Vitalik Buterin: EIP1559 Will Make Ether “Ultrasound Money,” Scaling is “Coming Very Soon” too
Ethereum co-founder isn’t concerned at all about the chain split due to the proposal. Also, a PoS chain is already here and running; it just doesn’t have sharding because the priority is currently the merge.
Ether is seeing some red today, much like the broad crypto market. Still, it is trading above $1,750, up nearly 140% YTD. However, the big thing is the upcoming upgrade, EIP 1559, that the market believes isn’t priced in yet.
The proposal is facing some pushback from miners, some of them even come together to attack the blockchain, but the market isn't really concerned. This is because of the multi-billion decentralized finance (DeFi), especially the stablecoins, which collectively now surpass 56 billion in supply, built on the second largest network, as shared by Arthur of DeFianceCapital on “UpOnlyTV” recently.
Ethereum co-founder Vitalik Buterin isn't concerned either, as he explained on The Tim Ferriss’ Show.
When asked by AngelList founder Naval Ravikant who is bullish on crypto and DeFi, if there’s a possibility that some miners and people will stay on Eth1 instead of Eth2, Buterin said, “the risks are much lower.”
Buterin attributed being very open about proof-of-stake and sharding from the first day as the big part of the reason. Not to mention, the market has gone through it already with Ethereum Classic (ETC). He said,
“Why stay on the chain where the core developers and lots of people are eagerly expecting a proof-of-stake change if you can just move on to a platform already that accepts your values? So I think that was one of the factors that did actually end up making the Eth2 transition a bit more secure.”
According to him, Ether is all about having more scalability which is going to deliver great environments for Ethereum users and everyone is roughly on board with the idea.
More Direct Connection Between Users & ETH’s Value
Ethereum Improvement Proposal 1559 was accepted a week back to be included in the London hard fork scheduled for July.
“It basically creates this more direct connection between people using the Ethereum blockchain and ETH having some value,” described Buterin.
He further explained that the proposal redesigns how the transaction fee market works, which means the majority of fees, instead of going to the miner or corporate who creates the block, would get burned. “It would just literally get deleted out of existence.”
“If demand to use Ethereum is high enough, then there would actually be more ETH being destroyed than is being created,” says Buterin adding, it would make Ether “ultrasound money” to Bitcoin’s sound money.
Before the London hard fork, however, the Ethereum Proof-of-Work (PoW) is undergoing a mainnet upgrade, called Berlin, on April 14, 2021.
A backward-incompatible fork will require updating the software to continue to follow the mainnet. As such, stakers are required to upgrade their Ethereum PoW nodes before April 14, 2021, and if you run the Pyrmont testnet, you must upgrade your Goerli nodes before March 17, 2021, shared developer Danny Ryan.
PoS is Already Here and Running Stable
While EIP-1559 would cement Ether’s economic value within the Ethereum platform, the big thing that would change the network and the market is eagerly awaiting is ETH 2.0, which will give the network 100 times improvement over the current processing.
While the Beacon Chain, Phase 0 has been launched with 3.2 million ETH deposited for staking, the full transition will take time. This multi-step approach is taken to “give proof-of-stake sometime to prove itself before the entire ecosystem is asked to upgrade over,” said Buterin.
Talking about the ETH 2, Buterin said, “there’s already a proof-of-stake chain. It does not yet have sharding, but the proof-of-stake system is running. The thing that has not yet happened is the event that we call the merge,” where the existing activity on Ethereum will be fully moved over from the proof-of-work chain to the proof-of-stake chain which would make PoW irrelevant.
The PoS not only exists but has been running stable ever since its launch, and “at some point fairly soon, we are going to actually go and merge all of the proof-of-work activity onto it,” he added.
As for sharding, Buterin said there are prototypes of parts of it, but they are prioritizing the merge rather than sharding because of rollups which still provide 100x factor scaling. Buterin said,
“So rollups are coming very soon, and we’re fully confident that by the time that we need any more scaling of that, sharding will have already been ready for a long time by then.”