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The Ethereum 2.0 beacon chain may be online within 6 weeks. What are the possible opportunities for ordinary coin holders?
On October 12th, ConsenSys researcher Ben Edgington wrote in an article published on Coindesk:
it’s time. It’s time to start the Ethereum 2.0 beacon chain.
Why pay attention to the progress of the beacon chain? Because the beacon chain as the headquarters of Ethereum 2.0 is officially launched, it means that the road to ETH 2.0 has taken a critical step, and from the perspective of currency holders, the lock-up rate of Ethereum is Will reach new heights.
The Ethereum community is currently preparing for the arrival of the beacon chain.
At present, the Ethereum community has multiple test networks undergoing iterative testing: multiple single-client test networks (Sappire, Topaz, and Onyx) of Ethereum 2.0 have been tested for a long time; and the multi-client test network Medalla is currently More than 50,000 verifiers participated.
When the Ethereum 2.0 beacon chain goes online, there will be multiple audited and community tested clients that can run normally (Teku, Lighthouse, Mimbus and Prysm).
With these preparations, the most concerned question of Ethereum followers may be: When will the Phase0 phase, the beacon chain phase, which marks the start of the Ethereum 2.0 online process?
According to Ben, we don’t have to wait too long this time. The key step in the launch of the beacon chain is the deployment of deposit contracts. The Zinken testnet is currently progressing smoothly, and the community plans to launch the beacon chain within six weeks. This means that we may see the beacon chain online before the end of November at the latest.
1. What is the beacon chain?
The Ethereum 2.0 network improves the scalability and processing capabilities of the network by introducing fragmentation, and the beacon chain is the “command and control center” of the entire Ethereum 2.0 network. In the initial stage after the beacon chain goes online, with the introduction of shards, the beacon chain can coordinate the operation of up to 64 shard chains at most.
The complexity of the Ethereum 2.0 upgrade is no less than replacing the tires of a high-speed off-road sports car. This is not to mention, but it must be modified so that it can fly. This process is not a one-day effort and needs to be achieved through multiple stages. Currently, three stages are relatively certain: stage 0, stage 1 and stage 2.
Ethereum 2.0 will introduce Casper, a PoS consensus protocol, and the key step is the realization of Phase 0. Because in phase 0, the launch of the beacon chain will serve as the control center and command center of the Ethereum 2.0 network.
Subsequent phase 1 will introduce shards, and the beacon chain will refer to the state of the shards through crosslinks, but transactions will not be processed at this time. Next, at the end of 2021 or even the beginning of 2022, with the introduction of virtual machines, smart contracts can be executed on shards. Only then can we see the Ethereum 2.0 network actually being used.
Previously, the Blockchain Research Institute published an article introducing the multiple stages of the Ethereum 2.0 launch. For details, click:
2. When will Staking be activated?
The beacon chain is online and the deposit function is enabled, which means that users can deposit their own Ethereum on the Ethereum 2.0 network (that is, staking is enabled). According to the setting of Ethereum 2.0, becoming a network verifier requires staking 32 ETH and running nodes. While maintaining the stability of the network, you will also be rewarded for your investment.
Why is the launch of the beacon chain so important?
Because Ethereum 2.0 adopts the PoS consensus mechanism, the beacon chain will record the pledge witnesses (Staker/Validator) and their pledged tokens, and randomly select pledge validators. After the shards are online in the future, the beacon chain will also distribute the block generation tasks of the shards to the verifiers through random allocation. The beacon chain will adopt consensus rules to sanction cheating validators, reward validating nodes for work, and act as a link hub between different shards.
Although it has undergone multiple rounds of test network verification, despite its many functions and features, it can be perfectly simulated on the test network, bugs can be found, and problems can be found. But only in the official network of the real beacon chain, is the participation and practice of real money and silver, and can obtain the real token economics characteristics under PoS, with real mortgages, real punishment and reward mechanisms, and more painful , And more relevant, which cannot be simulated on the testnet.
Ethereum 2.0 is not a simple upgrade of Ethereum 1.0. On the contrary, Ethereum 2.0 created another blockchain network. As development progresses, users and applications of Ethereum 1.0 are gradually migrating to Ethereum 2.0. For example, after the support for virtual machines is activated in Phase 2, the original Ethereum smart contract can be deployed on Ethereum 2.0.
How is the beacon chain started?
After the beacon chain is online, if you want to become a validator of Ethereum 2.0, the validator needs to deposit 32 ETH tokens into the official smart contract before becoming a validating node in the Ethereum 2.0 network and get rewards . However, the process of launching the beacon chain is not that simple.
In order to realize the creation of the beacon chain, in addition to the common block height requirements, an additional condition needs to be met: the number of validators who pledge 32 ETH needs to exceed 16,384 before the beacon chain can be officially launched. . In the pre-creation stage of the beacon chain before this, only the beacon chain nodes will participate in the ETH 2.0 network. Once the requirements for the number of people and block height are met, and the creation stage is achieved, it means that verifiers can participate in the consensus mechanism, maintain the operation of the network, and communicate with each other.
However, the beacon chain at this time is like the framework of a building, like the keel of the big ship of Ethereum 2.0, except for mortgage deposits and network operation, there is no substantial use.
Most concerned: When will Staking rewards be issued?
Will the validators on Ethereum 2.0 get income after the creation state of the beacon chain is realized? This is a concern of many users.
According to the above, in addition to meeting the block height requirement, at least 32 X 16384 = 524,288 ETH needs to be deposited in the relevant smart contract as a mortgage guarantee for the validator. And it should be noted that since the state of the Ethereum 1.0 network needs to be synchronized to the beacon chain, there will be a delay in state synchronization. Therefore, students who are concerned about the progress of the Ethereum 2.0 and the beacon chain online need to know that the mortgage ETH meets the requirements, After the block reaches the specified height, there will be a certain creation delay period. As described in the above picture, it is expected that there will be a delay of about 48 hours. Only after this is the beacon chain officially opened, and the rewards for becoming a validator will also begin.
It is estimated that on the beacon chain, the initial annualized rate of return for becoming a validator is about 20%. It is important to know that after the noisy early stage of the Ethereum 2.0 network, this benefit is equivalent to the risk-free benefit on Ethereum 2.0. Even at the peak of the DeFi project, the 20% rate of return is very attractive. .
Therefore, I think it should not take too long to meet the requirement of 543 thousand ETH mortgage during the beacon chain online process.
But don’t get excited, there are still some issues we need to pay attention to.
To participate in the ETH 2.0 network, you need to be aware of these risks
Like the online process of any large project, although the test network of ETH 2.0 and the corresponding client have undergone multiple tests, the test environment is a test environment after all, and it still cannot be compared with the formal network. In addition to factors such as software vulnerabilities and network failures, it is also necessary to consider that hackers can raise the vulnerabilities, save them instead of sending them, and attack them in one fell swoop until more tokens are deposited in the formal environment.
At the beginning of the beacon chain, there was a rush of brainstorming. Although it may be fresh, it is not necessarily a wise choice. If you are willing to participate, it is better to wait for the network to be stable, and after the security team and the company evaluate it, it is not too late to enter. Although there are few verification nodes in the initial stage of the launch, participation in it is more likely to be rewarded, but risks also follow.
In addition, although Ethereum 2.0 sets a low threshold of 32 ETH pledge requirements, more people can participate in it and become validators. But to run the software to become a verifier is still somewhat technical.
Under the PoS mechanism of Ethereum 2.0, the corresponding penalty mechanism is also set: penalty and laziness penalty. If the validator’s node continues to be offline, a part of the deposit will be confiscated by the system; if the validator does evil and is identified by the system as malicious, the assets will be fined. And when the penalty is lower than the requirement of 32 ETH, it will be removed, no longer qualified for block generation verification, and naturally cannot be rewarded.
It is worth noting that even if the beacon chain goes online as scheduled, the mortgaged assets will still be immobile for a long time.
As a validator, after transferring to the system contract on the Ethereum mainnet and staking 32 ETH to obtain the validator qualification, the rewards will always accumulate. When can I receive it?
According to ConsenSys researcher Ben Edgington, after the beacon chain is online, validators can stop verifying and freeze their pledged tokens and rewards at any time. However, before Ethereum 2.0 reaches the 1.5 stage, the staking and reward of Ethereum tokens Coins will always be locked on the beacon chain and cannot be taken away.
In the 1.5 stage, validators who pledge tokens can receive rewards and unfreeze the pledged ETH. Before that, the tokens will be locked for a long time and there is no way to redeem them.
This will bring uncertain factors, because when Ethereum will achieve stage 1.5, there is currently no clear roadmap or timeline. According to the current progress, even if it is optimistically estimated, it will be one to two years away. Perhaps such a long waiting period for returns will bring confidence to currency holders.
3. The impact of the Ethereum 2.0 upgrade
After talking about the details of the beacon chain and the risks of participation, it is time to talk about the possible opportunities that Ethereum 2.0 brings to ordinary people. Of course, these are the author’s personal inferences, do not constitute investment advice, only as information reference.
1. Become a validator and pledge tokens to participate in the network
This is the most obvious way to participate. The above also mentioned the estimation of the benefits that the validator can obtain. However, for non-technical enthusiasts, even though the current validator node needs certain software and node operation and maintenance knowledge, after all, So it brings a certain threshold.
In order to solve this point, there are also multiple projects aimed at staking track. The blockchain research institute has also introduced it before. Let’s review it briefly.
Ethereum 2.0 will have a large number of nodes. If calculated according to the industry’s average pledge rate of 50%, it is roughly estimated that 50 million ETH will enter the pledge state. Providing third-party pledges will become a big business. After all, even if the annualized income is 15% and the commission charge rate is 20%, the annual return rate is as much as 570 million US dollars. This cake is hard to be distracted. .
On the Ethereum 2.0 staking track, ordinary people can participate with some third-party staking projects, and after their own independent evaluation, they can choose a good staking service provider. Although commissions are given, they do not need to operate and maintain the nodes themselves. , Or save some trouble. The three projects Blox, Ankr and Rocket Pool are worthy of attention on the Ethereum 2.0 track.
Specifically, Blox provides non-custodial mortgage services, just like DEX, allowing users to have their own autonomy. Blox provides a set of programs for configuring, running and managing nodes for users to use. It has released a public test version on October 12th. Those who are interested can download the experience. At present, Blox’s token model is relatively simple, and a certain percentage of the commission charged by users will be used to buy back its own platform tokens.
Ankr wanted to do cloud computing at first, but later turned to node-related business. Users can run their own ETH 2.0 nodes through Ankr. After the subsequent launch of Stkr, third-party node service providers will be introduced for users to choose, and small ETH staking will be supported. The Ankr token will also become a payment method on the platform. According to official sources, the testnet will be announced soon.
Rocket Pool provides a concise UI that allows users to directly enter the Ethereum they want to mortgage, and obtain the voucher rETH after the pledge, which not only allows users to obtain revenue, but also obtains liquidity, and also supports small ETH to participate in staking.
Recently, I saw a project similar to the Rocket Pool model, Lido, which will be launched on the test network in the near future. This track will definitely become more and more crowded.
For ordinary people, it takes too much energy to run nodes on their own, and they may face the risk of punishment. Choosing a reliable third-party service will still become the choice of many people.
2. How to play Staking + DeFi
In fact, it can be inferred that projects such as Ankr, Rocket Pool, and Lido provide liquidity for Staking ETH, so these rETH will definitely be accepted by DeFi, and rETH’s transactions, lending and other scenarios may also capture relatively large value.
3. The benefits brought by the increase in the amount of Ethereum pledged
In addition to the above participation methods, there is one more thing to note: as the Ethereum beacon chain goes online, the pledge rate of Ethereum will increase. Together, the Ethereum 2.0 pledge + DeFi pledge will continue to change the Ethereum token market The supply-demand relationship means that ETH will face more demand-side markets. After all, the daily output of Ethereum is limited.
Holding ETH to share the value brought by the network may provide currency holders with more confidence in long-term currency holdings.
If all goes well, Ethereum 2.0 will begin the formal launch process at the end of November. Although at the beginning stage 0, we had no way to do more than pledged tokens to run nodes, but with various creative ideas in the community, the combination of ETH 2.0 mortgage and DeFi, etc., can be optimistically expected that Ethereum The amount of token collateral will exceed the previous high.
Participating in the emerging network has its risks, but the launch of the Ethereum beacon chain will mean that a long journey has finally arrived at the time of the announcement. As long as you start to walk, the road is far away but you can reach it. After all, even the Ace Pigeon Filecoin is officially launched, right?
After the Ethereum beacon chain is online, we have multiple possibilities for participation. Follow us and continue to discover new opportunities.