Ethereum’s 2.0 upgrades aren’t the game-changer that could bring more users

July 11, 2021 Coin Telegraph

Ethereum might be the darling of the blockchain world, but it’s likely that the awaited Eth2 will not attract wider mainstream adoption.

Ethereum 2.0 (Eth2) is being pegged as the blockchain Messiah of Ethereum. Newsflash: it's not. The long-awaited changes are not expected to solve core issues that are plaguing the network and forestalling wider adoption.

Vitalik Buterin, the brilliant mastermind behind the Ethereum blockchain, considers the personnel working with Ethereum as a bigger problem than the actual software, as he stated in a recent interview with Forkast news. While the personnel working on the project may or may not be problematic, it's surely not the only shortcoming. As promising as the new rollout may seem, the kind of software upgrades set to be introduced will not solve the long-term problems plaguing the network from reaching the heights Buterin and his disciples once envisioned.

The major problems

Ethereum currently runs on a proof-of-work (PoW) system that enables only up to 15 transactions per second or so — double that of the Bitcoin (BTC) blockchain — and is widely considered as impractical for building any expansive decentralized finance, or DeFi, ecosystem. As a result, gas fees are incredibly high on Ethereum. Because so few transactions can be processed per second, the price to process faster becomes competitive. Research by Dune Analytics shows that 2-5% of transactions on Ethereum-based decentralized exchanges (DEXs) failed due to complications such as insufficient gas prices.

Another core issue the Ethereum platform faces, but often disregards, is poor user experience (UX) design. As a result, the average users who may be interested in engaging with decentralized finance applications (DApp) or a nonfungible token (NFT) marketplace, for example, will avoid doing so because most user interfaces are not only not intuitive, but also lack sufficient educational resources to give users the know-how to use the platform.

Users are expected to set transaction fees in gas price and gas limits for transaction processing. Yet, how many users realistically know this without going down the intense rabbit hole of cryptocurrency jargon and information? Insider Intelligence reported that 25% of United States adults don’t understand or know how to invest in digital currencies. How could users be expected to know without access to effective educational tools, for example, that sending payment from two separate wallets to the same receiving address would not cause a nonces conflict? In all likelihood, the vast majority of regular users would not be aware in the slightest of such a problem to begin with.

Ethereum 2.0

To respond to these long-standing issues, Ethereum's overseers announced the launch of Eth2 as a series of upgrades over its existing model, which would include switching to proof-of-stake (PoS) and sharding. The proof-of-stake concept states that people can mine blocks and validate transactions according to how many coins they hold. The Ethereum Foundation announced that it expects the switch to PoS to be completed by the end of 2021. As the Ethereum Foundation explained in a recent blog post, “the energy requirements remain unchanged” compared with the old PoW system.

Sharding is expected to take much longer and, according to Ethereum’s website, “shard chains could ship sometime in 2022 depending on how quickly work progresses” after the current Ethereum mainnet merges together with the Beacon Chain proof-of-stake system. Sharding is the process of splitting a database horizontally in order to spread the load, reducing network congestion and increasing transactions per second. The shard chains are expected to give Ethereum more capacity to store and access data.

The new upgrades are designed to be more environmentally conscious and speed up the processing of transactions. In addition to these upgrades, the blockchain programming language is expected to change from the traditional Ethereum Virtual Machine (EVM) to one that can be adopted by developers using C++ or Rust, which will simplify coding directly into a browser. While the infrastructural upgrades may prove beneficial in some capacities, such as improving the flow of transactions, they still miss the mark.

First, Ethereum 2.0 has been in the works for years, leaving many users wondering when the actual full upgrades will happen. Proof-of-stake is intended to reduce mining cost and energy consumption, however, network throughput will only increase if block times are reduced and/or block sizes are increased. Furthermore, sharding only helps applications that can run independently from one another and only need to be synced every once in a while. But DeFi's inherent decentralized and open-sourced nature means that the sharding-style processing would need to run transactions through a relay chain and thus slow down the entire process.

More importantly, on the user experience front, Ethereum is still lagging behind to a large extent that remains unsolved by the rollout of the Eth2 upgrade. While Ethereum claims it will release upgrades that solve the transaction processing speeds and high gas fee problem to a degree, the foundation shows a blatant disregard for issues that, if resolved, would open doors for a greater number of users who are currently daunted by Ethereum’s unfriendly interface.

Even when the expected upgrades will eventually roll out, users will still have difficulty setting transaction fees in gas prices and gas limits for transaction processing. Even beyond Ethereum, the UX issues are not unique to Ethereum and are common on other blockchains that use EVM protocols, such as Binance Smart Chain and Polygon. Because other Ethereum-compatible chains that use EVM protocol suffer from the same UX issues, it is difficult to envision a future in which even EVM-based chains will also be truly accessible to the average user.

In addition to the lingering gas fee parameter issues, transactions have long confirmation times that typically result in delays, asynchronous transaction submission and confirmation notices. Quite often a user will not receive confirmation right after the transaction, leaving too much uncertainty regarding whether the targeted recipient received the transaction. For users who are accustomed to instantaneous results on the web, like e-commerce situations, this is a strange and frustrating user experience.

Ethereum might be the darling of the blockchain world, but at some point, the hype may just turn out to be hot air, and it’s very likely that the long-awaited upgrade will not attract wider mainstream adoption. It’s not clear if the expected changes will be able to deliver the promises of the Ethereum Foundation's head honchos. Until Ethereum can solve some of the deeper issues at heart, it's doubtful that Eth2 will make a significant difference for anyone outside of the community of Ethereum enthusiasts. For now, Ethereum 2.0 is not a much-needed game-changer, but rather a cosmetic upgrade.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Adrian Krion is the founder of the Berlin-based blockchain gaming startup Spielworks, with a background in computer science and mathematics. Having started programming at age seven, he has been successfully bridging business and tech for more than 15 years, currently working on projects that connect the emerging DeFi ecosystem to the gaming world.

3 reasons why Ethereum exchange reserves are falling to new lows

July 8, 2021 Coin Telegraph

Coin Telegraph

Ethereum held in exchange reserves reached a new low after a surge in Ether staked in Eth2 and the approach of the long-awaited London hard fork.

Over the past week, astute crypto market analysts noticed some interesting developments related to the supply of Ether (ETH) as the network's August 4 London hard fork approaches.

Recent data from CryptoQuant, an on-chain analytics firm, indicates that the amount of Ether held in cryptocurrency exchanges' reserves has hit new daily lows since the start of July.

*Ethereum all exchange reserves. Source:* *CryptoQuant*

To determine if this is a bullish or bearish development for the top altcoin, let's take a closer look at some of the factors playing a role in the increased demand for Ether, including the Eth2.0 staking contract, increased activity in decentralized finance and traders' possible excitement ahead of the implementation of Ethereum Improvement Proposal (EIP) 1559.

Eth2 staking surpasses 6 million Ether

One source for the increased demand for Ether is the Eth2 staking contract which surpassed the 6 million Ether mark on June 30.

There is now 6 million ETH in the eth2 deposit contract.
— Anthony Sassano Ξ (@sassal0x) July 1, 2021

Data from CryptoQuant shows that July 1 saw the largest single-day outflow of Ether from exchanges since January 21 with more than 596,000 Ether pulled off exchanges.

*Ethereum all exchanges netflow. Source:* *CryptoQuant*

The most recent data provided by Eth2 Launchpad indicates that the current amount staked is 6,166,661, which indicates that not all of the Ether withdrawn from exchanges went into staking.

DeFi values rise

Another possible destination for the Ether being taken off exchanges is the decentralized finance ecosystem which has seen increases in token values as well as the total value locked in DeFi protocols.

*Total value locked in all of DeFi. Source:* *Defi Llama*

While Ether and Bitcoin (BTC) hold a lot of the value that is currently locked in DeFi, their prices have remained relatively unchanged over the past week, meaning the recent rise in TVL seen on July 8 may have been caused by rising token values as deposits have remained steady according to deposits and loan data provided by Dune Analytics.

Traders' excitement grows ahead of the London hard fork

A third potential contributor to the recent flows seen in Ether is the upcoming London Hard Fork and the EIP-1559 proposal.

Several analysts expect the upgrade to positively impact Ether's price due to the transition to a more eco-friendly proof-of-stake consensus mechanism as well as a new “scarcity” feature that will reduce the number of tokens in circulation.

Excitement about the upcoming hard fork is a possible source in the rise of ETH/BTC pair seen since June 27 as the price of Ether also rose in its USD pair.

*ETH/BTC 4-hour chart. Source:* *TradingView*

While Ether has outperformed Bticoin for a majority of the time since June 27, BTC’s performance during the market-wide pullback on July 8 is a sign that BTC remains the most resilient of the cryptocurrencies when market conditions are less than favorable.

From a long term perspective, however, the value proposition of Ether can’t be ignored and the battle between Ether and BTC is far from settled as recently discussed in a report from Goldman Sachs, which suggests that Ether will possibly surpass the total market capitalization of Bitcoin in the coming years.

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.

London fork enters testnet on Ethereum as difficulty bomb sees delay

July 3, 2021 Coin Telegraph

Altcoins

As Ethereum’s London upgrade launches on the Ropsten testnet, mainnet anticipation for stakers and miners increases.

The Ethereum network witnessed the deployment of its London upgrade on the Ropsten testnet on June 24. This upgrade consists of the highly anticipated Ethereum Improvement Proposal (EIP) 1559.

Following the launch on the Ropsten testnet, the London upgrade will be deployed on Ethereum’s Goerli, Rinkeby and Kovan testnets at weekly intervals. This is one of the important steps in the roadmap to implement a proof-of-stake (PoS) consensus on the Ethereum network, also known as Ethereum 2.0.

The London upgrade brings five EIPs that are going to be deployed on the testnets — EIP-1559, EIP-3198, EIP-3529, EIP-3541 and EIP-3554. The hotly debated EIP-1559 proposal is a transaction pricing mechanism that consists of a fixed per-block network fee that is burned and allows the dynamic expansion and contraction of block sizes to address the congestion issue.

Changes proposed by EIP-1559. Source: ConsenSys

Through this mechanism, there will be a discrete base fee for transactions that will be included in the next block. For applications and users who want to prioritize their transactions on the network, a tip called “priority fee” can be added to incentivize the miner for faster inclusion. While the miner pockets this tip, the base fee for the transaction is burned. This entails that until the transition to a PoS model is complete, in addition to the 2 Ether (ETH) per block that miners receive, they would also be receiving the tip for prioritizing transactions.

James Beck, director of communications and content at ConsenSys — a blockchain technology company backing Ethereum’s infrastructure — discussed with Cointelegraph the impact of burning the base fees on the network:

“Burning the base fee should put a deflationary pressure on the issuance of ETH, though modeling exactly how deflationary is difficult since you have to project variables like expected transactions, and, even harder to predict, expected network congestion. In theory, the more transactions that occur, the more deflationary pressure that the burning of the base fee will have on the overall Ethereum supply.”

However, Marie Tatibouet, chief marketing officer of cryptocurrency exchange Gate.io, spoke to Cointelegraph about the possibility of this change to the transaction fees having an adverse effect on the network.

She noted that one can still tip miners and that the larger the tip, the faster the transaction will be processed, adding, “Now, as the network gets bigger and with Ethereum continuing to be the primary smart contract platform, will that not trigger another ‘fees war’ among the users who are willing to pay extra to speed up their transactions?”

Difficulty bomb delayed

Another crucial part of this upgrade that impacts day-to-day users is the EIP-3554. This EIP delays the “difficulty bomb” to come into effect from the first week of December 2021. In essence, the difficulty bomb going off would mean that mining a new block would become extremely unfeasible and hard for a miner, thus enforcing the transition to the PoS Beacon Chain.

Kosala Hemachandra, founder and CEO of MyEtherWallet — an Ethereum-based wallet platform — told Cointelegraph the EIP has been there since the inception of Ethereum in order to ensure that the network moves to a PoS and Eth2 on time. He further added:

“This value is responsible for making the block difficulty exponentially hard after a certain block number, thus making it impossible for miners to mine new blocks, and they have to move to Eth2 network. However, because of development delays, this time bomb kept getting delayed, and in the London fork, it’ll be postponed one last time.”

The official document for this EIP states that the network is “targeting for the Shanghai upgrade and/or the Merge to occur before December 2021.” However, it also goes on to add that the bomb can be readjusted at that time or be removed altogether, indicating that the first week of December is not a hard deadline for this bomb or the merge to finally occur and that it could be delayed even further from this point on.

Tatibouet also mentioned that until Ethereum 1.0 merges with the PoS Beacon Chain — a mechanism to coordinate shards and stakers on the network — transaction speed solutions built on top of the existing network, or layer-two solutions, seem to be the most viable option.

She went on to add, “Layer-one and layer-two solutions need not be exclusive from each other. This is the reason why Ethereum 2.0 is using a combination of layer-one (sharding, PoS) and layer-two (rollups) to achieve true scalability.”

Coincidentally, according to data from CryptoQuant, on the same day as the deployment of the upgrade on the Ropsten testnet, over 100,000 ETH was staked into the Eth2 deposit contract, which amounts to $210 million in notional value at the current ETH value of around $2,000. Such a high level of interest could be highly indicative of the anticipation that the Ethereum community has for this upgrade, especially due to the implications of the much-discussed EIP-1559.

Hemachandra also mentioned how this proposal supported layer-two solutions. He added, “EIP-1559 introduced dynamic block gas limit. In essence, now the number of transactions that can be included in a block can dynamically adjust based on the congestion.” He added further, “Therefore, it can reduce the congestion — this is another great solution on top of L2.”

Staking and aftermath of the “merge”

It’s important to note that after the additional 100,000 ETH was staked on the day of the deployment of the London upgrade on the testnet, the total proportion of ETH staked on the Beacon Chain surpassed 5% for the first time. The number of ETH staked currently stands at just over 6 million tokens with a value of $12.76 billion.

When compared to other PoS networks and coins, 5% of ETH staked isn’t a high proportion. For example, Cardano currently has nearly 72% of ADA staked on the network. However, there are a variety of reasons why this is the case. Hemachandra explained the core reason and why this is a positive indication for the network:

“Unlike most other PoS coins, the whole purpose of ETH is not just staking and earning interest. This is a good sign for ETH being used as a utility. For example, if 80% of ETH is staked, then there is only 20% of ETH left to do anything in Ethereum, and I don’t think this is an ideal scenario.”

According to data from Anthony Sassano, co-founder of EthHub.io, 23% of all ETH mined is deposited in smart contracts. This proportion amounts to over 23.45 million ETH tokens valued almost at $50 billion. Out of the 23.45 million, over 6 million ETH is staked in the Eth2 deposit contract and 9 million ETH in various decentralized finance (DeFi) protocols, as the network is the one most widely used for DeFi.

The remaining ETH in smart contracts is split among various stakeholders such as Gemini, Gnosis Safe multi-sig wallet, Polygon Bridge and Vitalik Buterin’s cold wallet among others.

In the aftermath of “the merge,” which will combine both Ethereum 1.0 and Ethereum 2.0, marking the end of Ethereum’s proof-of-work consensus mechanism, ETH miners will be faced with a tough choice.

As their mining hardware becomes obsolete, they must either sell their rigs and move to staking ETH or — at least for miners using GPUs — move to other altcoins.

An analysis by Justin Drake of the Ethereum Foundation estimates there will be 1,000 ETH issued every day, and 6,000 ETH will be burned to make ETH a more deflationary asset.

His analysis further found that assuming the increase of validators and a staking annual percentage rate of 6.7%, the annual supply change would amount to a negative 1.6 million ETH, thus decreasing the annual supply rate by 1.4%.

This transition would make ETH a deflationary asset, with the supply rate shrinking as time passes on, putting upward pressure on the supply-demand dynamic that would dictate its price in the market.

JPMorgan Bullish on Ethereum Staking, Forecasts Growth

July 2, 2021 The Crypto Briefing

3 reasons why analysts are turning bullish on Curve Finance (CRV)

July 1, 2021 Coin Telegraph

Coin Telegraph

Attractive yields for stakers, protocol revenue and competition among DeFi protocols have analysts pointing to a bullish long-term view for Curve Finance.

Choppy markets after a major pullback offer ample time to take a survey of the cryptocurrency landscape and find solid projects with improving fundamentals that have caught the attention of analysts and tokenholders.

One project that has piqued the interest of many, including researchers at Delphi Digital, is Curve Finance, a decentralized exchange for stablecoins that focuses on providing on-chain liquidity using advanced bonding curves.

*CRV/USDT 4-hour chart. Source:* *TradingView*

Three reasons why Curve DAO Token (CRV) is attracting the attention of analysts include attractive yields offered to tokenholders who participate in staking, competition for CRV deposits on multiple decentralized finance (DeFi) platforms and healthy earnings for the Curve protocol as a whole despite the market downturn.

Yield opportunities attract tokenholders

The root source of analysts’ bullish point of view comes from CRV’s attractive yield when staking the token on the Curve platform as well as other DeFi protocols.

Users who opt to stake their tokens directly on Curve Finance are offered an average APY of 21% and are given vote-escrowed CRV (veCRV) in exchange, which allows participation in governance votes that take place on the protocol.

Vote-locking CRV also allows users to earn a boost of up to 2.5 times on the liquidity they provide on Curve.

The amount of CRV tokens being locked in the protocol for governance was originally projected to have surpassed the total token issuance by the end of August 2022, but this estimate has since been moved forward thanks to an increase in demand for CRV deposits following the launch of Convex Finance in May 2020.

If the current pace continues, the rate of lock-up will have surpassed issuance by the end of August 2021.

*Forecasted CRV locking pre and post-Convex Finance launch. Source:* *Delphi Digital*

This could potentially lead to upward pressure on the price of CRV if the daily demand continues to rise while the available supply decreases, making for a bullish long-term case for the price of CRV.

Competition for CRV deposits

Curve Finance has emerged as one of the cornerstones of the DeFi market thanks to its ability to provide stablecoin liquidity across the ecosystem while offering token holders a less risky way to earn yield.

Due to its rising importance, demand for CRV and the governance power that comes with it have increased among DeFi platforms that have integrated Curve’s stablecoin liquidity.

The two biggest contenders for CRV liquidity outside of the Curve platform are Yearn.finance and Convex Finance, which together control roughly 29% of the veCRV supply currently in existence.

*Convex vs. Yearn veCRV holdings. Source:* *Delphi Digital*

Demand for more CRV deposits has led to a battle between these two platforms as each of them attempts to offer the most attractive incentives to lure CRV holders, with Convex currently offering an APY of 87%, while Yearn offers stakers a return of 45%.

This demand from DeFi platforms, in addition to the Curve Finance protocol, puts further pressure on the circulating supply of CRV and is another piece of data to take into account when evaluating the long-term outlook for CRV.

Revenue from providing stablecoin liquidity

A third factor catching the attention of analysts is the ability of the Curve Protocol to generate revenue in both bull and bear markets as the demand for stablecoin liquidity continues regardless of whether the market is up or down.

Almost forgot! Fee distribution time is up. Special thanks to @synthetix_io for their awesome fee sharing program: almost $400k came from it! pic.twitter.com/pjF1UIFGiK
— Curve Finance (@CurveFinance) June 17, 2021

According to Delphi Digital:

“Curve is one of the few DeFi protocols that has earnings (i.e. protocol revenue) with a healthy trailing 30d P/E of ~39.”

On top of continued revenue growth, the stablecoin component of Curve has helped shield the platform from the sharp decline in total value locked (TVL) seen on most DeFi platforms. Currently, Curve’s $9.34 billion in TVL makes the protocol the top-ranked DeFi platform in terms of TVL.

*Total value locked on Curve Finance. Source:* *Defi Llama*

The resilience of the protocol’s TVL combined with the ability to generate revenue from staked assets and the growing competition for CRV deposits by integrated DeFi platforms are three factors that have caught the attention of cryptocurrency analysts and have the potential to lead to further growth of the stablecoin-focused protocol.

Ethereum 2.0 approaches 6 million staked ETH milestone

June 30, 2021 Coin Telegraph

Coin Telegraph

ETH 2.0 now has 10x more staked Ether to power its proof-of-stake mechanism than the Ethereum Foundation required at launch six months ago.

Ethereum 2.0 is approaching what some are calling a major milestone in its short history — 6 million staked Ether (ETH). The Ethereum Launchpad, Ethereum 2.0’s portal for validators to stake their coins, shows some 5.9 million staked Ether and almost 180,000 validators powering the blockchain Wednesday.

That averages out to just slightly more than the minimum 32 staked Ether required to activate the validating software and becoming a validating node on the network. This represents an investment of $66,560 to participate as a validator on the network at the average crypto exchange price at the time of publication.

According to the Ethereum Foundation, validators “are responsible for storing data, processing transactions, and adding new blocks to the blockchain.”

When Ethereum 2.0 first went online in Dec 2020, the foundation required a minimum of 524,288 ETH to be staked before launching. So in six months, Ethereum has swelled with 10x more validators than the minimum network requirements decided by the foundation last year.

ETH rallied this week after reclaiming $2,000, remaining above key support at $2,080 since mid-afternoon Monday (UTC). Traders and investors are bullish for Ether as they anxiously await the London hard fork scheduled for July.

At the current price level, the 5.9 million staked Ether is worth some $12.29 billion in market exchange value. That figure represents the amount of money nearly 180,000 validators have locked away in deposit, for the opportunity to power the blockchain.

This qualifies them as good-faith participants in the network, with a stake in following the rules and keeping malicious behavior and software off the Ethereum network.

Validators that do not adhere to the network protocol, go offline, or fail to validate, risk losing their staked Ether. Those that help the network follow the rules and achieve consensus as it processes requests from users earn rewards credited to them on the blockchain.

China crackdown shows industrial Bitcoin mining a problem for decentralization

June 29, 2021 Coin Telegraph

Bitcoin mining

The great hash rate plunge caused by an exodus of miners from China shows large scale Proof-of-Work mining facilities are vulnerable to regulation.

Bitcoin’s reliance on large-scale mining infrastructure and geographic concentration has been thrown into sharp relief by China’s recent mining crackdown. In May, China announced that it would be getting tough on crypto mining and trading as a response to financial risks. The nation’s crackdown on crypto is not new, rather it's a reiteration of previous standings on the risks of digital currency to economic stability, in response to recent price fluctuations.

For the first time, cryptocurrency miners are being targeted to enforce the existing guidelines. Mining hardware still presents a potential risk, even if mining moves to other locations. This could prove that the Ethereum blockchain’s switch to proof-of-stake (PoS), which can run on consumer-grade equipment, is a more reliable path to decentralization and offers greater resilience against such risks.

Bitcoin (BTC) mining is reliant on large-scale, industrial cryptocurrency mining farms and has been largely concentrated in China, which accounts for 65% of the global hash rate. The manufacture of custom hardware in China has supported this trend, with one in two ASIC miners produced being distributed to Chinese miners. The crackdown has caused significant turmoil in Bitcoin markets.

The Bitcoin network’s hash rate has dropped to a 12-month low, with more provinces directing miners to shut down. Uncertainty about what may happen with confiscated mining hardware has hit the overall network hard. This is a massive loss to what was a multi billion-dollar industry for Chinese miners.

China’s policy position on Bitcoin seeks “financial stability and social order” and is possibly the result of geopolitical interests related to the desire to remove competitors to its own national digital currency, the digital yuan, in addition to its stated goals of lowering carbon emissions and redirecting energy toward other industries. The swift crackdown has shown that Bitcoin’s reliance on industrial-scale mining farms, hardware supply chains and electricity — all of which are reliant on government policies — may be its Achilles’ heel.

Miners are now seeking to migrate to cool climates, cheap energy and “crypto-friendly” jurisdictions. This may open up healthy competition for other crypto-friendly policy positions in other jurisdictions to attract industry participants — as we’ve seen, for example, with Wyoming’s embrace of legislation friendly to decentralized autonomous organizations and crypto in general. Yet, it is unclear whether moving the hardware will keep it out of the reach of policy crackdowns.

Are we decentralized yet?

Hardware has always been a major vulnerability in decentralized infrastructure. In blockchain-based cryptocurrency networks that run on a proof-of-work (PoW) consensus algorithm, such as Bitcoin, the commonly agreed record of transactions relies on a distributed network of computers.

This is vulnerable to structural exploitations, including concentration of hardware mining in industrial-scale factories in certain geographies (such as China), “premining” cryptocurrency with upgraded hardware that is not yet available to the broader market (such as new model ASICs), or supply chain delays.

Having a majority of hashing power concentrated in one country, reliant on expensive hardware setups, and subject to regulatory crackdown is antithetical to the “decentralized” ethos of Bitcoin that was outlined by Satoshi Nakamoto. The initial vision of Bitcoin in its white paper was a peer-to-peer system, whereby infrastructure could be run by individuals on a general-purpose computer in a distributed way (via CPU mining), so that the entire network could not be shut down by targeting a single point of failure.

This may also show why Ethereum’s move to PoS consensus is important — and why it has the potential to be more reliable and decentralized in the long term. Attacking a PoS network is more costly in time and money than the cost of hiring or buying hardware to attack a PoW blockchain, as an attacker’s coins can be automatically “slashed.”

Furthermore, it is much less conspicuous to run a PoS validator node on a laptop than it is to run a large-scale hardware mining operation. If anyone can run a node from anywhere with consumer-grade equipment, then more people can participate in validating the network, making it more decentralized, and regulators would find it almost impossible to stop people from running nodes. In contrast, the huge energy-consuming factories found in Bitcoin mining are much more easily targeted.

What’s happening to the hardware?

Mining is on the move, with miners moving their hardware to nearby areas, including Kazakhstan and Russia. Some crypto-friendly jurisdictions — such as Texas, which is offering legal clarity for companies — are racing to attract miners. Hardware is also on sale, with logistics firms reporting thousands of pounds of mining machines being shipped to the United States to sell.

Although China’s policy has caused some fear, uncertainty and doubt in the market, it may help to remove structural vulnerabilities from the network, which is why some Bitcoin supporters have welcomed the crackdown. The aim here for Bitcoiners is long-term decentralization. Yet, moving hardware is not the same as further decentralizing the network and removing vulnerabilities to regulatory crackdowns on miners.

Moving hardware vs. removing vulnerabilities

Hardware is a hard problem in decentralized networks. Bitcoin’s requirement for large-scale infrastructure has made it vulnerable to the policies and politics of countries like China. Even if mining moves elsewhere, it may not be decentralized, meaning it could come under threat in other jurisdictions in a way that PoS networks relying on software that can run on a standard laptop likely will not.

These events demonstrate the interdependencies between blockchains and nation-state politics and interests. How jurisdictions respond to the opportunity to attract hardware mining, along with how they approach blockchains that are transitioning to PoS, will have significant implications for the structure and risks to blockchain networks in the long term.

Kelsie Nabben is a researcher in the RMIT Blockchain Innovation Hub and a Ph.D. candidate in the Digital Ethnography Research Centre at RMIT University. She is also a board member of Blockchain Australia.

Three Ethereum Testnets Are Transitioning to the Highly Anticipated London Upgrade

June 22, 2021 Bitcoin.com

Arrington Capital to back Algorand projects with $100M growth fund

June 10, 2021 Coin Telegraph

Algorand

“The Arrington Algorand Growth Fund represents yet another key strategic pillar in supporting the momentum of those building on top of what we think is the best technical platform for regulated DeFi and the future of finance,” said Sean Ford, COO of Algorand.

Support for the Algorand ecosystem appears to be growing, with digital asset manager Arrington Capital earmarking $100 million for projects building on the smart-contract platform.

The massive Arrington Algorand Growth Fund, or AAGF, has been designed to accelerate additional development across all facets of the smart contract platform, the company announced Thursday. This includes applications spanning the DeFi, traditional finance, public sector and NFT marketplaces.

AAGF will invest in an array of Algorand-focused projects, including native cryptocurrencies that drive new financial applications on the network.

Arrington Capital was founded by TechCrunch and Crunchbase founder Michael Arrington. The company oversees more than $1 billion in assets under management and its portfolio includes key investments in Unbound Finance, BlockFi, Polkadot, Kava and many others.

Michael Arrington said his firm is “inspired by the traction that Algorand has in the market right now,” adding:

“With unmatched tech, robust developer resources and a vision for long term sustainability, Algorand is empowering its community to more easily create the future of finance.”

Algorand was viewed as a serious smart-contract competitor to Ethereum during the run up to the 2017 bull market. The proof-of-stake blockchain has received more than $500 million in strategic investments, according to Arrington Capital. This includes a $25 million fund from Borderless Capital to support digital payment solutions on the Algorand network.

At the time of writing, Algorand was the 35th most valuable blockchain network, with a total market capitalization of nearly $3.1 billion.

Senator Elizabeth Warren Slams Bitcoin’s Energy Usage

June 10, 2021 The Crypto Briefing

Proof-of-Stake