The staking contract of Ethereum 2.0 becomes the largest ETH holder

Recently, the Ethereum network reached a new staking milestone. On August 17, the Ethereum 2.0 pledge contract became Largest Ethereum holder (Ethereum), beyond Wrapped Ether (WETH).According to Etherscan data, the current Eth2 recharge contract hold There are more than 7.14 million Ether, valued at $23 billion at the time of writing.

This accounts for nearly 6.1% of all Ethereum in circulation, which means that the collateral rate of Ethereum is now over 6%. The Wrapped Ether deposit contract ranked second, holding 6.97 million tokens-5.94% of all Ether. Data from Beaconcha.in Show There are now 217,354 validators on the Ethereum network.

Immediately, this makes Ether the third-largest bet cryptocurrency.According to the data of Staking Rewards, the Ethereum 2.0 deposit contract Rank Third, following Cardano and Solana, they have been Proof of Stake (PoS) blockchains since their inception. Compared with the USD 23 billion pledged by ETH, the pledge value of SOL exceeds USD 26 billion, and the pledge value of SOL exceeds USD 63 billion. Have Stake on their respective networks.

Pete Humiston, manager of Kraken Intelligence, the research department of Kraken Exchange, introduced these different blockchains to Cointelegraph:

“The market value of Ethereum is far more than US$350 billion: many times higher than Solana and Cardano. Compared to the 5.7% ETH on ETH 2.0, SOL and ADA may have larger shares, but the sheer size of Ethereum means As ETH 2.0 continues to develop rapidly, it will almost inevitably surpass both.”

Ether is only in its infancy

Although the staking of the Ethereum network is still in its infancy, the staking of the ether has reached a milestone and is rising. All Ether currently stored in the Eth2 deposit contract is locked and can only be withdrawn after the beacon chain is integrated into the Ethereum main network-this is the final stage of its transition to the PoS consensus mechanism.

Rick Delaney, senior analyst at OKEx Insights, the research team of the cryptocurrency exchange OKEx, spoke with Cointelegraph about whether the transition will eventually slow down. He said:

“There are several factors that may slow down the speed of adoption, including the requirement to lock capital on the Beacon Chain, centralized staking service risks, and ETH’s broader DApp [decentralized application] The ecosystem provides additional opportunities to generate rewards and protocol risks that accompany any major network upgrades. “

This staking milestone of Ethereum occurred after the London hard fork, a major event of blockchain transformation.this London upgrade goes live online On August 5, it brought the highly anticipated Ethereum Improvement Proposal (EIP) 1559, as well as four other EIPs: EIP-3554, EIP-3541, EIP-3198, and EIP-3529.

EIP-1559 brought about changes in the transaction pricing mechanism, which ultimately reduced the inflation rate of tokens and reduced the income miners earn from transaction fees. This upgrade is the penultimate step of the planned final merger of the Eth1 and Eth2 chains in 2022.

Related: Ethereum’s London hard fork puts ETH on a more deflationary path

Humiston mentioned that ETH’s lower inflation rate makes it a scarcer asset than otherwise. Once the final transition to PoS occurs, the inflation schedule will change again. He said:

“If ETH burns the offset issued under PoS, ETH will become a deflationary asset. If demand remains at the current level, then we can assume that the price of ETH may rise while everything else remains the same.”

This price increase may lead to a positive feedback loop, because higher prices may promote innovation and development within the ecosystem, leading to more network usage and the need to burn more ETH under this EIP. In addition to reducing the selling pressure of ETH in the short to medium term and leading to an increase in the price of ETH, there are other aspects that need to be considered.

Delaney pointed out that miners currently sell ETH to pay for their electricity and hardware costs, but once the network is fully protected by mortgagers, even miners will be incentivized to hoard ETH. He said: “At the same time, the ETH of network users will disappear from circulation through the 1559 destruction mechanism. Although the resulting supply shock may push ETH to the well-known moon, it may affect the network’s validator structure. And wealth concentration have a concentration effect.”

Ki Young Ju, CEO of the on-chain analytics service CryptoQuant, mentioned the seller’s “liquidity crisis” in a tweet Can push ETH to surpass Bitcoin (Bitcoin) In terms of price. Cointelegraph discussed this issue with Andrew Keys, founder of ConsenSys Capital and co-founder managing partner of Darma Capital. He acknowledged that although supply will decrease, “calling it a’liquidity crisis’ may be an exaggeration.” He further stated :

“The reduction in the supply of tokens, coupled with the greater scalability of Ethereum and a larger developer community, should cause the price of ETH to exceed the price of BTC in the next 24 months.”

Earth-shaking narrative

After the London upgrade, in addition to increased interest in Eth2 mortgage contracts, the price of tokens has also seen a huge increase. In the past week, ETH has risen by 10.58%, and it has risen by 51.80% in the past month. This exceeds Bitcoin’s 42% gain in the past 30 days.

This incremental difference in price appreciation has reappeared the “flipped” narrative of the conscience of the crypto world.Nigel Green, CEO and founder of deVere Group, one of the world’s largest independent financial advisory institutions, said that he expects ETH will continue to outperform BTC For the rest of the year. He also mentioned that in the next five years, the value of Ether will surpass that of Bitcoin, adding that “Ethereum’s ascent to the top of the crypto world seems unstoppable.”

Coinbase’s recently released second-quarter financial report shows that the ETH transaction volume on the platform Surpassed BTC for the first time In nine years-since the platform was established.Even Ledger, one of the most famous cryptocurrency hardware wallets, announced Integrate accessible mortgage options through Ledger Live, This may lead to higher retail interest staking on the network, thereby triggering a craze for Ethereum as a whole, and this dynamic is usually reserved for Bitcoin.

Delaney further talked about the possibility of a flip event. He said: “Considering their respective use cases today-BTC is used as a store of value, and ETH needs to interact with smart contracts-ETH transaction volume seems to eventually exceed BTC.” In addition to transactions, DApp service consumers also need Purchase ETH to interact with it. This is a sharp contrast because most of the BTC supply is still in cold storage. He added:

“Efforts such as the integration of Lido and Ledger make staking Ethereum more attractive to those who care about the risks and fees of centralized staking services, capital lock-in requirements, technical barriers to entry, and security. These factors, plus users can pledge The fact that it is less than the 32 ETH required to run an independent verification node should see an increase in staking participation.”

The growth of total value lock (TVL) in decentralized finance (DeFi) applications and the boom of non-fungible tokens (NFT) provide evidence of strong Ethereum usage. According to DappRadar data, TVL in DeFi Spikes From the level of nearly 102 billion U.S. dollars before the hard fork on August 4, it rose to the current 122.6 billion U.S. dollars, an increase of 19%. If the ongoing network transition succeeds in reducing gas prices and increasing scalability as expected, this usage may increase even more.

Related: Staking will treat proof of work as breakfast-that’s why

Keys commented that in addition to market capitalization and transaction volume, Ethereum is ahead of Bitcoin in every indicator, and it is only a matter of time before ETH surpasses BTC in these indicators. He added: “The Ethereum ecosystem is the largest ecosystem that supports blockchain applications, and 95% of blockchain-based applications are built there.”

Whether ETH will flip BTC in the short term remains to be seen, but Ethereum 2.0 may trigger new interest in the entire cryptocurrency industry, even from traditional financial markets.As Revealed in the JPMorgan Chase report, By 2022, Ethereum’s mortgage yield may reach 20 billion U.S. dollars, and by 2025 it will reach 40 billion U.S. dollars. This is another encouraging sign that has strengthened the continued demand for Ethereum.