50% of the time has passed and the progress bar is 20%. Will Ethereum 2.0 go live as scheduled?

Ethereum 2.0 pledge progress (as of November 16th)

In the early morning of November 5th, Beijing time, the Ethereum 2.0 deposit contract was officially launched, making many practitioners who are concerned about the progress of Ethereum 2.0 caught off guard.

According to the design of Ethereum 2.0, 524,288 ETH needs to be deposited in the deposit contract before the Ethereum 2.0 mainnet can be officially launched. According to the time plan, the above pledge amount will only be reached before November 24 (7 days before December 1). In order to launch the mainnet as scheduled on December 1.

Compared with the grand occasion of staking 700,000 ETH on the testnet (see details), the real holders of the mainnet are much more cautious. The current time has passed halfway, and the pledge amount progress bar has only reached the place of less than 20%, which makes us wonder: Can the Ethereum 2.0 mainnet go online as scheduled ?

01 Concerns of currency holders: threshold, lock-up, profit

In the face of the sudden release of deposit contracts, the market is not fully prepared. Most of the media have summarized the list of service providers with more voices in the market, but there are only a few who actually released the available products. It can be seen that most of them are still in the testing stage; and those service providers that focus on non-custodial, decentralized and security , There is no true open source. Obviously, the sudden launch of the Ethereum 2.0 mainnet caught many service providers off guard and failed to prepare adequate products and services. This makes it a very high threshold for ETH holders to participate in the Ethereum 2.0 pledge. Things.

I have seen the most mature “staking service”: the official launcher for beacon chain verifiers https://launchpad.ethereum.org/ is suitable for hardcore players who build nodes by themselves, run the node through the launcher and register the verifier .

Another problem is that the biggest concern of currency holders is the extremely long and uncertain lock-up time, which is expected to be about 1 to 2 years. For details on the interpretation of the lock-up period, please refer to the previous article “”. Under such a lock-up period, whether we understand and design Ethereum 2.0 pledge from the perspective of mining, staking, or financial products, we cannot get a product or service model that is generally acceptable to the public . This creates an extremely high threshold that prevents more people from participating.

The third point is that the actual pledge yield of ETH2.0 is also uncertain. At the initial stage of the mainnet launch, that is, with a pledge amount of 520,000 ETH, the corresponding return rate can indeed reach an annualized rate of more than 20%, but as the pledge amount gradually increases, the return rate will gradually decrease. At this time there is a very embarrassing problem : When the actual rate of return is lower than the expected rate of return when the pledger decides to enter the market, the pledger wants to leave the market but cannot . Therefore, even though the current annualized rate of return of 21.6% is very attractive to many currency holders, a “wait and see party” may be the best choice at present. On the other hand, although DeFi in the fire this year has cooled down, whether there will be Ethereum projects with extremely high yields during the 1-2 years of ETH lock-in is also an opportunity cost that ETH pledgers need to bear. .

02 Difficult to find a prescription: share, liquidity, DeFi?

In response to the above threshold, service providers on the market have proposed various solutions. As mentioned above, due to the rush of time, it is difficult to see mature and practical solutions, so at present, we can only summarize the news of various external PRs and some research. At present, the direction of service providers’ efforts can be divided into three main categories:

1. Fraud, that is, to solve the problem of users with less than 32ETH participating in pledge
2. Liquidity, that is, to solve the problem of locking ETH liquidity for a long time
3. DeFi, which solves the problem of not being able to participate in DeFi after ETH pledge

As far as the fight is concerned, the hosting service provider undoubtedly has a great advantage. There is no technical obstacle. The only problem that needs to be solved is the trust of the user in the hosting provider, which is not a problem for the established centralized institutions. Big. But if you want to achieve non-custodial spelling, sorry according to the author’s research: impossible. From a technical point of view, it may be possible to realize the custody of key keys by smart contracts, but due to the development progress of Ethereum 2.0, how to withdraw funds with keys has not yet been implemented, so it is impossible to write support for decentralized share and withdrawal now , Proportional profit sharing program. If it is to be realized, it must be developed by an institution after Phase 2 goes online. This is not pure decentralization. Vitalik also spoke in the Ethereum community before and stated that only in the second phase of Ethereum 2.0 can it support decentralized “split” operation of nodes.

(If your institution and plan can indeed achieve decentralized splits and support future decentralized withdrawals, please contact us^-^)

As far as liquidity solutions are concerned, almost all the solutions currently seen are the issuance of mapped tokens , and there is no solution to guarantee the arbitrary redemption of ETH (after all, the latter is equivalent to pledging one’s own ETH). The so-called mapping token is actually a kind of equity token, including the pledged ETH principal and the redemption right of all future income (similar to a bond). Therefore, when Ethereum 2.0 supports withdrawals (stage 2 implementation), whether the mapping token can actually redeem the principal and income is the key to measuring the reliability of the mapping token .

It can be expected that after the market will see all kinds of xETH flying together (currently known as BETH, rETH, aETH, QETH, etc.), how is the value recognition of these xETH in the short- and medium-term market right? Another important test for each family . Most pledgers get xETH to obtain liquidity, and they have a strong willingness to sell in the secondary market. Can the price of xETH be supported to match its endogenous value as much as possible (discounted principal + interest) It is a test of market making ability . Due to the extremely long lock-up period of ETH, the conventional market-making method that relies on arbitrageurs to smooth out the difference in value may not be effective.

With the mapped token, the solution to the DeFI problem seems obvious: replacing ETH with xETH can easily participate in various DeFi. Therefore, the market competition of xETH needs to face both the secondary trading market and the DeFi market.

03Can Ethereum 2.0 be launched as scheduled?

In the face of the above-mentioned problems and the emergence of no perfect solutions, it is a wise choice for most retail holders to be a “waiting party”, so it is reasonable that the current ETH pledge ratio is not high.

But I still have great confidence in the launch of Ethereum 2.0 as scheduled.

First, because the service provider’s solutions are constantly moving towards maturity, the rate of entry of funds in the second half must be higher than the first half;

Second, institutional clients and giant whale clients have gradually begun to enter the market. For them, the risk-free annualized rate of return of 20% is very attractive, even if the rate of return may fall below 5% as the amount of pledge increases, If we refer to the return rate of about 3% and the pledge rate of more than 50% on EOS, we can understand the trend of giant whales towards stable returns.

For the Ethereum holding community, it should be easy to attract 500,000 ETH at a rate of return of 20%. Once the main network is launched, the steps of early entrants will inevitably attract more Many visitors stepped up.