ETH 2.0 is Already the Largest Proof of Stake Network and Vitalik isn’t Concerned About Competitors
ETH network remains unfazed by market conditions with over 5.2 million ETH staked and smart contract usage at elevated levels with sharding and rollups to bring the kind of “scalability that the large scale enterprise applications are expecting.”
The interest for the developments ramped up after the Beacon Chain, phase 0, was launched last December that allowed people to send their 32 ETH for staking. Since then, in a matter of six months, over 5.2 million ETH have been locked in ETH 2.0 deposit contract for an unspecified time.
With more than $14 billion staked and over 80,000 validators, ETH 2.0 has already become the largest Proof of Stake (PoS) network before becoming even functional.
In anticipation of the upcoming PoS network, the price of Ether surged to a new all-time high of $4,380 last month. However, since then, it has a 60% drawdown and is currently trading around $2,700.
Despite the volatility, the percentage of ETH supply locked in smart contracts remains unfazed by market conditions, and Ethereum is going on its own merry way with its usage at all-time highs. Smart contract usage from users is also at elevated levels, ever since DeFi summer kicked off.
This much development has a growing number of people expecting Eth to replace Bitcoin as the number one crypto asset. BTC -0.86% Bitcoin / USD BTCUSD $ 47,163.52
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While Ether’s market cap at $314 billion, it needs to more than double to reach Bitcoin’s $697 billion, its network is already generating over 4x more fees than Bitcoin daily.
As such, Ethereum’s fee ratio multiple, which measures how reliant miner revenue is on block subsidies, has consistently been under 5 throughout this year, indicating a high, organic security budget. While Bitcoin’s fee ratio multiple is also impressive, it is much higher than Ethereum’s while lower is better.
Ethereum In A Better Economic Position
Co-founded in 2015 by Vitalk Buterin and eight other co-founders, including ConsenSys’ Joseph Lubin, Polkadot’s Gavin Wood, and Cardano’s Charles Hoskinson, the second-largest network is finally making some solid moves in solving the scalability issue which has been plaguing it for years.
According to Buterin, the problem with Ethereum isn’t technical but related to people.
“Ethereum is now in a better economic position, but it took us five years to get to where we are now. We have a lot of internal team conflicts in these five years. If you are building a team, it is important to know who you are working with,” said Buterin in an interview at a Hong Kong conference.
Buterin further shared that it took more time building Ethereum than he had anticipated, “We thought it would take one year to do the proof of stake, but it actually takes six years.”
“If you are doing a complex thing that you think will take a while, It’s actually very likely to take a lot more time.”
But the good thing is sharding and rollups that stack on top of each other will bring the kind of “scalability that the large scale enterprise applications are expecting.”
In the meantime, competitors like Binance Smart Chain (BSC), Solana (SOL), Polkadot (DOT), and Cardano (ADA) have emerged to challenge Ethereum’s dominance. But Buterin isn't concerned about these newer chains.
This is because they are “trying to target having more scalability in whatever way and sacrificing decentralization,” he said.
“In the long term, the challenge for those kinds of platforms is that Ethereum itself is improving, and there’s also these layer two protocols on top of Ethereum that are rapidly improving.”