Solana (SOL) co-founder Anatoly Yakovenko says that leading digital asset Bitcoin (BTC) will eventually see all of its users migrate to other platforms unless it switches to a proof-of-stake mechanism. In a new interview with CNBC host Kate Rooney, the founder of the smart contract platform says that proof-of-work mining systems will be barren in […]
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According to a World Economic Forum (WEF) tweet, a “change in the way bitcoin is coded could almost eliminate its environmental impact.” That statement stems from a tweet the WEF published on April 26, with an accompanying video that claims “miners could stake their own bitcoins to verify transactions.” WEF on Bitcoin’s Proof-of-Work: A ‘Basic […]
The ETH 2.0 deposit contract can only be unblocked after the PoS transition, postponed to the latter half of the year.
The deposit contract for staking Ethereum (ETH) on the Beacon chain reached a balance of 12 million ETH on Friday. The total locked value of Ether in the Eth2 contract is worth about $34.5 billion.
The deposit contract was launched in November 2020 and currently holds around 10% of the total circulating supply of ETH.
The Beacon Chain is the first major step in Ethereum's transition from a proof-of-work (PoW) to a proof-of-stake (PoS) consensus model. A trader must invest a minimum of 32 ETH to become a validator in Eth2. Thus the largest Beacon Chain contract, valued at $34.5 billion highlights the enormous demand and trust in the future Eth2, despite several delays over the past year.
ETH devs started the community testing of the PoS network in December itself, however, the tentative merger date of June 2022 was postponed again, without offering any certain date for the merger.
Related: Ethereum price 'bear flag' could sink ETH to $2K after 20% decline in three weeks
Ethereum’s biggest upgrade since its inception has faced numerous challenges and continuous delays along the way. However, despite all that, the deposit contract has grown significantly with over 2 million ETH deposited over the last two months.
Ethereum’s move to PoS has generated varied sentiments in the crypto market, where on one hand the energy-conscious group has lauded the move claiming it would bring down the network’s consumption by 90%, on the other hand, Bitcoin proponents such as Jack Dorsey believe PoS mining consensus is more centralized and less secure than PoW.
less security, more centralization
— jack⚡️ (@jack) May 20, 2021
The merger of the Beacon chain into the Ethereum mainnet would complete the transition to Eth2. The upcoming merger is expected to put the Ethereum network on par with centralized payment processors, increasing its payment processing speed by several magnitudes with the help of sharding (parallel processing).
A renewed focus on decentralization, the steady growth of DeFi’s liquid staking sector and investment from institutions could benefit LDO token in the long-term.
Liquid staking has grown in popularity over the past year thanks in part to the launch of the Ethereum beacon chain and the inability of ETH stakers to withdraw their tokens until the full launch of the consensus layer.
As a result, Lido (LDO) has established itself as a leader in the liquid staking sector. Lido is one of the main staking protocols for several popular tokens and it allows token holders to earn an extra yield by putting their staked assets to work in decentralized finance (DeFi).
Data from Cointelegraph Markets Pro and TradingView shows that the price of LDO trended higher throughout the month of March and then entered a consolidation period in early April. Currently, the wider market is in a sharp downtrend, but the growth of the staking sector and upcoming Ethereum "merge" could still lead to bullish outcomes for LDO.
LDO price reversed trend toward the end of February and this was in part due to the addition of Polygon (MATIC) liquid staking to the Lido protocol, which was developed in conjunction with Shard Labs.
Lido for Polygon is here ️https://t.co/FCv36KDQj4
— Lido (@LidoFinance) March 2, 2022
Stake your MATIC with Lido for an effortless staking experience.
Get started on https://t.co/usVwJcgv4Q. pic.twitter.com/ueBk2iSYeE
At the time of writing, there is more than $14.5 million worth of MATIC staked on Lido and it is earning a 8.7% yield. The protocol currently allows staking of ERC-20 MATIC tokens and stakers receive stMATIC in return, which can be utilized in DeFi protocols on the Ethereum and Polygon network.
The addition new assets, as well as an increase in the amount of Ether staked on Lido sent the total value locked on the protocol to a record-high $20.83 billion on April 5 and currently this figure stands at $18.3 billion according to data from Defi Llama.
Investments from institutions and integrations with other protocols also paint a bullish picture for LDO. The project recently received a $70 million investment from Andreessen Horowitz’s firm a16z firm.
We are pleased to welcome a16z to the Lido family.
— Lido (@LidoFinance) March 3, 2022
️ pic.twitter.com/XSDc3ANfjS
Along with the $70 million investment, a16z also revealed that it would be staking a portion of its Ether holdings on the platform as a way to help reduce some of the operational complexities for institutional investors.
Lido also benefited from multiple integrations throughout March and April, including staked Ether (stETH) being added to the lending pools on AAVE. Staked Solana (stSOL) was also integrated on multiple platforms in the Solana ecosystem, including Raydium, Friktion Finance and multiple protocols adding support for staked Terra (stLUNA).
Related: The many layers of crypto staking in the DeFi ecosystem
Another factor that could help boost the forward outlook for LDO is the developers' focus on enhancing the decentralization of the protocol.
One step in this process is the adoption of Distributed Validator Technology (DVT), which groups validators into independent committees that propose and attest to blocks together as a way to help reduce the risk of an individual validator underperforming or misbehaving.
This helps to simplify and speed up the process of adding new node operators (NOs) because new operators can be paired with a group of majority trusted NOs to help decrease potential risks.
A second improvement includes the ability to stake based on a Node Operator Score which is derived from several metrics and this helps provide an incentive to operators to maintain optimal performance.
One final improvement is the creation of new mechanics such as longer time-locks and giving veto rights to a quorum of stETH holders as a way to mitigate the risk of governance capture to prevent unplanned changes to Lido.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.
The term staking receives many meanings in crypto, each of them presents its own set of opportunities and challenges.
Staking has been used fluently to describe several actions within the world of crypto, from locking your tokens on a decentralized finance (DeFi) application or centralized exchange (CEX) to using tokens to run a validator node infrastructure on a proof-of-stake (PoS) network.
PoS is one of the most popular mechanisms that allows blockchains to validate transactions and it has become a credible consensus mechanism alternative to the original proof-of-work (PoW) used by Bitcoin.
Miners require a lot of computational power to carry out the energy-intensive PoW, while PoS requires staking coins as collateral to validate blocks and verify transactions, which is significantly more energy-efficient and presents less centralization risk. These are some of the reasons why companies like Mozilla changed their donation policies to only accept PoS crypto donations in line with its “climate commitments.”
The Ethereum protocol is expected to undergo a transition to a PoS consensus mechanism before the end of the year. On the roadmap to scale the network, the merge feels right around the corner. Ethereum miners will have to mine a different cryptocurrency or pivot to staking if they wish to continue securing the network.
Dogecoin also has plans to perform this transition in the future.
Staking rewards are incentives provided to blockchain participants for validating new blocks. There are several ways in which one can participate in staking within the crypto ecosystem:
Proof-of-stake allows for anyone with a computer to run a node and validate transactions by participating in the consensus of the selected blockchain. Validators are assigned at random to verify a block.
Validators have to build their own staking infrastructure to run a node. Depending on the network, being a validator can demand high entry costs as a set amount of tokens needs to be staked before going live.
As long as the validator node is live, the tokens being staked are both locked up and earning a yield. Running your own node can be complicated and technical for beginners and if done incorrectly, can incur financial losses of the tokens at stake.
Tokens of PoS networks can be assigned to a third party so they can run their own node and validate transactions. This is a less complicated method than running your own node but involves delegators joining a staking pool and trusting the selected validator with their tokens.
Projects like Stake.fish offer “Staking as a Service” to ensure the legitimacy of these validators. The founder of Stake.fish’s validating services also co-founded f2pool, one of the largest Bitcoin and Ethereum mining pools.
Similarly to running a mining pool, a staking pool requires a robust team of engineers. The main difference comes down to the target audience. While mining pools are focused on miners, staking pools cater to anyone who holds PoS tokens. Dasom Song, head of marketing for Stake.fish, told Cointelegraph:
“Managing and building our own infrastructure is our way of contributing to the crypto ecosystem.We talk with projects, research ecosystems as well as listen to our community to make a decision on new chains to support.”
Both running your own node and delegating to a validator are some of the safest ways to earn an active return on your tokens but come at the cost of making your assets illiquid for a set period.
Related: Ethereum 2.0 staking: A beginner's guide on how to stake ETH
In recent years, several projects have sprouted that offer token holders an alternative to staking pools and solve the illiquidity of staking while still contributing to validating the network.
Lido (LDO), the highest-ranked protocol by total value locked (TVL), supports several blockchains with their yield-bearing tokens like Ether (ETH), Cosmos (ATOM), Solana (SOL), Polkadot (DOT), Cardano (ADA) and more. It is a non-custodial protocol but it is not permissionless as the Lido DAO selects validators through governance voting. Stake.fish is one of those trusted validators voted by the Lido community to support the protocol.
Other projects like Rocketpool (RPL) have decided to focus on just supporting liquid staking for ETH at the moment. Rocketpool is a permissionless protocol so anyone can become a node operator.
Although similar in principle, LDO tokens are different from RPL tokens.
Those tokens staked with Lido are pegged to the original token. Meaning that 1 ETH is equivalent to 1 Lido stETH (STETH). This method is similar to yield farming in DeFi and incurs a gas cost to harvest with every transaction.
Rocketpool's tokens will remain as a fixed amount of Rocket Pool ETH (RETH) but the value of these tokens increases over time as the decentralized network of nodes earns rewards, making it more cost-effective as it does not requires the harvesting of tokens.
Liquid staking was created with DeFi applications as the prime users of these tokens. Staked tokens have value and can be used as collateral for many decentralized applications to earn a yield on top of the staking rewards.
The first and main use in DeFi at the moment is providing exit liquidity to those liquid staking protocols via liquidity pools. Curve Finance liquidity pool of ETH + STETH tokens allows for STETH to be swapped for ETH until the merge is complete. RETH also has a liquidity pool in Curve Finance.
There is even a liquidity pool that facilitates swaps between STETH and RETH with more than $100 million in assets locked on Convex Finance.
Protocols in DeFi can incentivize participants to lock their tokens in exchange for rewards in the form of yield. This can be done for lending and borrowing protocols like Aave (AAVE), to provide liquidity on a decentralized exchange (DEX) like Uniswap (UNI) or SushiSwap (SUSHI), and to support governance-related operations of decentralized autonomous organizations (DAOs).
Governance has seen the most innovation with regard to staking as the vested escrow (VE) model was used by many DeFi applications to align community interests and incentivize long-term awareness of the protocol.
Curve Finance has received major attention with the use of this mechanism as Curve’s native token (CRV) is deposited into the voting escrow contract for a period of one week to four years; the longer the contract, the bigger the voting power the VE token will hold.
Two things make the DeFi world go round:
— Ross Booth (@rossboothr) March 9, 2022
• Liquidity
• Incentives
Protocols want liquidity, and we want incentives. We say we're in it for the tech, but we're also greedy.
Protocols understand this. They fight for our liquidity, incentivizing us with creative rewards.
Colloquially denominated “Curve wars” in DeFi, protocols like Convex Finance have built a structure around this mechanism to influence Curve Finance token reward allocation and position themselves as the top liquidity providers for CRV governance tokens, making it the sixth biggest DeFi application with $12.26 billion TVL, per DeFi Llama's data at the time of writing.
Related: Crypto staking: How to pick the best staking coins for passive income
Centralized exchanges provide several of the staking options mentioned above in a traditional custodial and permissioned manner. The exchange will stake the tokens on the users' behalf and ask for a commission in exchange for the staking services.
Binance, the biggest crypto exchange, allows users to stake their tokens for a locked period or in a liquid way, depending on their preference and yield appetite. For those users who stake ETH, the platform provides exit liquidity in the form of a Binance ETH (BETH) token until after the merge takes place. Binance recently launched a new TerraUSD (UST) staking program for more than 30 million users.
Kraken, another leading exchange, provides staking services but doesn’t offer an exit liquidity option. Those users that stake ETH will have to wait until after the merge to obtain a liquid asset. It also recently announced the acquisition of the non-custodial staking platform, Staked for an undisclosed amount, which was described as “one of the largest crypto industry acquisitions to date.”
Staking comes from PoS but has taken a meaning of its own in DeFi and crypto as a whole. As of the time of writing, any token that is locked either to support a network via a validator or used in a decentralized application is considered to be staked.
The above-mentioned examples showcase the different ways to stake tokens and they all come with different implications and characteristics. Staking tokens provides a strong foundation for earning yields while contributing to a network's overall ecosystem.
The upcoming Decred hard fork also plans to increase DCR rewards for PoS validators from 30% to 80%.
Decred (DCR) prices soared by as much as 45% on April 18 before paring some gains as traders bet on a major hard fork that aims to prevent pump-and-dump schemes by miners.
DCR rallied by nearly 45% to over $86 in one day, its highest level in four months. Moreover, the massive upside move accompanied a similarly huge spike in its trading volumes, confirming that most traders backed the intraday bullish momentum.
Traders flocked to buying Decred ahead of a key upgrade slated for early May that would reduce the DCR mining reward share to 10% from the current 60%.
The update comes in response to a community vote that agreed to limit "malicious miners" — those with a history of artificially pumping-and-dumping DCR — from accessing Decred.
On the other hand, the community agreed to raise the rewards for Decred's proof-of-stake (PoS) validators — entities that validate blocks submitted by miners — from 30% to 80%, suggesting that consensus wants to switch primarily away from proof-of-work (PoW) consensus to PoS on-chain governance.
pow and pos both have notable strengths, but we have found that the typically-overlooked risk of a mining cartel suppressing markets with its inventory is a massive downside to pow.
— Jake Yocom-Piatt (@behindtext) April 14, 2022
the revolution will not be suppressed #Decred
Simply put, Decred users would be incentivized for locking up their DCR for a certain period, thus reducing their active supply from the market, which could bolster price.
"DCR block reward change is in 20 days," noted Permabull Niño, an independent market analyst, saying that it should be the reason for traders to watch the Decred market closely in the coming sessions. Excerpts:
"If price starts moving while staking rewards go up could create a decent wealth effect/reflexively bullish price action. As always, barring a BTC plunge."
Decred's price corrected by nearly 20% soon after topping out for the day near $86, a level near DCR's two key resistance levels: the 200-day exponential moving average (200-day EMA; the blue wave) around $78 and the 23.6 Fib line near $96.
A decisive break above the two price ceilings could have DCR test $125 as its next upside target. Nonetheless, multiple indicators suggest that its likelihood of rallying further is limited. That includes a bearish divergence between the DCR's rising prices and falling momentum (as indicated by its relative strength index).
Related: BTC could drop to $30K in 2 weeks, trader warns as gold goes for $2K high
Additionally, the DCR price action on April 18 appeared very similar to massive upside moves witnessed since December 2021 — each showing the token forming daily candles with large bullish wicks.
None of those price booms led to substantial followups, suggesting that market participants had been merely pumping-and-dumping DCR to secure interim profits.
As a result, DCR now risks plunging to its immediate support target near the 50-day EMA (the red wave) near $60.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.
The wait for the long-awaited Ethereum Merge just got longer, leading analysts to discuss potential price outcomes for Ether.
The rollout of Ethereum 2.0, or Eth2, includes a transition from proof-of-work to proof-of-stake that will supposedly transform Ether (ETH) into a deflationary asset and revolutionize the entire network. The event has been a trending topic for years and while anticipation for “The Merge” has been building over the past couple of months, this week Ethereum core developer Tim Beiko informed the world that “It won’t be June, but likely in the few months after. No firm date yet.”
Delays in Ethereum network upgrades are nothing new and so far, the immediate effect on Ether’s price following the revelation has been minimal.
Here’s what several analysts have said about what the merger means for Ethereum and how this most recent delay could affect ETH price moving forward.
Based on data from Beaconscan, there is currently more than 10.9 million ETH staked on the Beacon Chain, offering a gross staking reward of 4.8%. According to a recent report from the cryptocurrency data provider Staking Rewards, this level of staking offers validators the opportunity for a net staking yield of 10.8%.
The current amount staked is equivalent to 9% of the circulating supply of Ether but several barriers including the inability to withdraw staked Ether or any rewards from the Beacon Chain have limited more widespread involvement.
In the post-Merge world, Staking Rewards expects the number of ETH staked to increase to between 20 to 30 million ETH, which would “yield a net validator return (staking return) of 4.2% to 6%.”
While the Merge has several benefits for the Ethereum network, including a reduction in the circulating supply of ETH through burning and staking, some of the main concerns facing the network remain an issue.
Chief among these are high transaction costs, difficulty of use and network congestion, leaving the door open for competing networks that offer comparable staking rewards and cheaper transactions to increase their market share.
Big events like the Merge, oftentimes, turn into a “buy the rumor, sell the news” type of event in the cryptocurrency sector, but several analysts are saying that it would be a mistake to assume that with Ethereum.
According to decentralized finance (DeFi) educator and pseudonymous Twitter user “Korpi,” there are multiple factors that will change the supply and demand dynamics for Ether following the Merge.
The Triple Halvening refers to ETH issuance being reduced by 90% following the Merge, a feat that would “take three Bitcoin halvings to produce an equivalent supply reduction.”
Other bullish factors include a potential increase in the staking reward as stakers will also receive the unburnt fee revenue that currently goes to miners and an increase in institutional demand due to the ability to apply the discounted cash flow model to Ethereum which “is what institutional investors need to approve multi-million dollar investments.”
In essence, following the transition to proof-of-stake, institutional investors could start to view Ethereum as a sort of internet bond, presenting a viable alternative to the United States Treasury bonds.
This concept was explained in detail in a recent post titled “Five Ducking Digits” by former BitMEX CEO Arthur Hayes, who stated, “The native rewards issued to validators in the form of ETH-based issuance and network fees for staking Ether in validator nodes renders Ether a bond.”
Hayes provided the following chart, which illustrates how much value Ether could lose while investors still break even versus the United States bond market.
Based on this chart, if the staking rate is 8% Ether price could fall 32.6% in value and still be equal to a 10-year 2.5% interest bond.
With many analysts making long-term Ether price projections of $10,000 and higher, there is potential for many U.S. bond investors to start seeking yields from Ether staking rather than the U.S. bond market, assuming the institutional infrastructure needed to support these types of investments is present and approved.
Related: Ethereum price 'bullish triangle' puts 4-year highs vs. Bitcoin within reach
On the trading front, several ways to trade the Merge were discussed by pseudonymous Twitter user “ABTestingAlpha,” who noted that there will be less selling pressure following the Merge because the regular sales by proof-of-work miners will stop.
According to ABTestingAlpha, this is likely to be a crowded trade on the long side which means there will be “a good chunk of momentum traders getting long Ether into the Merge.”
This will help with incremental price gains, but it’s important to remember that these traders aren’t likely to hold Ether long term, so it’s important to try and determine when they will sell.
Based on the news of the recent delay, the launch of the Merge would be considered late by ABTestingAlpha, which leaves several possible scenarios. With the current delay pushing the launch into the second half of 2022, there is a chance that momentum traders sell their tokens which could result in a loss of the 75% to 80% gains made by Ether since mid-March.
If the delay is extended into 2023, sentiment is likely to be crushed, resulting in momentum traders selling with some opening short positions. This is the worst-case scenario and could lead to Ether liquidity flowing into cash and other layer-one and layer-2 protocols.
ABTestingAlpha said:
“Outcome: Ether sells off, giving back all its gains into the Merge plus an additional 30-50%.”
At this point, the situation has turned into a waiting game and a test of patience because the official launch of the Merge is unknown and the crypto market is notorious for having a short attention span.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.
“It won't be June, but likely in the few months after. No firm date yet, but we're definitely in the final chapter of PoW on Ethereum,” said developer Tim Beiko.
The long-awaited Ethereum Merge is set for yet another delay, with developers working on the upgrade estimating a completion time a “few months after” June.
Owing to the success of testing, there was a general expectation the Merge would go through mid year, however the latest setback is unsurprising given that Proof of Stake has been delayed constantly ever since it was first proposed.
That said, the signs are promising that the Ethereum mainnet will actually merge with the beacon chain to become a Proof-of-Stake (PoS) network this year. For real.
Ethereum developer Tim Beiko provided the updated timeline via Twitter yesterday, tentatively stating that the core devs are into the final stretch:
“It won't be June, but likely in the few months after. No firm date yet, but we're definitely in the final chapter of PoW on Ethereum.”
After noting that his comments caused a stir amongst Ethereum proponents and haters alike, Beiko followed up today by observing “that it can be hard to parse the progress on The Merge when you aren't deep in the process.”
To provide further context, Beiko published a blog post with a deeper rundown.
Didn't expect my tweets from yesterday to cause such a reaction I appreciate that it can be hard to parse the progress on The Merge when you aren't deep in the process.
— Tim Beiko | timbeiko.eth (@TimBeiko) April 13, 2022
Tried to provide some context here: https://t.co/QTZ7CuapMf pic.twitter.com/MVXdPEj3NX
According to the developer, a specific date will not be set until “client teams are confident that the software implementations have been thoroughly tested and are bug-free.”
Central to these latter stages are the trial runs of public test nets such as Kiln, and the roll out of shadow forks which enable devs to test various merge/PoS-related implementations on the network.
Another important factor is the difficulty bomb (an automated increase in mining difficulty designed to make PoW mining less attractive), which Beiko says will start to be noticeable on Ethereum around May and make blocks “unbearably (read 15-20 seconds) slow by August.”
“If client developers do not think they can deploy The Merge to mainnet before block times are slowed too much, it will need to be delayed again,” he said.
Beiko put forward two ways in which the difficulty bomb could potentially be delayed to usher in the Merge upgrade beforehand, firstly combining a bomb delay with merge client releases to delay the “bomb at a certain block, restoring 13s block times, and then activate The Merge shortly after.”
Secondly to separate the bomb delay via network upgrade “which only delays the difficulty bomb” prior to the merge.
“The Merge, unlike previous Ethereum upgrades, will not be triggered by a block time. Instead, it will be triggered by a total difficulty value. Given these are harder to estimate than block times, the delay between choosing a time for The Merge and it going live on the network may be slightly shorter than prior Ethereum upgrades.”
Related: Ethereum derivatives data shows pro traders are bearish, but for how long?
Earlier this week Ethereum Foundation developer Parithosh Jayanthi suggested there is still a fair amount of trial and error to go, after he noted that the testing of three shadow forks resulted in “bugs varying from sync code to request timeouts being found.”
We've done 3 shadow forks of Goerli with bugs varying from sync code to request timeouts being found. Watch the Ethereum R&D discord channels for more. Goerli-shadow-fork-3 is live for anyone to test with, rated at advanced difficulty to join.
— parithosh | (@parithosh_j) April 10, 2022
Following the successful implementation of The Merge and transition to a PoS consensus mechanism, the final landmark on the road map for Ethereum (formerly known as Eth2) is the sharded chains upgrade slated to go live in early 2023. Until then however, the network will utilize Layer-2 networks like Polygon and Optimism to handle scalability and high transaction volumes.
The price of Ether (ETH) has seen a significant uptick over the past 30 days, gaining 20.5% to sit at $3,126 at the time of writing.
During the first week of January, the software community Mozilla revealed it was pausing cryptocurrency donations after citing environmental concerns. 14 weeks later, Mozilla decided last week it will accept crypto donations again, but only from digital assets that leverage a proof-of-stake (PoS) consensus model. Mozilla Plans to Accept PoS Crypto Assets Only, Executive Says […]