Ethereum 2.0 is approaching, what investment opportunities are there?

Ethereum 2.0 is one step closer to its official launch, a long-awaited event across the crypto industry.

ETH developer Superphiz revealed on Twitter that the merger is planned for September 19 and has not yet been finalized. While this may not be the final merge date, it's very exciting.

What is a "merge"?

While Ethereum has had some success in the past, it still needs to address some key issues, such as scalability.

The current Ethereum blockchain can only process around 15 transactions per second, making it impossible to reach the milestone of thousands. However, Ethereum 2.0 will make it possible.

Ethereum 2.0 is the next generation of Ethereum, which can transition to proof-of-stake consensus through "merging". The merger requires the integration of the beacon chain and the main chain, officially switching the network to the POS consensus algorithm. This will also greatly alleviate the current network's woes, including low throughput and high gas costs.

The Proof of Stake (PoS) consensus mechanism requires validators to store a certain amount of ETH in the Ethereum network to ensure the safe operation of the network.

To become a validator, you need to pledge 32 Ethereum (ETH) as a deposit to participate in this proof-of-stake protocol. If validators follow the rules, they can earn a certain amount of interest as a reward. Otherwise, you will be punished.

The total number of Ethereum validator nodes reached 409,113. This is the highest value since the launch of staking in November 2020.

According to data from Ethereum Org, the amount of ETH in the Ethereum 2.0 pledge contract has exceeded 13 million, accounting for about 10.9% of the total supply of ETH.

Currently, the annual rate of return for staking ETH is 4.2%, which is expected to jump to over 6% after the merger.

The amount awarded to validators is determined by the total amount staked and the number of validators. As the ETH staking pool increases, the annual yield will decrease.

What you need to know is that before the merger of Ethereum 2.0 and Ethereum 1.0, stakers cannot temporarily withdraw the pledged tokens and earned rewards.

How to participate in pledge?

We can pledge on Ethereum in a variety of ways, and each investor can choose according to the size of his own funds.

separate pledge

Solo home staking means that users pledge at least 32 ETH on Ethereum and operate their own validator nodes.

For ordinary retail investors, becoming a validator seems to be prohibitively high. In addition to at least 32 ETH, they also need a computer. Powerful hardware is necessary to ensure that validators operate well.

Staking pool

Becoming a validator is not the only way to benefit from staking on the Ethereum network. Anyone can join staking by depositing very little ETH. This is where staking pools come in.

The current main liquidity staking pools include Lido Finance, Marinade Finance, Stakehound, Ankr, Rocket Pool, and Stakewise.

Centralized exchange

If you’re not familiar with on-chain operations, many centralized exchanges offer staking services. You can easily stake your ETH on Binance, Coinbase, and other cryptocurrency exchanges with no minimum investment required.

Staking as a Service (STaaS)

STaaS represents a type of pledge service, where users can deposit their own 32 ETH into a validator and delegate node operations to third-party operators.

In return, the STaaS provider charges its customers a fee. The current STaaS providers mainly include Everstake, Allinnodes, Infstones, etc.

What investment opportunities does Ethereum 2.0 bring?

At present, Ethereum is in the final stage of opening a new chapter of 2.0. For new and old investors, what opportunities can they grasp?

ETH miners move to ETC

When ETH is converted to a POS mechanism, will the mining situation be affected? meeting.

Once ETH2.0 arrives, the ETH algorithm will be changed from POW to POS, and you can mine as long as you hold coins. ETC has always been a POW mechanism, so ETH miners will undoubtedly divert to ETC.

The foresighted market reflected this very well. ETC started to rise when the news of the ETH merger came out, with an increase of more than 30%.

Pledge track

A large number of ETH2.0 pledge service providers and protocols have emerged in the market. The smooth launch of ETH2.0 will greatly affect the development of the pledge track. Among them, LDO, SSV and other tokens have ushered in a gratifying rise recently. Potential, follow-up can continue to pay attention.

L1 track

As ETH2.0 is about to officially land, the long-suspended L1 track will once again set off waves, and the major public chains are bound to become hot spots for hype again.

ETH2.0 will help the ecological scale of Ethereum to achieve exponential expansion, and high-performance L1s such as Solana, Avalanche, Polkadot, and Near will also have a huge network joint effect.

L2 track

Maybe you will be curious: After ETH2.0 goes online, will Layer 2 have any impact? In fact, even if ETH2.0 goes online, it will be difficult to meet the performance requirements. Ethereum-based L2 can be expanded through Ethereum, which in turn will further improve the performance of Ethereum. Obviously, L2 will greatly improve its transaction processing capacity with the enhancement of ETH2.0 TPS, which will benefit the L2 track in the long run.

The core projects of Ethereum L2 include zkSync, StarkNet, Optimism, Arbitrum, etc. Optimism tokens are currently listed, and StarkNet tokens are planned to be launched in September.

epilogue

It is difficult to see clearly the future of Ethereum, but Ethereum 2.0 is a necessary upgrade to the Ethereum blockchain network. The scalability of the Ethereum 2.0 network will undoubtedly attract more users, making it the blockchain of choice for gamers.

Attached reference materials:

1. https://ethereum.org/en/staking/#how-to-stake-your-eth