Look at how Ethereum (ETH) 2.0 would affect the valuation of Ethereum in 2021.

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Ethereum 2.0 has been touted as a transition to a stronger compromise system, and this particular ‘transition’ has been under scrutiny for the better half of the last year.

The production process was launched in 2018 and it took a while to enter phase 0. Over the past 18-20 months, the Ethereum Foundation has met with delays, revised roadmaps, numerous rumours about the validity of the project, and truckloads of scepticism from competing project supporters (*cough* Bitcoin Maximalists *cough*).

Any of these questions were put to rest on 1 December 2020. Ethereum 2.0 beacon chain successfully went live after the ETH2 deposit contract obtained 524,288 Ether. Multiple validators involved 32 ETHs on the network to fulfil the condition of the network and, at the time of writing, 2,133,282 tokens were included in the deposit contract (i.e. $1.55 billion in ETH).

However, with some claims put to rest, new ones have appeared with the launch of the beacon chain. The implementation process for ETH 2.0 is going to be more limelighted in 2021, so what exactly will change next year?

Another Roadmap update, to understand progress this time 

Ethereum

ETH 2.0 Roadmap Comparison: March 2020 v. December 2020

The picture is self-explanatory. The voice of Ethereum, Vitalik Buterin, posted the December 2020 Roadmap right after the launch of the beacon, and the progress bars highlighted the state of growth of ETH 2.0.

Although at first glance both maps revealed a difference between expectation and fact, what can be omitted from this example is the actual amount of work left to the Ethereum Base.

Ethereum 2.0: 2021 game plan

Now, after phase 0 is launched, focus will turn to phase 1 of ETH 2.0. A full-fledged transition to proof-of-stake would begin with the introduction of the shard chains.

To illustrate in layman words, sharding would be a method of breaking up loads on one blockchain to distribute through several parallel chains. The number determined at the outset was 64 shards, but it is not set in stone. The goal, huh? Just to make Ethereum more scalable (as you didn’t know).

As a result, the beacon chain is scheduled to be exchanged in 2021, and concerns tend to pop from here on.

The ‘Hold-Up’ Syndrome: Ether 2.0 and Delays

Without directing excessive scrutiny of the Ethereum Foundation, there were a number of delays in the initiation of step 0. The start date for the beacon chain began to make headlines by the end of 2019. After that, it was a series of ‘planned launch dates’ that kept getting pushed back, adding more fuel to BTC maximalists.

So, there’s a theme here. The scope of Ethereum 2.0 is so enormous that delays have become an essential aspect of the production process. Danny Ryan said in a recent interview that his immediate staff is 10 people. In addition, there are five client teams on a daily basis, increasing the organisation by more than 100 contributors. He said that:

“In terms of getting out some of these major upgrades to mainnet, the production goes from ideas and research into specifications and proof of concepts … then into a full-blown production, then developments in engineering and testing and finally vetting.”

What I’m trying to mean is that sticking to deadlines is not the best suit for ETH 2.0, and debates around space sharding just indicate that there will be more delays.

Money Question Alert: How is Ether’s value affected?

The complexities of Ethereum’s economy are absolutely shifting with Ethereum 2.0. For eg, the new ETH 1 chain problem has an inflation rate of 4 per cent per year. With ETH 2.0, the inflation rate is projected to decline to 0.5 per cent with respect to the participation of validators.

It is important to remember that Ethereum 2.0 sting incentives are not open to consumers for the first two years of concurrent service. Thus, as these trading opportunities are activated, a major market disruption will be caused, with significant incentives for trading. However, the value of Ether is subject to greater volatility for 2021.

Currently, 1.87 per cent of ETH’s circulation stock is locked into the ETH 2.0 Deposit Arrangement. Technically, regardless of the deflationary nature of Ether as a currency, this is not a bad circumstance. More people joining the Stake Procedure suggest that there is an organic concern. It’s not, ergo, a short-term reward.

Hence, while it may be difficult to judge the height of its price growth, the bottom could be ETH’s present value.

Time for the verdict

Now that we have covered 2021, which may theoretically be more speculative for Ethereum, the price trajectory would be equally flexible. However, there are few aspects we can be sure about; a) the valuation of Ethereum is unlikely to drop like a house of cards, b) the growth of ETH 2.0 will not experience stagnancy, and c) Ethereum will attract more interest from investors (Exhibit A – Futures of CME).

Here are some of the common forecasts for the valuation of Ethereum in 2021,

  • Simon Dedic, Co-founder of Blockfyre estimates above $800
  • James Todaro, managing partner at Blocktown Capital believes $9000 possibility
  • WalletInvestor.com suggested a precise value of $872
  • DigitalCoinPrice.com indicated a $1493 range in one-year
  • Bloomberg’s Mike McGlone hints at a lower range of $500-$700

As noted, the Ethereum forecast model is largely focused on analyst expectations and how they believe they are going to do, whereas data-crushing websites may provide historical figures.

We assume that at the beginning of 2021, Ethereum will have the highest prospects for risk/reward. With Bitcoin surpassing its previous ATH, Ethereum has stayed 50 percent off its ATH since 2017. Increasing curiosity and increasing demand for Ethereum will undoubtedly drive the valuation towards its ATH at some point in time, and 2021 will set the rally to that immediate target.

 

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