Ethereum 2.0 has been advertised as a transition to a better consensus mechanism and this particular 'transition' has been a buzz for the past half year.
Development began in 2018 and it took some time to reach Phase 0. Over the past 18-20 months, the Ethereum Foundation has been struggling with delays, update roadmaps, many rumors about the project legitimacy and dozens of skepticism from rival project proponents.
On December 1, 2020, some of these questions were suppressed. The Ethereum 2.0 Beacon Chain was successful after the ETH2 depositing contract received 524,288 ETH. Many validators stake 32 ETH on the network to meet the condition, and there are 2,133,282 tokens staked in the deposit contract at the time of writing (i.e. $ 1.55 billion ETH).
However, when some controversy was resolved, new arguments about the Beacon Chain launch emerged. The development of ETH 2.0 will get more of the spotlight by 2021, but what exactly will change next year?
Another route update to learn more about the progress this time
Compare ETH 2.0 roadmap in March 2020 and December 2020
Vitalik Buterin shared the December 2020 roadmap shortly after the Beacon launch and the progress bars highlight ETH 2.0 development status.
While both maps at first glance show the difference between expectation and reality, what should be removed from this illustration is the actual workload remaining for the Ethereum Foundation.
Ethereum 2.0: Plans for 2021
Now, after the launch of Phase 0, the attention will shift to Phase 1 of ETH 2.0. The formal transition to PoS will begin with the sharding (fragmentation) chain implementation.
Sharding is the process of splitting the load on a blockchain to spread across many parallel chains. The decision was initially 64 shards, but it can be changed. Target? Simply making Ethereum more scalable.
So the Beacon Chain is expected to be shared in 2021 and questions start to emerge from here.
Retention' syndrome: ETH 2.0 and delays
The launch of Phase 0 has been delayed many times and the Ethereum Foundation has received a lot of criticism. The Beacon Chain launch date started to get attention at the end of 2019. After that, a series of ‘expected days’ continued to be pushed back, bringing more excitement to those who maximize BTC.
As such, it can be said that Ethereum 2.0's complexity is so great that delay becomes an inevitable part of the development process. Danny Ryan stated in a recent interview that his teammates side by side with 10 people. On top of that, they have 5 groups of clients that join regularly, increasing the group's more than 100 collaborators. He say:
“In terms of delivering some of these major upgrades to the mainnet (mainnet), the production process goes from conceptualization and research on specifications and proof of concepts… then production perfection, followed by technical development and testing, and finally proofreading ”.
In short, sticking to timelines is not the most suitable way of ETH 2.0, and many discussions of sharding in the space suggest further delays.
How is the value of ETH affected?
The economic dynamics of Ethereum changed completely with Ethereum 2.0. For example, issuing on ETH 1 chain currently has an inflation rate of 4% per year. With ETH 2.0, the inflation rate is expected to drop to 0.5%, with the participation of validators.
It is important to note that users cannot access staking rewards on Ethereum 2.0 for the first 2 years of parallel operation. Hence, when these trading rewards are unlocked, significant price disruptions can be triggered, with great incentives to trade. However, by 2021, the value of ETH may become more volatile.
Currently, 1.87% of ETH's circulating supply is locked in ETH 2.0 deposit contracts. Technically, this is not a bad situation given the deflationary aspect of ETH as an asset. Many people involved in staking protocols show that the interest is natural and the vision is not short term.
Hence, while it may be difficult to gauge the level of price growth, the bottom could be the present value of ETH.
Time to answer all
The year 2021 is likely to be more speculative towards ETH, and the price trend will be equally flexible. However, there are a few things we can be sure of:
- a) The value of ETH is not likely to plunge catastrophically.
- b) The development of ETH 2.0 will not stagnate.
- c) ETH will get more attention from investors (thanks to upcoming CME Futures).
Here are some popular predictions about the value of ETH in 2021:
- Blockfyre co-founder Simon Dedic estimates over $ 800.
- James Todaro, managing partner at Blocktown Capital believes in the possibility of reaching $ 9000.
- com proposed exact value of 872 dollars.
- com shows a range of $ 1493 for a year.
- Bloomberg's Mike McGlone hinted at $ 500 to $ 700 lower.
As observed, the predictive model for ETH is largely based on analyst perceptions and how they feel it will work, while crawling sites incorporate historical metrics. .
ETH is believed to have the best Risk / Reward Potential in early 2021. While Bitcoin surpasses the previous ATH level, ETH is still down 50% from 2017's ATH. The escalation towards ETH will certainly push its price to ATH at some point. The year 2021 may provoke a rally towards this goal.
