After London’s upgraded Ethereum burns over 1 million Ethereum 2.0 pledges, the track gradually becomes clear?
According to data from ultrasound.money, as of 11:00 on December 24, the total amount of Ethereum burned reached 1.25 million, with a total value of more than 5 billion U.S. dollars.
Among them, the application that destroys the most Ethereum is OpenSea, which burns more than 131,300 Ethereum, accounting for about 10.5% of the total. Ethereum transfer and Uniswap V2 are ranked second and third respectively, accounting for 9.82% (122,800) ) And 8.9% (111,700 pieces) .
In fact, in addition to the continuous burning demand since the upgrade in London this year, the Ethereum 2.0 pledge that began last year has also provided a significant impact on the continued tightness of the demand side of ETH from another dimension.
A review of the first anniversary of the Ethereum 2.0 pledge
The Eth2 pledge launched by Ethereum in December last year means that Ethereum has officially begun to transition from Proof of Work (PoW) to Proof of Stake (PoS), and Ethereum 2.0 has entered the 0th stage.
The past year has also ushered in considerable development. According to the official data of ethereum.org, as of December 24, the number of ETHs participating in Ethereum 2.0 pledge has exceeded 8.75 million, and the pledge amount accounts for the total circulation of Ethereum. More than 14.28%, of which the total number of verifiers is 273,600.
The main difference of Ethereum 2.0 lies in two points: consensus mechanism (PoW to PoS) and sharding, while Eth2 pledge is mainly for the Proof of Stake service-users can pledge at least 32 ETH to participate in Ethereum PoS pledge to obtain income rewards.
The Ethereum network will be protected by validators who pledge 32 or more ETH. The responsibilities of validators include processing transactions, recording data, and adding blocks to the main network.
Among them, validators who actively and honestly perform their duties to the network will be rewarded with ETH, while those who fail to perform their duties or commit malicious acts will be punished and lose ETH.
This means that the main force for maintaining network security will no longer be miners but verifiers, and if you want to become a verifier, you must pledge ETH to the Eth2 pledge contract (Eth2 pledge).
In fact, from this perspective, the behavior of staking at least 32 ETH to obtain rewards can be simply compared to “Ethereum graphics mining” under the new situation-every 32 ETH can be compared to a mining machine, and the rewards generated by staking It is mining output.
Issues needing attention in Ethereum 2.0 pledge
At the same time, at the beginning of October this year, the Ethereum team has completed the specifications for the transition from Ethereum to PoS, which means that Ethereum 2.0 has taken another crucial step.
However, for most ordinary users who want to participate, due to some unique mechanism designs in the Ethereum 2.0 pledge, directly participating in the Ethereum 2.0 pledge actually has certain thresholds and risks.
- Funding threshold: 32 ETH
First of all, when participating in the Eth2 pledge, deposit at least 32 ETH (or a multiple of 32) into the deposit contract. At the current market price, 32 ETH is more than 120,000 U.S. dollars, which is undoubtedly a high funding threshold for most users.
- Technical threshold: Slash punishment
As mentioned above, the verification node on Eth2 is similar to the miners using the proof-of-work mechanism on Eth1. The user becomes a verification node by pledged 32 ETH to run the software to help verify and help new blocks and get rewards.
The Slash penalty refers to the penalty that the pledged node does not comply with the agreement, that is, the deduction of at least 32 ETH pledged in the node , if the node’s pledged ETH tokens drop below 16 due to the accumulation of Slash penalty, the node will automatically Withdraw from the Ethereum 2.0 network.
And the conditions that trigger the Slash penalty basically revolve around the technical operation and maintenance level, such as signature errors, long-term node offline, etc.:
- The validator uses different roots (essentially a hash of internal data) in the same slot to propose two conflicting blocks;
- The verification node proves two conflicting blocks in the same slot, that is, double voting;
- The votes cast by the verification nodes are “surrounded” or “surrounded” by previous votes;
As early as the first day of the Eth2 pledge, 600 people suffered Slash punishment. Since then, it can be said that Slash punishment has been continuous due to technical problems and other factors.
- Capital efficiency threshold: liquidity lock-up
The ETH pledged by Eth2 will always be locked, and together with the potential benefits obtained, it will not be unfrozen until Phase 2 (or 1.5) of Ethereum.
It can be seen from the above that the small amount of ETH cannot participate, the technical threshold of verification nodes, and the liquidity of pledge tokens are issues that our ordinary users need to pay attention to directly when participating in Eth2 pledge.
Ethereum 2.0 pledge track is in the ascendant
Because of this, a series of Ethereum 2.0 pledge services have emerged in the market, which can be basically summarized as “two categories and four models” from a macro level.
The biggest advantage of hosting is that it encapsulates the technical thresholds for node construction and maintenance, and ordinary users do not have to worry about hardware and software settings, Slash penalties, etc.
Fully managed users do not need to worry about verifying node operation and maintenance. The custodian will handle all node affairs. Users only need to transfer the ETH that participates in the pledge to the custodian. The custodian will manage and operate 100% of the Ethereum 2.0 verification for the user. Node, and draw a profit on the pledge income.
Users can also pledge a small amount (less than 32 ETH), because the custodian can help small pledgers collect 32 ETH to participate in the Eth2 pledge.
But similarly, during the pledge period, users no longer have control over assets, and once they are attacked, user assets will face greater risks . At the same time, whether the online rate of the custodian’s validator is stable, whether the income level is reasonable, and whether it has been compromised. The user cannot know the details such as punishment.
It is not even known whether the assets under custody are used for collateral. I am most afraid that “we value the income, but people are worried about the principal.” Therefore, for the “full custody” scheme, the trust and brand of the custody institution are very important .
Stake pool custody
On the basis of full custody, the pledge pool solution not only supports small (less than 32 ETH) pledges, but also solves the liquidity problem caused by long-term lock-up of pledge deposits.
A special Ethereum 2.0 pledge agreement such as Lido (this article does not talk about the corresponding services of CEX for the time being), which allows users to obtain staking income without locking ETH, and the solution is the same — 1:1 issue of stETH to compensate for liquidity :
Lido deposits ETH into the Ethereum smart contract and receives stETH as a receipt. The balance of stETH tokens will be adjusted over time to reflect the distribution of pledge rewards generated by the contract.
Up to now, Lido’s Ethereum pledge has reached 1.53 million, which is the largest pledge pool so far. At the same time, it is also vigorously developing the ecology. SOL and LUNA have launched corresponding pledge services.
Non-custodial is decentralized. The difference from custody is the difference between DEX and CEX, that is, the control of ETH assets is always in their own hands.
Users running Eth1 and Eth2 clients and running and maintaining nodes by themselves are the most direct non-custodial forms, but they require strong technical strength and node operation and maintenance experience.
Therefore, the advantage is that users have complete control over self-built nodes, and there is no centralization risk of centralized custody, but the disadvantage is that it requires high funds and professionalism, and it is difficult for ordinary users to participate.
After the wallet on the beacon chain is created, two sets of keys will be generated, namely the withdrawal key and the validator key:
- The withdrawal key allows us to withdraw your ETH and rewards when the (beacon chain) withdrawal function is activated (may have to wait for 1 year);
- Verifier key, the signature key that the verifier software actually needs to use when verifying the beacon chain;
Among them, the withdrawal key and the verifier key do not need to be controlled by the same entity, which provides greater flexibility for the service form of ETH staking.
The core idea of the semi-custodial solution represented by imToken, etc.: Under this design, the asset control right is still in their own hands. The shortcoming is that it also requires at least 32 ETH, and the capital threshold is high.
In summary, the respective characteristics and advantages of these “two categories and four models” are as follows:
Although the progress of Ethereum 2.0 is not satisfactory, with the advancement of the day, the pledge of Ethereum 2.0 will undoubtedly become an unavoidable important track in the Ethereum world in the future.
It also contains considerable market volume and innovation opportunities in terms of improving the passive income of long-term ETH holders and creating investment opportunities for pledge derivatives, which deserve special attention.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/after-londons-upgraded-ethereum-burns-over-1-million-ethereum-2-0-pledges-the-track-gradually-becomes-clear/
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