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"The Ethereum 2.0 transition is risky and highly complex, but it could drive up the price of ETH"



Ethereum 2.0 was slated to launch in January 2020, but the launch was postponed to a later date, which was revealed to be possibly July 2020. BitMex Research explained in a tweet that the decision is to scale through fragmentation, which is the separation of large databases into smaller and more manageable ones.

Responses to the BitMEX tweet were neither supportive nor enthusiastic about this release, as many see it as a failure by Ethereum. Responses like 'sell your Eth' and 'Ethereum sucks' were posted, while one person asked when the launch of Eth 3 was expected. One person sarcastically commented that while Bitcoin was undergoing another halving, Ethereum was "doubling "

According to the tweet, Ethereum has little choice but to attempt a very complex multi-year transition to a new network, which is very risky. In a blog post Linked to the tweet, BitMEX Research states that the launch may not be as important as it sounds, as Ethereum 2.0 It will operate primarily as a test network for Ethereum's new proof of stake consensus mechanism.

Ethereum is trying to transfer its entire economy to a new network, Ethereum 2.0. This transition is risky, highly complex, and will take a considerable amount of time. ”

However, Ethereum is trying to transfer its entire economy to a new network. This planned transition will take place in three phases; beacon chain phase, fragment chain phase, and state execution phase.

Many have asked us what impact the launch of Ethereum 2.0 will have on the price. Of course, in the short term, a significant amount of ETH could be blocked within the beacon chain, attracted by the ability to earn the new block rewards. This could restrict the supply of ETH in the market and increase the price, on the other hand, it could simply attract ETH from other contracts where they are considered blocked. However, the real question is whether Ethereum 2.0 will generate long-term value, and for that, supply must not only be restricted, but there must be sustainable demand. ”

The original Ethereum network will hold most smart contracts and business activities as long as it exists as a parallel system to Ethereum 2.0. This transition will cause the existence of Eth1 and Eth2; so Eth1 can be transferred to Eth2 but the opposite will not be possible.

Why do blockchains prefer fragmentation?

Lack of scalability for many blockchains is a problem, therefore the choice to use fragmentation. It is a method that many developers are exploring to increase transactional performance. Through fragmentation, each node is not responsible for processing the transactional load of an entire network, but only maintains information related to its partition. In this way, there is less centralization of activities and more security and decentralization of the general ledger.

Ethereum's decision to use fragmentation to increase scalability allows more transactions to be processed in parallel at the same time. However, this decision represents a change in Ethereum's economic model. The network is described as an unstoppable single world computer, which might not be the case once it splits into multiple chunks.


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