3 November 2020

Ethereum 2.0 Release

In the last few weeks, Ethereum has been a key focus in the cryptocurrency world as investors eagerly await Ethereum 2.0 release. Ethereum 2.0 will transform scalability and scalability while providing opportunities for passive income for investors. 

Over the weekend, the ETH2 coordinator, Ben Edgington confirmed that ETH2 is ready to be activated. However, his affirmation contradicted feedback from the Ethereum Foundation. Contrasting timelines for the long-awaited Ethereum 2.0 release are not new and we’re seeing the impact of the uncertainty impact prices on a day-to-day basis. 

When Is The Ethereum 2.0 Release?

Danny Ryan, a key developer at Ethereum Foundation, conservatively shared that the next-generation of ETH2 requires further audits. In particular, Green points to updates in security and private key generation as central areas where NCC Group, a top cryptocurrency audit group, will need to focus attention before ETH2 is officially released to the public. 

Based on the audit results from NCC Group, the first phase of ETH 2.0 could be activated in the next two weeks. However, caution must be taken as misinformation in the developer community to avoid setbacks in the development of decentralized applications and staking pools that have been created for the new Proof-of-Work model.

Ethereum Staking

In all this confusion, investors are nonetheless gearing up for Eth2 and staking. According to GlassNode, an on-chain analytics platform, the number of holders with 32 ETH and above shot to an all-time high of over 125,000. 

Ethereum Staking
Source: Ethereum Staking (Lumi)

Once the deposit contract is set and Ethereum officially activates the Proof-of-Staking machine, holders with a minimum of 32 ETH, or roughly $12,500 at spot prices, qualify as validators. 

In this case, they will be responsible for not only securing the network against attackers through mechanisms like slashing but also confirm transactions all this whilst remaining energy efficient and decentralizing the network. From an investor’s perspective, it is imperative that there are many validators.

By lowering the barrier for validator entry, the number of validators will increase which will subsequently lead to greater network decentralization. It’s a strategic move by Ethereum Foundation, and Ethereum will experience compounding network effects with greater participation on the platform. 

Will Staking Change ETH’s Classification with the SEC and US Regulators

Last week, Heath Tarbert from the US Futures Trading Commission shared his perspective on whether Proof-of-Stake would change the classification that the Securities Exchange Commission and US regulators place upon Ethereum.

Currently, Ethereum and Bitcoin are the only cryptocurrencies with a regulated derivatives market in the US; however, there has been uncertainty about whether Proof-of-Stake could change Ethereum’s classification from commodity to security. Heath Tarbert, the Chairman of Commodity Futures Trading Commission, shared:

“The more decentralized it becomes over time and the more that it effectively runs itself, the more that it effectively runs itself, the more likely it is it’s going to fall within the commodity category and not the securities [group].”

Ethereum Transactions Draw in Institutional Investors

As per a Messari observation, Ethereum is on course to process over $1 trillion worth of transactions in 2020. By the third week of October, the 30-day rolling daily average for Ethereum transactions stood at $7 billion, more than twice Bitcoin’s at $3 billion. The spike in transaction volumes and the count is attributed to DeFi which also pins the recent price expansion of ETH. 

Messari Ethereum $1 Trillion
Source: Messari

As network usage increases on Ethereum, which are impacted by the explosive growth of decentralized finance, there has been a direct correlation with the investments from institutional players. 

Grayscale, who is one of the leading digital asset investment firms, have taken a considerable stake in Ethereum with 2% ownership of all ETH in circulation (valued at $870 million). 

Despite these holdings, Grayscale has only increased their investments throughout 2020 as it purchased 50% of all mined ETH. With increased demand for ETH, Weiss Ratings expects valuation to rise another 18 percent once Eth2 is activated.

ETH/USD Daily Chart for Nov 3 TradingView
ETH/USD Daily Chart for Nov 3 (TradingView)

From ETH/USD daily chart, bears are pressing for liquidation. With a reduction of 3% price in the last week , there is a retest of the main support trend line. For buy trend continuation, buyers must maintain prices above $400. Any drop below the liquidation level and $360 may trigger a sharp sell-off towards $300 or worse.

In contrast, an uptick above $400 or even $430 is enough to spur demand and a lift-off towards $480 by the end of 2020.

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Edmund McCormack
Tech industry veteran and blockchain technology investor. Simplifying cryptocurrency for almost a decade.

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