Ethereum 2.0, which was recently renamed the consensus layer, continues to gain steam because 12,059,714 ETH has been staked in its deposit contract.
This represents 10% of the entire circulating Ethereum supply of 120,585,605 ETH, according to CoinMarketCap. Ethereum 2.0, also known as the Beacon Chain, was launched in December 2020 and was regarded as a game-changer that sought to transit the current proof-of-work (PoW) consensus mechanism to a proof-of-stake (PoS) framework.
The proof-of-stake algorithm is touted to be more environmentally friendly and cost-effective. It allows the confirmation of blocks in a more energy-efficient way because it requires validators to stake Ether instead of solving a cryptographic puzzle.
Therefore, validators will take up the role of miners when it comes to the confirmation of blocks based on the amount of ETH staked, acting as collateral against dishonest behavior.
The transition from PoW to PoS is known as the merge and will act as the biggest software upgrade in the Ethereum ecosystem. Ethereum lead developer Tim Beiko recently disclosed that the merge would not occur in June as planned.
This revelation came days after the first shadow fork that served as the merge trial went live on the Ethereum mainnet. It was to stress test syncing and state growth on the ETH network. The merge is being waited with bated breath because it will enhance Ethereum’s quest to be a deflationary asset. Its value is expected to continue increasing with time on the foundation of slashed supply.
As more investments continue trickling into Ethereum 2.0 deposit contract, confidence in the ETH network is rising in anticipation of the merge.
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