“I might buy 32 ETH to support the upgrade of Ethereum.”
A week ago, Changpeng Zhao expressed his support for Ethereum 2.0 on Twitter.
Coincidentally, for the smooth development of Ethereum 2.0, Ethereum founder V God also publicly stated that he has pledged 3,200 ETH to the deposit contract address of Ethereum 2.0.
More and more ETH is pouring into the contract address of Ethereum 2.0.
However, this speed is still not fast enough.
Because, until now, there are only 99264 ETHs in the Ethereum 2.0 deposit contract, which is far from the total demand of 524288.
There are still 13 days before the preset start time on December 1.
Can the zero phase of Ethereum 2.0 be launched as scheduled?
1. 32 ETH supports V God, is it cost-effective?
Regarding Ethereum, no matter whether 2.0 can be launched as scheduled, and no matter what changes it will bring after 2.0, it will definitely go on.
Because the current Ethereum is too blocked.
Under the PoW mechanism, Ethereum is limited to 15-45 TPS and the staggeringly high Gas fee, which tells us from all angles that Ethereum needs to change.
This change is Ethereum 2.0. To realize Ethereum 2.0, you first need to reach the 0th stage of Ethereum 2.0. Before that, 524288 ETH pledges and 16,384 verification nodes are required to join.
In the early morning of November 5th, V God tweeted that the current ETH pledge contract has been opened. If all goes well, Ethereum 2.0 is expected to start the genesis block at 20 o’clock on December 1st, Beijing time. If the threshold is not reached, then The founding block is generated 7 days after reaching.
This is also known as the Ethereum beacon chain. The beacon chain is the core of Ethereum 2.0 and adopts the PoS system, just like a “supervisor”, mainly responsible for verifying data from the shard chain.
When the beacon chain is launched, the current Ethereum PoW mainnet will also be integrated into it and become one of the shards or main storage contracts.
It is worth noting that Ethereum 2.0 Phase 0 accepts users to pledge ETH to become a beacon chain verifier, and can obtain pledge income. The minimum threshold for user pledge is 32 ETH.
“In fact, the number of 32 pieces is quite interesting.” An Ethereum miner told reporters, “It’s almost 100,000 yuan, and the threshold is not very high. If there are less, too many nodes, the revenue will be low; if there are more, there are too few nodes. Affect participation.”
After becoming a verification node, the node will receive a certain reward while assuming the corresponding responsibilities, and this is also the biggest motivation for attracting token holders to become a verification node.
If the pledge amount reaches the minimum standard for the beacon chain online, which is 524288 mentioned above, then this part of the validators will be able to obtain 21.6% of annualized income. If the pledged ETH reaches 2.45 million, its return will be reduced to 10%; when the locked ETH reaches 10 million, the return will be reduced to 4.9%.
Is the highest annualized return of 21.6% too low?
Let us compare the current centralized exchanges and the DeFi protocol’s ETH wealth management income.
Take Binance as an example, ETH only has current financial management, and the 7-day annualization is only 0.98%; Hufu’s ETH regular financial management, although the 7-day annualized income reaches 20%, there is a purchase restriction, and each account can only buy 5 at most.
For DeFi protocols like Aave, the annualized interest rate of ETH deposits is only 0.18%.
Therefore, for the believers of Ethereum who plan to hold coins for a long time, staking may not be a wise choice.
On November 4, 16,000 ETH was transferred to the deposit contract from the Whale account.
However, for retail investors with a larger number of people and a wider distribution, whether they want to pledge, it is necessary to draw a big question mark. After all, having tasted the high annual benefits of DeFi liquidity mining, everyone’s appetite will inevitably increase.
In addition, even now, with the decline of DeFi liquidity mining, the annualized income of many projects far exceeds 21.6%. Take SushiSwap, whose tokens have soared recently, the annualized return of some pools has reached more than 50%. Of course, this is not ETH single currency mining. There is also the risk of impermanent loss caused by the rise and fall of tokens.
Even if you don’t mine, retail investors still have more opportunities to “get big with small” in the spot and contract markets, so the Ethereum 2.0 pledge in front of you is naturally not good enough.
“I don’t pledge, don’t I invest 100,000 yuan in DeFi?” There are more than 50 Ethereum players who told reporters, “I bought CRVs in the past two days, and who can see that profit? rate?”
2. What is persuading coin holders to withdraw is only income?
Of course, not all retail investors are pursuing “big gains by small” and “high risk and high return”. A return of 4.9%-21.6% is acceptable for risk-averse investors.
In addition, in the opinion of many people, with the smooth opening of phase 0 of Ethereum and a large amount of ETH being pledged, the price of ETH in the secondary market is likely to rise.
However, the data tells everything best: Glassnode data shows that as of November 10, the number of Ethereum addresses holding 32 ETH and above has reached about 107,000. But until today, there are only about 3,000 validators who actually pledged 32 ETH, which is the result of the 10-day Ethereum 2.0 pledge opening.
Earlier, Ethereum 2.0 researcher Justin Drake initiated a poll on Twitter. Among the 3,600 voters, 50% of the voters said they would not pledge, while only about 20% were willing to pledge and already pledged.
What is causing more currency holders to be unwilling to pledge their ETH? Is it just because the income is not high enough?
In fact, there are many reasons.
First of all, the pledge time is too long.
According to the route design of Ethereum 2.0, transfer and withdrawal operations are only allowed at about stage 2. That is to say, the assets pledged to the Ethereum 2.0 deposit contract must be locked for at least two years.
And this is just a conservative estimate. If the subsequent Ethereum 2.0 process encounters some mutations, it is very likely that the pledge time will be extended.
The second is a higher technical threshold.
For coin holders, it does not mean that they can easily participate in pledge with 32 ETH, after all, this is not a simple deposit of coins to earn interest.
For users who want to become validators, in addition to configuring a computer with good performance, they also need to maintain a variety of maintenance tools to ensure the stability of the node.
In fact, as early as the beginning of the Ethereum 2.0 pledge, Ethereum developer ConsenSys reminded users, “Do not send any tokens directly to the contract. Sending ETH directly to the contract address will cause the transaction to fail. It does not mean that you are using Ethereum 2.0. To participate in the Ethereum 2.0 network, you need to use a dedicated Launchpad and follow the instructions, or join a service provider.”
After becoming a verifier, the pledger must run the verification program at all times. If there is a bug in the code of the verifier node or a problem with the network link, it will result in a loss of principal or a decrease in revenue.
The other is the risk of falling ETH price.
As mentioned above, players who are optimistic about Ethereum 2.0 pledges feel that as the pledge is carried out, the amount of ETH in the market will decrease, and the corresponding ETH price will rise.
But it is worth noting that currently in the Ethereum addresses, 60% of the addresses in the ETH have not been moved for a year, and the coins involved in the pledge are likely to come from here. After all, these addresses have more long-term ethics. By. Therefore, whether the pledge can reduce the market circulation of ETH and raise the currency price is still unknown.
What’s more, the bull-bear exchange in the cryptocurrency field is relatively rapid. It is hard to say how long the current bull market can last, and it is not even ruled out that there will be a “black swan” event similar to the 312 flash crash in the future.
In the case of Bitcoin plummeting and market depression, Ethereum’s currency price is also difficult to protect itself, and the ETH pledged in the contract pool at that time naturally cannot escape the risk.
Finally, there is the problem of Ethereum itself.
As early as September 24 this year, Danny Ryan, the project leader of Ethereum 2.0, said that there are certain risks in staking after the start of Phase 0, which is not suitable for everyone.
At that time, the validators of the Ethereum testnet Medalla were still at a loss; the Ethereum 2.0 client team was out of touch in funding and cooperation; the testnet was highly centralized.
Although after two months of development, the Ethereum team is constantly fixing problems, but there is still no guarantee that there will be no new problems in the future.
In short, all of the above have made the majority of ETH holders undecided or persuaded to leave.
3. Ethereum 2.0 may be late, and the pledge ecology has already started
As of now, beaconcha.in data shows that 99264 ETH has been pledged, but this only accounts for 18.93% of the target number.
At this rate, the current pledge efficiency is estimated to be far from reaching official expectations. There are only 13 days left until December 1st. The opening of Ethereum 2.0 Phase 0 is highly likely to be delayed.
However, regardless of whether the staking speed is fast or slow, the arrival of Ethereum 2.0 is a sure thing.
Therefore, many exchanges and projects have begun to provide solutions for staking, lowering the threshold for users to participate in staking conveniently, and designing strategies to solve the locked-in liquidity problem.
For example, CoinDCX, one of India’s largest cryptocurrency exchanges, claimed that its users can pledge Ethereum 2.0 with as little as 0.1 ETH. CoinDCX will create validator nodes from the collected ETH, and in return, will extract part of the handling fees to cover hardware and infrastructure costs.
Coincidentally, many exchanges, including Huobi, Binance, and OKEx, have stated that they are planning to deploy related products for Ethereum 2.0 pledge. Not surprisingly, in the foreseeable future, the Ethereum 2.0 pledge products of these exchanges will come out one after another.
In addition to exchanges, various projects in the industry are also laying out Ethereum 2.0 pledges.
On November 12, LiquidStake, initiated by Darma Capital, announced that it will allow Ethereum holders to withdraw USDC stablecoin loans from their holding assets while receiving equity rewards from the new network.
Individual investors can pledge any amount of ETH through LiquidStake and obtain USDC loans; LiquidStake will centralize and send users’ ETH to validator service providers such as Bison Trails, ConsenSys Codefi or Figment Networks.
Web3 blockchain cloud infrastructure platform Ankr also announced that it will provide ANKR airdrop rewards to users to encourage users to pledge by using the mobile betting platform Stkr.
Stkr’s solution to liquidity is as follows: Users deposit ETH through Stkr and obtain the corresponding interest-bearing certificate aETH, and users can transfer or trade aETH freely to obtain liquidity.
In addition, there are Staked, which provides custodial services for large Ethereum holders; Blox Staking, which provides users with convenient node verification; StakeWise, which provides users with a simple staking interface, and so on…
Ethereum 2.0 may be late, but the curtain surrounding the pledge ecology of Ethereum 2.0 has already begun.
