Ethereum is one of the popular cryptocurrencies, but the crypto market is down due to various reasons. The spread of the COVID variant, turmoil in Eastern Europe, supply chain issues, and inflation are the main reasons for crypto market outflows.
Recently the Terra Luna fiasco and the announcement of ‘Withdrawal Pause’ from leading service provider Celsius made the market volatile in the short term.
The Goals of Ethereum 2.0
ETH has been facing an issue with scalability, which is why the Ethereum 2.0 upgrade intends to support the scaling of the network while enhancing the security and decentralization process.
One important step is switching from proof of work to proof of stake consensus. In the previous method, Ethereum miners used GPUs and hardware to mine coins, while in proof of stake consensus, the ETH stakeholders validate transactions.
In this way, Ethereum increases the net revenue with the change in consensus, which helps to increase the price of ETH in the long run.
Indeed, proof of stake is more energy-efficient and eco-friendly, which helps crypto markets to sustain themselves without consuming much energy. In other words, it helps to validate the transactions through stakeholders without outsourcing the job to the miners.
The Ethereum 2.0 upgrade is launched in three phases:-
- The Beacon Chain – Launched in 2020
- Sharding – Launched in 2021
- Docking – Expected in 2022
The Ethereum Beacon Chain
It provides a network to proof of stake consensus. It is a different network than the old Ethereum network. It was launched in November 2020, and users lock their Ether in this network until it is merged with the Ethereum mainnet. It finally became live in December 2020 after getting enough deposits to start. In exchange, the users get a return for locked Ether.
It splits the network into different servers to maintain scalability and a higher transaction rate. In the ETH 2.0 upgrade, the blockchain will be split into 64 shards. That means the old Ethereum blockchain will be Eth1, and there will be other 63 Eth blockchains.
The third and final phase that will be launched in August is Docking. Here the Beacon chain and Eth1 will be merged together to set a new blockchain that runs on a proof of stake consensus. In this way, it will be a full-fledged scalable blockchain. As a result, the mining infrastructure will be replaced by staking software.
Effects of Ethereum 2.0
ETH 2.0 will make Ethereum a faster, more secure, user-friendly blockchain that attracts more users and grows the ecosystem. Later it will introduce an interest rate for the crypto ecosystem, and analysts think it will be set as a benchmark against all DeFi yield earnings.
Developers will add zero-knowledge proofs and other layer-2 solutions to the Ethereum blockchain. Indeed, after the launch, developers will keep a close eye on the network and adjust the algorithm to make it a more secure and user-friendly decentralized platform.
Will Ethereum Sustain Its Dominance over Evergrow and Firepin?
Based on our ETH price prediction, we think Ethereum is a different type of blockchain platform that has a wide range of use cases. Most of these projects are new in the market; they can rely on Ethereum for technological purposes.
Developers of Ethereum have been working hard to make it a world-class platform that offers decentralized finance apps, decentralized apps, NFTs, payment transfer, and many other facilities under one roof.
It is a community coin that helps purchase a community membership. It aims to establish the global crypto community for the creators that also helps to raise money for the investors, NFT game development, metaverse games, and other enterprises.
Firepin seeks to provide a platform for developers and gamers, and it will be a suitable platform for those who want to trade, buy or sell virtual goods in the metaverse world.
It is a reward token that pays to the users as an interest rate on the investment, and it also pays daily stable coins. It will join the metaverse and create the first virtual crypto exchange in the world. It seeks to offer a virtual NFT marketplace and play-to-earn games in the metaverse world.
All these new projects will not replace Ethereum as a dominant cryptocurrency in the world. Many retail investors have doubts regarding the competitive advantage of ETH, especially in this downtrend market. It has a large market cap, so if it cannot recover, then small market caps may not recover easily.
That is why Ethereum has a competitive advantage and branding in the market to come back quickly. The ETH price will rise after the Ethereum 2.0 upgrade. It is time to accumulate more coins because they are available at a lower rate.