trial and error are needed. After the popularity of PoS, everyone gradually discovered the problem of participation in Staking.

From the perspective of system security, POS has at least some security risks, such as no severe attack and long-range attack, closed system of POS and high inflation rate. For details, please see: PoS is becoming mainstream, and there are still many risks behind the easy production of blocks and high yields

Secondly, in addition to risks, there are also many challenges: educating users about staking-related responsibilities and risks is still a huge challenge; user experience is also a challenge; how to adopt the staking mechanism more widely in practical applications, without sacrificing It is also a challenge to find a good incentive mechanism in the case of centralization ; the sustainability and standardization of proof of stake and staking ; how users choose staking service providers and many other challenges. For details, please see: The staking mining ecology is gradually prospering, but there are still many challenges. Can you still feel at ease with staking?


What do you think about POS

As of March 26, 2019, there were already 11 PoS mechanism projects with a market value of more than $100 million. Holders can participate in ecological construction through Staking and obtain benefits.

Therefore, with the POS projects mentioned above, which are estimated to have a market value of tens of billions of dollars in 2019, billions of dollars in staking income will be generated every year.

In the face of such a large staking cake, the most sensitive capital has already begun to deploy. Focusing on the PoS ecology and Staking Economy, in April 2019, the vernacular blockchain interviewed Wen Hao of Bitpie Wallet on the rise of Staking, risks or trends, layout and problems. For details of the interview, please see: PoS ecological prosperity, or will it enter the “mining 2.0” era with an annual output of 10 billion and no need for mining machines?

Focusing on the development of ecology and layout, Vernacular Blockchain also interviewed Li Chen, CEO of HashQuark, and Zhang Dizhang, operation director of Wetez Wallet. From the perspective of PoS entrustment service providers and wallets, help everyone understand the ecological panorama of the Staking Economy, the existing Staking issues, multi-chain nodes and security, factors to consider when choosing a Staking entruster, and whether the PoS blockchain can be compatible with ” “Deposit Coins and Earn Interest”, etc. expressed their opinions. For details, please see: The main application of the blockchain of PoS mechanism is “deposit currency to generate interest”?

On November 4, 2020, Vitalik Buterin posted that PoS is a superior blockchain security mechanism compared to PoW. There are three reasons: PoS provides greater security at the same cost; PoS is easy to recover from attacks; PoS is more decentralized than ASIC. This caused extensive discussion in the community within the plus circle.

Therefore, Vernacular Blockchain also invited Nervos Foundation co-founder & COO Lv Guoning, Cobo co-founder and CEO, F2Pool co-founder Shenyu Daniel, and Spark Pool Product Manager Miao Shu to express their opinions on PoW and PoS consensus mechanisms the opinion of. More details: Bitcoin to the left, Ethereum to the right, POW and POS which side are you on?


possible investment opportunities

As a major upgrade of Ethereum, the launch date of Ethereum 2.0 is determined as the number of validators pledged exceeds the set value. That is, on December 1, 2020, the beacon network will be launched, and Ethereum will officially enter the 2.0 era. . This is called “stage 0”.

That is to say, this public chain project with a market value second only to Bitcoin, an ultra-high adoption rate and a strong developer community will most likely bring about a new wave of wealth effects, and there are certain opportunities to get rich. , still want to participate in the pledge, then you can start by understanding ETH2.0 pledge one step ahead of others

Specifically, look at this article: Ethereum enters the 2.0 era, can it bring new wealth effects? Start by understanding ETH2.0 pledge one step ahead

Ethereum 2.0 enters Phase 0. In 2021, it has ushered in great development. The London upgrade brought burning demand. According to the relevant data at the time, as of 11:00 on December 24, 2021, the total destruction of Ethereum reached 1.25 million, with a total value of more than 5 billion US dollars.

First take a look at this popular science to understand what the London upgrade is: Popular Science | What is the Ethereum EIP-1559 that takes effect after the Ethereum London upgrade?

In addition, the pledge of Ethereum 2.0 starting in 2020 has also provided a considerable impact on the continued tight demand of ETH from another dimension.

However, for most ordinary users who want to participate, due to some unique mechanism designs in the Ethereum 2.0 pledge, there are certain thresholds and risks to directly participate in the Ethereum 2.0 pledge:

1. Funding threshold: 32 ETH. When participating in the Eth2 pledge, deposit at least 32 ETH (or a multiple of 32) into the deposit contract, and 32 ETH exceeds tens of thousands of US dollars at the market price, which is undoubtedly a high capital threshold for most users.

2. Technical threshold: Slash penalty. Slash penalty means that the staking node is punished for not complying with the agreement, that is, deducting at least 32 ETHs pledged in the node. The conditions for triggering the Slash penalty basically revolve around the technical operation and maintenance level, such as signature error, long-term node offline Wait.

3. Capital efficiency threshold: The ETH pledged by the liquidity lock-up Eth2 will always be locked, and together with the potential income obtained, it will not be unfrozen until the second stage (or 1.5 stage) of Ethereum.

It can be seen from the above that the small amount of ETH cannot participate, the technical threshold of verification nodes, and the liquidity of pledged tokens are issues that our ordinary users need to pay direct attention to when participating in Eth2 pledge . For details, please see: London’s upgraded Ethereum burns over 1 million, and the Ethereum 2.0 pledge track is gradually becoming clear?

This year, the mainnet merger in September that V God said should be the biggest benefit for ETH.

So about this benefit, you should pay attention to these few things: Why does ETH have to be transferred to POS, can it not be transferred? Why is the Merge of POW to POS a great benefit? After the Merge ends, will the amount of ETH pledged be unlocked? In the ETH2.0 era, where will Layer 2 go? For details, please see: Ethereum will be merged in August and September as soon as possible: a big advantage? Pledge smashing? What about Layer2?



The need to deploy stablecoins and similar banking services in DeFi is also on the rise while Ethereum can be used for staking. As a newcomer who wants to join the development of Web3, it is necessary to understand the principle behind it. Finally, collect ten articles, it is better to read them carefully, and don’t forget to take time to read them again.

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