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Over the years, the Ethereum network has seen continuous evolution. All of the improvements and updates aim to make the network more scalable, sustainable, and secure.
Currently, Ethereum is planning to switch its consensus mechanism from Proof-of-Work to Proof-of-Stake as part of a series of upgrades that will culminate in the transition to Ethereum 2.0.
The 2.0 release will take place in three stages. The “Beacon Chain” phase has been operational since December 2020. This PoS blockchain was launched concurrently with the current PoW chain to evaluate functionality and coordinate the environment for future upgrades. The Ethereum network will formally migrate to the Beacon blockchain as soon as the next phase, “The Merge,” is completed.
The aforementioned shift is scheduled to occur by the end of this year, thereby putting a stop to energy-intensive mining. The last “Shard Chains” phase is set to begin in 2022, and it will increase the network’s capacity for confirming transactions, storing data, and boosting network performance over time.
Progress so far
Ethereum 2.0 went live on the testnet, a while back. As per data from The Block, the amount of ETH tokens staked in the 2.0 deposit contract has already crossed the 7 million benchmark. In fact, at the time of writing, the same stood at 7.4 million.
Further, the number of addresses with a balance of ≥32 ETH have been witnessing a gradual rise of late. The aforementioned addresses, by and large, account for the potential network validators. As such, to run a validator node on the Ethereum network, a total of 32 ETH need to be staked.
Further, as per data from beaconcha.in, there are currently around 276k validators [as opposed to miners] who are processing the blocks on the PoS network. These validators have a fairly high block success rate [99.51%]. In retrospect, the share of missed blocks per day have majorly been revolving around the bare minimum.
The Ethereum network went through another update via the London hardfork in August. This update marked the implementation of EIP-1559 that altered the transaction fee system and initiated the burning of ETH tokens.
Recently, Ethereum had its first ever deflationary day. As shown in the attached chart, the daily burnt fee has risen beyond the daily block reward for the first time since EIP-1559 a day ago. This essentially indicated that more Ethereum tokens were burned recently than were produced. Furthermore, as described in a previous study, this move has been relatively successful.
As previously demonstrated, the rate of development on the largest alt’s network has been highly tempting. Notably, the price of ETH has risen in response to the majority of network updates to date. Once a result, token HODLers should expect a similar price reaction as the upcoming phases are implemented.