Ethereum’s (ETH) next version is all set to be launched in a multi-stage rollout beginning Dec. 1, as the deposit contract has reached the threshold in terms of ETH deposits for the project to commence.
What Happened: As of Monday, the Ethereum 2.0 deposit contract has garnered more than 540,000 ETH required to trigger the shift of cryptocurrency from its current proof-of-work model to a proof-of-stake one, CoinDesk reported.
A quarter of the ETH needed to trigger the contract was deposited in a four hour period on Monday evening.
Bitcoin and Ethereum both use the Proof of Work consensus mechanism at present, which requires a large amount of electricity and limits transactions to a small number at a time.
The Proof of Stake model on the other hand is considered a fairer mining system and has more scalable transactions and uses less electricity.
Ethereum has risen 32.51% in a seven-day period leading up to press time. In the same period, Bitcoin (BTC) has gained 10.24%.
Why It Matters: The launch of the new version of Ethereum was delayed until 2020 due to debugging. It is expected that the shift to proof of stake would change the economic basis of the second-largest cryptocurrency by market cap, reported The Block.
The new version of Ethereum will not launch immediately but will be launched as a parallel blockchain called “the beacon chain,” noted CoinDesk.
Ethereum co-founder Vitalik Buterin expressed his relief on the stake threshold cross on Twitter with a Lord of the Rings meme.
524288 pic.twitter.com/N66EmtW0Ih
— vitalik.eth (@VitalikButerin) November 24, 2020
Beacon chain’s primary stakeholders will act as validators, which are akin to miners on the proof of work chains.
Validators stand to earn a 20% annualized reward on their staked ETH. There are more than 16,300 such validators at launch, according to CoinDesk.
Price Action: Ethereum traded 6.05% higher at $614.85 at press time. Grayscale Ethereum Trust (OTC: ETHE) closed 25.1% higher at $97.94 in the otc market on Monday.
© 2020 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.