Ethereum 2.0 has been touted as a transition to a better consensus mechanism, and this particular “ transition ” has been researched for the better half of last year.
The development process started in 2018 and it took some time to reach phase 0. Over the past 18-20 months, the Ethereum Foundation has dealt with delays, updated roadmaps, multiple rumors on the legitimacy of the project and tons of skepticism from its rival. promoters of the project (* cough * Bitcoin Maximalists * cough *).
On December 1, 2020, some of these questions were put to rest. The Ethereum 2.0 beacon chain was successfully commissioned after the deposit contract for ETH2 received 524,288 Ether. Several validators have wagered 32 ETH on the network to respond to the state of the network and at the time of writing, 2,133,282 tokens had been put into play in the deposit agreement (or $ 1.55 billion in ETH).
However, with a few arguments put to bed, new ones emerged with the launch of the Beacon Chain. The ETH 2.0 development process will be more prominent in 2021, but what exactly changes next year?
Another update of the roadmap, for understand the progress this time
The caption of the image is self-explanatory. The voice of Ethereum, Vitalik Buterin, sharing The December 2020 roadmap right after the beacon launch and progress bars highlighted the state of development of ETH 2.0.
While at first glance, the two boards displayed a disparity between expectation and reality, the takeaway from this illustration is the actual volume of work remaining for the Ethereum Foundation.
Ethereum 2.0 Game Plan: 2021
Now, after the launch of Phase 0, the focus will be on ETH 2.0 Phase 1. A full-fledged transition to proof of stake will begin with the fragment chain implementation process.
To put it in layman’s terms, sharding will be a process of splitting the load on a blockchain to spread over multiple parallel chains. The number decided was 64 shards at the start, but it’s not set in stone. The goal? To simply make Ethereum more scalable (as if you don’t already know).
So, the tag chain is expected to be shared in 2021, and questions start popping up from now.
The “ hold-up ” syndrome: ether 2.0 and delays
Without directing undue criticism of the Ethereum Foundation, there has been a lot of delay towards the Phase 0 launch. A launch date for the Beacon Chain started making headlines towards the end of 2019. After that , it’s a series of “expected launch dates” that have continued to be pushed back, giving more fuel to BTC maximalists.
So there is a pattern. The complexity of Ethereum 2.0 is so immense that delays have become an inevitable part of development. Danny Ryan said in a recent interview that his immediate team is made up of 10 people. On top of that, they have five client teams under regular engagement, increasing the team to over 100 contributors. He said,
“In terms of releasing some of these major upgrades to the mainnet, production moves from ideas and research to specs and proof of concept… then to full production, then to developments. in engineering and testing and finally in control.
What I’m trying to indicate is that meeting deadlines is not the best solution for ETH 2.0, and the discussions of sharing in space only suggest that there will be more delays.
Silver Question Alert: How is Ether value affected?
The dynamics of the Ethereum economy are changing completely with Ethereum 2.0. For example, the current issue of ETH 1 has an inflation rate of 4% per year. With ETH 2.0, the inflation rate is supposed to drop to 0.5%, compared to the participation of validators.
It is important to note that Ethereum 2.0 staking rewards are not accessible to users during the first two years of parallel operation. Therefore, when these trading rewards are unlocked, a significant price disruption can occur, with significant incentives for trading. However, for 2021, the value of Ether is subject to more uncertainty.
At the moment, 1.87% of the outstanding ETH supply is blocked in the ETH 2.0 deposit agreement. This is not technically a bad situation due to the deflationary aspect of Ether as an asset. More people entering the staking protocol are indicating that the interest is there from an organic standpoint. This is not a short term incentive.
Therefore, while it may be difficult to judge the height of its price growth, the bottom could be the current value of ETH.
The hour of the verdict
Now that we’ve covered that 2021 could potentially be more speculative for Ethereum, the price direction will be just as flexible. However, there is little we can be sure of; a) Ethereum’s value is unlikely to drop like a house of cards, b) ETH 2.0 development will not witness stagnation, and c) Ethereum will attract more attention from investors ( Exhibit A – Upcoming CME Futures).
Here are some of the popular predictions about the value of Ethereum in 2021,
- Blockfyre co-founder Simon Dedic estimates above $ 800
- James Todaro, Managing Partner of Blocktown Capital, Estimates Possible $ 9,000
- WalletInvestor.com suggested a specific value of $ 872
- DigitalCoinPrice.com reported a range of $ 1,493 in one year
- Bloomberg’s Mike McGlone hints at lower range of $ 500 to $ 700
As observed, Ethereum’s prediction model is primarily based on how analysts perceive it and how they think it’s going to perform, while data-processing websites might incorporate historical numbers.
In my opinion, Ethereum will have the best risk / reward potential at the start of 2021. With Bitcoin surpassing its previous ATH, Ethereum remains 50% of its ATH as of 2017. Growing interest and growing demand for Ethereum will certainly push the value towards its ATH at some point and 2021 can prepare the rally towards this immediate goal.