It has been an explosive week for the crypto market, as most cryptos see double-digit gains for the first time since the FTX contagion started in November 2022. This rally was led by Bitcoin (BTC) and Ethereum (ETH), which surpassed the $21,000 and $1,590 mark respectively. It is important to understand what factors are causing these uptrends, so that we, as investors, can recognize and capitalize on these patterns.
Why is Bitcoin (BTC) Pumping in January 2023?
Over the past week, Bitcoin has seen large numbers of purchases with robust trading volume. According to Glassnode, the exchange outflow volume of BTC has hit an early year-to-date high, with nearly $300 million worth of withdrawn BTC moving into crypto wallets. Moreover, most of these withdrawals were made in large installments ranging from $1 million to $10 million of BTC. This is corroborated by on-chain aggregator Santiment, where Bitcoin whales have been loading up their wallets with a lot of BTC, suggesting institutional action.
📈 A definitive explanation on why #crypto prices have bounced:
Across the broader crypto market, more than $1.3 billion of crypto assets in short positions were liquidated over the past 8 days, according to data sourced from Coinglass. Additionally, more than 200,000 traders were liquidated, with the most significant liquidation being a $6.84 million short position against Bitcoin, contributing to the surging price movement in the crypto market.
Apart from market activities within the space, there are other macroeconomic conditions that contribute to Bitcoin’s pump.
Inflation Slowing Down According to U.S. Consumer Price Index (CPI)
The price surges in the crypto market also reflects the market’s expectations that inflation is cooling ahead of the release of the U.S. Consumer Price Index (CPI) data. Bitcoin began the week trading at $17,207 and has since seen an upward trajectory, with the CPI report meeting market expectations indicating that inflation in the U.S. economy is slowing. Other equities markets have also responded positively as a result.
Investors are now anticipating comments from the Federal Reserve which should hint at future policy, including the size of interest rate hikes. The Federal Open Market Committee (FOMC) meeting will be held between January 31 and February 1. According to CME FedWatch Tool, the committee is currently expected to yield a hike of 25 basis points istead of the previous 50 basis points.
Now, the prevailing narrative is that U.S. inflation has peaked in 2022, which means softer rate hikes going forward. This stimulates all economic activities including in speculative markets, but with the crypto industry, any surprises could spark additional volatility.
Bitcoin Halving Event in 2024
Another factor contributing to Bitcoin’s pump this month is the upcoming Bitcoin halving event in 2024, in which Bitcoin rewards to miners are cut in half. This event occurs after every 210,000 blocks are created, which is roughly every four years. Around next year, miner’s payout will be reduced from 6.25 BTC to 3.125 BTC.
Historically, halving events have been seen as a positive sign for Bitcoin’s price, as it helps to contract the supply of BTC. This is due to the fact that Bitcoin has a fixed supply, and the halving event directly relates to Bitcoin’s deflationary tendency, driving its price up as a result of supply and demand mechanisms. According to Coindesk, we can see from Bitcoin’s halving history, the events have always been able to establish long-term bullish drivers for Bitcoin’s price.
Correlation with the U.S. Dollar Index (DXY)
Another factor contributing to Bitcoin’s price movement is its relationship with the U.S. Dollar Index (DXY). The crypto market generally correlates negatively to the DXY due to the purchasing power of fiat currencies. When the DXY declines, investor sentiment for riskier assets such as crypto tends to increase. This year, the DXY dropped to seven-month lows, momentum has slowed as it is beginning to retract. Typically when this happens, it is followed by Bitcoin price moving in the opposite direction.
The concept of the “Flippening” has been increasingly gaining traction in the crypto space. It refers to the hypothetical moment when Ethereum (ETH) surpasses Bitcoin (BTC) as the most valuable cryptocurrency by market capitalization. The Flippening is important because it would signify a major shift in the overall direction of the crypto landscape, signalling a change in investor sentiment and adoption patterns.
https://www.youtube.com/watch?v=0lQ8bz9QRBo
While the Flippening is not set in stone, there are compelling data that indicate it is coming, and sooner than you think… Here’s why:
The Case for Bitcoin
Being the world’s first cryptocurrency, Bitcoin has maintained its throne on the crypto market since its genesis block in 2009. It is often considered as the safest digital store of value by investors, with its limited supply structure similar to the scarcity of gold, hence its nickname “digital gold.” As such, Bitcoin is usually the primary choice of cryptocurrency for financial institutions looking to get involved. As far as mainstream adoption goes, Bitcoin has led the way so far.
However, Bitcoin’s Proof-of-Work (PoW) consensus model is highly energy-intensive, sparking criticisms of the network’s impact on the environment. Additionally, the usage of Bitcoin is only limited to exchanging and storing value. This is where Ethereum has much more to offer.
The Case for Ethereum
As the second most valuable cryptocurrency, Ethereum is designed to be used as the foundation of a decentralized, blockchain-based internet — an idea that is become known as Web3. Apart from exchanging and storing value, Ethereum introduced smart contract functionalities that allows developers to do all kinds of innovative and creative things on the network. This brought about a proliferation of financial products that have enabled a much broader range of investors.
Ethereum earned its nickname “digital oil” because it is a utility-based asset like oil, fuel or gas, and its value is largely dictated by supply and demand mechanisms. Similar to how the world’s global supply chain is fueled by crude oil, Ethereum lays at the heart of the Decentralized Finance (DeFi) space as well as GameFi and Non-Fungible Token (NFT) market. And as the Web3 landscape progresses, demand will increase as more and more people are recognizing the potential of a decentralized internet. It is only a matter of time when Web2 evolves to Web3, and Ethereum is at the centre of that.
Do “Ethereum Killers” Hinder the Flippening?
It is worth noting that Ethereum faces competition from other prominent layer-1 blockchains such as Aptos, Cardano, Solana, BNB Chain, Polkadot, and Avalanche. There is a trending “Ethereum Killer” narrative in which user adoption will be distributed amongst these blockchains instead of focusing on Ethereum only. However, most of these blockchains in fact depend on Ethereum, as one way or another they are associated with the network’s smart contract. As shown in the image below by Cryptowatch, all of the top layer-1 blockchains are closely correlated with Ethereum’s price action.
Comparing Market Share between Bitcoin and Ethereum
As of 11th January 2023, Ethereum’s market share increased by 3% among global crypto assets, signalling its dominance on the rise. According to Coinmarketcap, Ethereum’s market dominance is at 19%, valued at around $856 billion. On another note, Coingecko’s metrics were slightly different, indicating Ethereum’s dominance at 18.3%. But both aggregation websites show that Bitcoin’s market dominance is decreasing, from 40% to 38%.
It is unclear whether this trend will continue, but according to data sourced from Blockchain Center, the Flippening has been on an uptrend since July 2021. And we are nearly halfway for it to happen. It is also worth noting that Ethereum came closest to the Flippening in 2017, when Bitcoin’s market dominance’s dropped by 40.6% and Ethereum took over 32% of the market amidst the situation.
In reference to the data provided by Blockchain Center, there are also other metrics apart from market cap that determines the Flippening. As of now, Bitcoin is still by far superior in trading volume, which is a crucial metric for adoption usage. However, Ethereum has Bitcoin beat in active addresses, transaction count and volume, and total USD transaction fees.
Outperformance of Ethereum will be primarily driven by the strength of its post-Merge fundamentals. The upcoming Shanghai Upgrade will significantly reduce the risk and opportunity cost of staking ETH, which is likely to attract participation from more crypto users.
Key Takeaway
Despite Ethereum’s increasing adoption and market dominance, Bitcoin still reigns supreme in the crypto space. In fact, Bitcoin saw significant adoption in 2021-2022 from retail and institutional investors, public companies, and even countries. As of now, El Savador and the Central African Republic (CAR) have adopted Bitcoin as a legal currency. This is a monumental step towards mainstream adoption.
But that is not to say the Flippening will never happen — it is certainly a possibility. After all, both Bitcoin and Ethereum have different visions. Bitcoin aims to become the global reserve currency, whereas Ethereum aims to become the infrastructure of a global digital economy. The Technology Acceptance Model (TAM) applies to both assets, but it all comes down to supply and demand mechanisms. If demand in digital money is higher, then Bitcoin dominates. But if demand in utility-based asset in building out a decentralized ecosystem is higher, then Ethereum is generally favored.
The Federal Reserve’s December meeting minutes revealed the central bank’s plans to continue raising the federal funds rate to control rising inflation. This could potentially impact the crypto market as economic activity is further tightened, signalling consumers and investors to save money and mitigate risk. Shortly after the news, the price of Bitcoin and Ethereum had dropped momentarily before bouncing back to the $16800 and $1250 range respectively.
Key Takeaways:
Feds opted to raise interest rates by 50 basis points, putting the target range for federal funds rate to 4.25%-4.5%.
The new restrictive policy in place will fight inflation, but it also tightens economic activity including investments in the crypto market.
The price of Bitcoin and Ethereum dropped 1% after the Federal Reserve’s December meeting minutes were released.
The Fed’s minutes noted the collapse of digital asset exchange FTX, but said it didn’t have a serious effect on the wider financial system.
Fed Signals Hawkish Interest Hikes in 2023
The Federal Open Market Committee (FOMC) and Federal Reserve officials concluded its December 13-14 meeting, publishing new projections for expected inflation in 2023 which is higher than previously anticipated. Against the macro backdrop, Fed officials agreed to raise interest rates by 50 basis points, putting the target range for the federal funds rate to 4.25%-4.5%.
Higher interest rates mean higher borrowing costs, which in turn affects consumer spending and investments in speculative markets including the stock market and crypto market. The news of the Fed’s plans to continue raising interest rates has caused investors to be cautious, as they are wary of its potential impact on the crypto market. Occasions such as this would prompt traders and investors to sell U.S. equities as well as Bitcoin and other digital assets to mitigate risk.
This caused the price of Bitcoin to dip nearly 1%. Ethereum, the second largest digital asset by market cap, also dropped by 1%. According to Cryptowatch, the correlation between Bitcoin and Ethereum sits strong at 0.82. Therefore, it is expected that Ethereum will mirror Bitcoin’s price movement.
Despite the dip, Bitcoin is still up 0.4% in the past 24 hours and 1.2% in the past week. Ethereum is down 0.1% at the time of writing but has seen 5.1% gains in the past week.
Fed officials also noted the collapse of FTX, acknowledging its impact on the crypto ecosystem. However, they claimed that the situation did not have a serious effect on the wider financial system. The meeting summary stated, “while the spillovers from this situation had been significant among other crypto lenders and exchanges, the collapse was not seen as posing broader market risks to the financial system. (Valium) ”
The crypto industry had a tumultuous year in 2022, with coins tanking at the start of Q2 and never rallying, signalling the beginning of a crypto winter. To make matters worse, the collapse of Terra Luna and FTX led to a devastating contagion across the industry. Despite the challenges, we shouldn’t forget about the progress and achievements the industry has made. Here’s a brief recap of some of the biggest news in 2022.
Crypto’s Role in the Russia-Ukraine War (February)
During the Russia-Ukraine war, cryptocurrencies have been immensely valuable to Ukrainian refugees. Russian attacks have destroyed critical infrastructure, rendering many Ukrainians inaccessible to withdrawing money from ATM machines. Therefore, many Ukrainian refugees relied on digital currencies sent from relatives or donors abroad to purchase goods and services.
All that is needed for them to access their cryptocurrency wallets is a mobile phone and internet access, which was being provided by the thousands of Starlink satellite internet dishes provided by Elon Musk’s SpaceX at the time.
Feds Interest Rate Hike (March)
Despite Bitcoin reaching an all-time high of $69000+ in November 2021, what follows is a series of market decline. This is in part due to the U.S. Federal Reserve announcing its first interest rate hike in March to fight increasing inflation. As a result, the macro backdrop began to worsen, not only affecting crypto assets but also every other investment asset class. This also called into question Bitcoin’s reputation as an inflation hedge as Bitcoin itself started to trade in tandem with Nasdaq tech stocks, according to the New York Times.
Collapse of Terra Luna (May-July)
The collapse of the Terra Luna ecosystem in May 2022 was one of the most devastating black swan events in crypto history, wiping at least $60 billion off the market which triggered a dangerous domino effect across the industry such as the fall of several high-profile crypto firms, namely Three Arrows Capital, Voyager Digital, and Celsius Network.
Amid the crash, the UST algorithmic stablecoin, which was supposed to maintain a $1 peg via on-chain mechanisms with Terra’s native token LUNA, depegged, bottoming out at $0.006. This was caused by a massive continuous selloff on both UST and LUNA, resulting in a death spiral. Terraform Labs (TFL) developers and founder Do Kwon are facing multiple investigations as well as lawsuits into its collapse. (Canadian Pharmacy) As of now, South Korean authorities and Interpol have issued a warrant for the search and arrest of Do Kwon and his accomplices.
Recovery Plan of Terra Luna Classic (August)
As of now, the Luna Classic blockchain is managed and governed by the community after Terraform Labs (TFL) developers abandoned the chain in support of Luna 2.0. On August 26th 2022, governance was restored as citizens of Luna Classic could delegate, stake, and vote for the future of the ecosystem. Proposals and the associated implementations are being passed by the Terra Classic Decentralized Autonomous Organization (DAO).
Feds Sanction Tornado Cash (August)
On 8th August 2022, the U.S. Treasury Department imposed sanctions against Tornado Cash, a privacy-focused Ethereum mixing service that obscures the trail back to the fund’s original source. They claimed that Lazarus Group, a cybercrime group run by the North Korean government, has been using Tornado Cash to launder illicit funds.
Moreover, one of the developers for Tornado Cash was arrested in the Netherlands. The crypto community and privacy advocates bashed Netherlands authorities as the developer was simply writing code and had nothing to do with illicit activities. Ethereum co-founder Vitalik Buterin also criticized the move as he himself used Tornado Cash to make donations to Ukraine’s cause.
Ethereum Merge (September)
On 15th September 2022 at 06:42:42 UTC at block 15537393, the Ethereum Merge was completed. This meant a merger of the Ethereum mainnet execution layer and the Beacon Chain’s consensus layer, transitioning from the proof-of-work consensus mechanism to proof-of-stake. This landmark update brings major changes to the network, including a 99.95% reduction in energy consumption and a 90% cut in ETH issuance.
This is a significant achievement in the history of blockchain, allowing the Ethereum network to scale effectively as demand for Web3 and DeFi increase. Since Ethereum is the mother of all smart contract platforms, this could put Ethereum in a position to rival Bitcoin in adoption and even value.
Downfall of FTX and Sam Bankman-Fried (November)
On 11th November 2022, former FTX CEO Sam Bankman-Fried (SBF) filed FTX, FTX US, and Alameda Research for bankruptcy in the U.S. Once hailed as one of the top crypto exchanges, the sudden collapse of FTX came as a shocking blow to the entire crypto industry, setting off yet another contagion across the space. This affected 130 affiliated companies including several high-profile firms such as BlockFi, Genesis Trading, Grayscale, KuCoin, Gemini, Coinbase, Crypto.com, Sequoia Capital, and Galaxy Digital.
Apparently, SBF was misappropriating customer funds for his own benefits without customers’ consent and knowledge, conducting unethical flywheel schemes with Alameda Research. As a result, SBF had been arrested in the Bahamas, facing many criminal charges including securities fraud, money laundering, and campaign finance law violations. However, on 22nd Decemeber 2022, the disgraced FTX founder was released on a $250 million bail.
Enjin is a blockchain gaming platform focused on the creation of digital collectible items that are truly owned by the user. The platform offers methods for creating digital assets (known as ERC1155 tokens) for use across multiple Video Games. Their uses include collectible art or even in-shop coupons. Blockchain gaming allows gamers to have true ownership of their in-game items and trade them for value.
Enjin Platform uses Blockchain technology for these key benefits:
True item ownership – with transactions that cannot be censored powered by the Ethereum blockchain.
Convenient Exchange of value – digital items can be traded or sold instantly. The Enjin Wallet also allows users to access decentralised exchanges such as Kyber Network and Changelly.
Reserve Value – unwanted digital items can be “melted” into the Enjin Coin cryptocurrency.
Single Wallet for all items – the Enjin Wallet users to keep all digital assets in one single location.
ERC-1155 Token Standard – a superior version of the ERC20 and ERC721 token. Its transaction bundling and multi-send features mean it will save users’ costs.
What is Enjin Coin (ENJ)?
Enjin coin’s (ENJ) value comes from its use case as a stored reserve value in every item created on the Enjin Platform. $ENJ is locked up when items are created and released when items are destroyed.
Items store (lock up) a certain amount of ENJ, with items such as the infamous “Monolith” storing 1,155,777 ENJ. ENJ from items can only be extracted by destroying the item (“via the melting process”). This creates a situation where more and more ENJ is locked up and overall supply is reduced as the platform is used by more games.
Popular meme “Melt is Murder” discourages the destruction of items
In terms of economics ENJ is a scarce resource and each game acts as a “value trap” for ENJ – locking up ENJ reserve and increasing the scarcity of $ENJ. With a limited supply of 1,000,000,000 $ENJ, this cryptocurrency acts as a form of “Digital Gold” – its value determined by the dynamics of supply and demand within the game’s ecosystem.
Enjinx showcases all valuable assets and games on the Enjin Plastofrm
Cross-game items – Enjin Multiverse
One of the unique advantages of Blockchain gaming is the ability to create items that can be used across different games by different developers. This means players can carry their items between games like it is a single world (also known as the Multiverse).
Multiverse items are possible because assets are stored on a decentralised blockchain – so independent developers can all access the item. To encourage the development of cross game items, Enjin announced its newest asset the Stormwall. It is an example of what we can expect with its gaming assets. Stormwall is a shield that moves across Enjin’s Multiverse of games.
In the below video we see Stormwall being as a playable item in 32 different games including 9Lives Arena, Age of Rust, Cats in Mechs and more.
Why is a Multiverse Beneficial?
One of the biggest questions asked about cross-game items is – why is it beneficial for game developers and players? For developers, supporting cross-game items mean that they gain the benefits of additional exposure from games participating in the multiverse and increased retention from players who want to test out the item. This is especially important in this age as player attention is extremely valuable and having players “check out” how an items works in a different game drastically improves player interest.
For players, having cross-game items mean that their items are naturally move valuable, especially long term value. This means that the effort used to earn valuable items are not wasted if they can be used in new upcoming games.
The Enjin Coin Ecosystem
Enjin have created an entire ecosystem where you can create, store, trade and use these items.
Enjin Wallet – Cryptocurrency wallet to safely store cryptocurrencies, blockchain gaming assets and exchange value. For more information check our EnjinWallet review.
EnjinX – Blockchain explorer to view transactions and items
Unity Plugin – Allows game developers to directly implement and issue items in games on multiple platforms like iOS, android, PC and MacOS.
Marketplace – buy and list items with the safety of smart contracts that independently facilitate the trade.
The Enjin Ecosystem
Enjin for Mobile Games
One of the biggest use case for non-fungible tokens is in mobile games. Mobile gaming is currently valued at $63.2 billion USD globally and growing on a year by year basis (Source: newzoo). Enjin has a direct partnership with game engine Unity which hosts the Enjin SDK which allows for easy integration of Blockchain assets directly into the game.
Enjin Partnerships
Enjin has a strategic partnerships with increase the rate of adoption of Blockchain Gaming and growth of the ecosystem. On the gaming side there is a partnership is with cross-platform game engine Unity with the introduction of the SDK
Samsung’s s10 presentation at MWC Barcelona 2019 that broke the internet
Enjin has been partnered with smartphone manufacturer Samsung Electronics to as a technology provider. Enjin Wallet directly interacts with the Samsung’s Blockchain Keystore, a trusted zone on new Samsung devices which is specifically designed to key cryptographic private keys safe. Samsung will also support Enjin’s ERC-1155 token standard and increase the adoption of Blockchain based non-fungible tokens.
Enjin and Microsoft Partnership
Microsoft Azure Heroes using Enjin ERC 1155
Microsoft has chosen Enjin as technology provider with the deployment of Azure Heroes, a program that will directly use ERC-1155 non-fungible tokens as a reward. This Blockchain-based reward will be given to contributors who help produce material for the Microsoft Azure platform, with participants given cute badge(r)s. For example, makers that contribute to the developer community or content heroes will be given rare badgers.
These collectable badgers are a proof of achievement as an Azure Hero which you can show off on your social media. As these are tokenized assets on the blockchain, they cannot be faked. So no fake achievements or heroes here!
Enjin Coin (ENJ) is now supported by the Aave Protocol. This means users can deposit ENJ in the Aave Protocol and earn interest whilst others borrow your ENJ. The Aave Protocol protects your deposits as it is controlled by immutable and transparent Ethereum smart contracts. Your ENJ is also secured by other cryptocurrencies left on the Protocol as collateral.
How to connect Enjin Wallet to Aave Protocol
Now with the Enjin-Aave partnership, you can directly interact with the Aave Protocol with your Enjin Wallet (which in our opinion is the best mobile wallet EVER). Here’s how: On the Enjin wallet, go to “DApp Browser”. On the search bar, go to app.aave.com. Click “Browser wallet” and when asked to choose your market, choose “Aave Market”.
Connect Enjin Wallet to Aave Protocol
Enjin and BMW
After much speculation, Enjin has confirmed they are partnering up with BMW to integrate Enjin Coin token swap into BMW’s Vantage App. The Vantage App is a Korean customer loyalty app for car-owners. Users can use the app to pay for goods/services such as gas, highway tolls and parking fees. There will also be referral rewards for dining and shopping.
Purchases on the BMW Vantage app are rewarded with BMW Coins which can be used as spending for various activities and be swapped for ENJ.
Note the token swap feature is not available on the Vantage App yet and according to Enjin, more details will be available once it is live.
Enjin putting property on NFTs with LABS Group partnership
Enjin is helping LABS Group put property on NFTs and the blockchain with its partnership.
LABS Group will be using Enjin’s NFT minting platform to tokenise real estate on the blockchain. LABS Group will be offering fractionalized deeds of real estate for as low as USD$100, allowing retail investors (particularly millennials) to finally enter and invest in the real estate market.
The range of real estate on offer will include buildings, hotel rooms and apartments. Trades will all take place securely through the regulated LABS Security Exchange.
This marks the introduction of blockchain into the world’s oldest and largest asset class, valued at approximately USD$228 trillion.
Enjin enters Japanese cryptocurrency market
Enjin will be the FIRST gaming cryptocurrency to be listed on Japanese cryptocurrency exchanges. And it is going straight for the top with one of the largest cryptocurrency exchanges- Coincheck.
Enjin ($ENJ) will be listed on Coincheck from 26th January 2021.
This is a significant first step for Enjin into the Japanese market. Enjin’s aims are twofold- for ENJ to be approved by Japan’s finance regulators and to promote adoption of the Enjin Platform in the Japanese gaming industry.
This listing was one and a half years in the making, having to pass the rigorous auditing and monitoring of the Japanese Virtual Currency Exchange Association (JVCEA)- formally recognised by Japanese financial regulators, the Japanese Financial Services Agency (FSA). The approval process for cryptocurrencies in Japan is notoriously difficult, with only 15 cryptocurrencies (including Enjin) being approved for listing on Coincheck.
Japan also has a fiercely competitive cryptocurrency exchange market with over 20 exchanges in operation. Coincheck is one of the largest cryptocurrency exchanges in Japan based on volume, founded in 2014 with over 1.7m users and counting, and prides itself on being the top downloaded cryptocurrency app in Japan.
As Enjin now has its foot in the door of the Japanese market, the Enjin team is now in discussions with various domestic companies and projects. With Japan being the pioneers of the gaming world (think Super Mario, Pokemon and Final Fantasy), it will be interesting to see what innovations Enjin can bring to the space.
Does it cost ENJ to transfer tokens on Enjin Chain?
Enjin isn’t a blockchain, rather it’s a project built on Ethereum. In order to transfer Items (non-fungible tokens), you’ll need to use ethereum (similar to how ERC20 tokens work). In the future Enjin is explorer additional scaling options (Efinity) to allow for free item transfers.
What is the most EXPENSIVE item on ENJIN
The Monolith is the most expensive item on ENJIN, with 1,155,777 ENJ locked in the item. At the time of writing, this item is worth $168,000 USD!
What makes ENJIN valuable
ENJIN is a scarce resource, used to lock value into ever item created on the ENJIN platform. This means as time progresses and more games create items on ENJIN, more and more $ENJ will be locked up creating scarcity in supply
Where can I buy Enjin
$Enj is listed on all major exchanges, such as Binance.
Other Resources:
EnjinX – Blockchain explorer that tracks the Ethereum Blockchain, ERC-20 and ERC-1155 items Egamers – Enjin Games news website Everything Enjin – Great site covering Enjin Related News Multiverse Era – Telegram Channel about the Enjin Multiverse Castle Crypto – Coverage of Enjin games AsiaCryptoToday – cover of Enjin Platform
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Ethereum Founder Vitalik Buterin recently discussed in his blog post his excitement about Ethereum and its potential. He admits that originally, he was more general about what Ethereum can achieve. But now, after so many projects being developed on Ethereum, he is shifting his gaze to applications already known to work. In this article, we look at some Vitalik’s reasons as to why we should be excited for Ethereum and its potential.
What is Ethereum?
Ethereum is an open-source, public, blockchain-based distributed computing platform featuring smart contract (scripting) functionality. It provides a decentralized virtual machine known as the Ethereum Virtual Machine (EVM). The EVM can execute scripts using an international network of public nodes. Ethereum also provides a cryptocurrency token called “ether” ($ETH). Ether ($ETH) can be transferred between accounts and used to compensate participant nodes for computations performed. Ethereum was proposed in late 2013 by Vitalik Buterin and launched in 2015.
In countries with fewer links to the global financial system or with extreme inflation, cryptocurrency (and Ethereum) is a valuable asset. Vitalik realised this in December 2021 when he was able to pay for meals using cryptocurrency in Argentina.
One obstacle to the more widespread use of cryptocurrency, according to Vitalik, was high transaction fees. At the time, fees cost about a third of his meal, and several minutes to confirm. However, since he and the restaurant owner had Binance wallets, they were able to transfer the funds instantly for free.
Since then, there have been significant improvements to the Ethereum network. After the Ethereum Merge transactions are being processed at a much faster and more stable rate. Scaling technologies such as rollups will even further push Ethereum’s scalability. Technologies such as social recovery and multisig wallets with account abstraction are also improving wallet security. It may take years for these technologies to mature, but progress is certainly being made.
Donations are a notable use case for cryptocurrency. For example, we saw donations being made to Ukraine and refugees relying on digital currencies as a form of payment.
In addition, countries’ adoption of CBDCs (e.g. China’s DCEP/e-CNY) has led to serious concerns about financial surveillance and control. According to Vitalik, cryptocurrency is the only technology that can combine digitalization with privacy.
This makes payments one of the major reasons to be excited for Ethereum and its potential.
Reason 2: Decentralized Finance (DeFi)
Vitalik also sees huge potential in DeFi. In particular, he considers the following DeFi products to be especially important:
Decentralized stablecoins: Decentralized stablecoins are considered a secure and stable digital money. Essentially, halfway between holding crypto assets and withdrawing to fiat currency. They are also usually pegged to a reserved asset, such as the US Dollar, making it less volatile than most cryptocurrencies. Decentralized stablecoins have added aspects of being fully transparent and non-custodial. An example of decentralized stablecoins is the DAI token, DUSD or EOSDT.
Prediction markets: Prediction markets have been a reliable part of the DeFi landscape since Augur launched in 2015. They have been gaining traction ever since, demonstrating their utility in the 2020 US election. Allowing people to predict (and profit) from the outcome of the 2020 US elections. In 2022, both crypto-based prediction markets such as Polymarket, and play-money markets like Metaculus are becoming even more popular. Crypto-based prediction markets are advantageous, as they are more trustworthy and accessible worldwide. Vitalik expects these markets to continuously grow in terms of usage and value over time.
Other synthetic assets: Major stock indices and real estate have the potential to be replicated in the same way as stablecoins. However, there is a challenge in creating an appropriate balance of decentralization and efficiency to make these assets available at reasonable rates of return.
Glue layers: These will be necessary to allow users to easily trade between different assets, such as ETH, centralized or decentralized stablecoins, synthetic assets, etc.
Reason 3: Blockchain Identity
Vitalik is bullish on blockchain identity. Blockchain identity uses blockchain technology for aspects of identification such as basic authentication, attestations, naming, and proof of personhood. An example mentioned by Vitalik is the Sign In With Ethereum (SIWE) standard. The SIWE standard lets users log into websites similar to how we use Google or Facebook to automatically log in. But with SIWE, we can log into sites without fear of Google or Facebook accessing our private information, or locking our accounts. SIWE is currently used in end-to-end encrypted email, Skiff and many blockchain-based alternative social media projects.
Also, ENS allows usernames to be used with proof-of-personhood systems. This can enable users to prove that they are actually human. This is especially useful for airdrops and governance, as it ensures fairness and prevents abuse. Proof-of-attendance protocol can also confirm a person’s participation and thus their eligibility for airdrops and participation in governance.
Vitalik believes that each of these applications has its individual uses. But the true utility will be seen when these aspects are all combined. For example, users can log on to Blockscan chat using Ethereum, making them visible by their ENS name. Then, to fight spam, Blockscan chat could “verify” accounts by examining their proof-of-attendance protocols. This verification process could show information on a user’s participation, and even verify token balances or a proof-of-personhood profile. In turn, it can be determined whether the user should be eligible for rewards and perks.
Reason 4: DAOs
DAOs (Decentralized Autonomous Organizations) are smart contracts that represent an ownership or control structure over an asset or process. Vitalik believes there is still room for improvement for DAOs, particularly in terms of ensuring they are not abused. For example, DAOs are crucial for the long-term survival of decentralized stablecoins. But, there have been cases of malicious actors abusing DAOs to drain DeFi projects out of hundreds of millions.
Reason 5: Hybrid applications
Finally, Vitalik believes there are applications that can take advantage of both blockchains and other systems in order to improve their trust models. For example, voting can utilise systems such as MACI to combine blockchains, ZK-SNARKs, and a limited centralized (or M-of-N) layer for scalability and coercion resistance. This will allow voting to be censorship resistant, auditable, and private.
Conclusion
According to Vitalik, we are only at the beginning stages of building applications that will push Ethereum’s potential even further. Currently, these applications face the challenges of the limits of present-day technology, such as the lack of scalability of blockchains. There will also be other challenges to come, such as privacy issues.
However, there are numerous reasons to be excited for Ethereum, because all these problems can be solved. Vitalik believes that it will require us to look beyond the quest for excitement and short-term profit. Because sometimes, it is the more stable and boring applications that become the most useful and valuable in the long run.
The newly launched Ethereum Merge has rendered mining obsolete. So what will happen to all Ethereum mining pools and its miners as well as the millions of dollars worth of hardware in the ecosystem?
What is Ethereum Mining?
Before Ethereum’s Merge on 15th September 2022, the blockchain used proof-of-work, the same consensus protocol as Bitcoin, to validate and record transactions. But unlike Bitcoin which solely uses application-specific integrated circuit (ASIC) miners, you could use graphics processing unit (GPU) of gaming computers to mine ETH. As a result, it was generally easier to mine ETH than Bitcoin since GPUs are more accessible and widely applicable than ASICs.
There were two main ways to mine ETH – pool mining or solo mining:
Pool Mining (working together)
Work with others to mine and share rewards
Get paid per share, on a hourly or daily basis
Less random / dependent on luck
Pools take some fees (0.5-8% depending on pool)
Solo Mining
You mine the entire block reward (differs based on mining difficulty changes) – no pool fees
Random chance and probability – you can go days or months without rewards
Not viable if hashrate is low – single GPU might take years to mine a block
Ethereum mining pools were the go-to options for most miners as solo mining took a very long time to earn rewards. However, this work drew criticism for its impact on the environment and its excessive electricity consumption. It is a highly energy-intensive process as miners around the world pool together large amounts of resources and power to mine ETH. But all of that has changed with the arrival of the Merge on 15th September 2022.
How does the Merge affect Ethereum Mining?
On 15th September 2022, Ethereum switched its consensus protocol to proof-of-stake as part of an update known as the “Merge” that links Beacon Chain and the Ethereum Mainnet. The Beacon Chain is what allows users to stake ETH, which has been operational since the end of 2020. Many people have staked their ETH to support the transition as well as earn rewards on their stake. Here’s the kicker, after the Merge begins, mining difficulty will soar due to the “difficulty bomb”. It is a kind of self-destruct mechanism meant to make proof-of-work calculations almost impossible, incentivizing the move to an environmentally-friendly proof-of-stake model.
What will happen to Ethereum Mining Pools and Miners?
There is a divide in the Ethereum mining community between the organizations that have helped coordinate the resources of individual miners (mining pools) and the individual miners themselves.
Good for Ethereum Mining Pools
For mining pools, the transition does not affect them at all. Since these organizations never did the actual work of generating computing power themselves, they are not affected by the sunk cost of the eventual obsolete mining rigs. Instead, these pooling companies have human capital and infrastructure necessary to organize the pooling of resources, source new clients, and overall manage and maintain the operation and its security.
For this reason, leading Ethereum mining pools like Ethermine or f2pool can simply transition to staking pools. They do not rely on the actual mining itself. It is not a matter of product, only business model. These companies operate on a fee structure, charging individuals for participating in their pools, and it will be unaffected by the move from mining to staking. They only require business development, customer service, and communication with core developers, softwares, and client teams.
Bad for Individual Ethereum Miners
However, for the miners who make up these pools and other independent Ethereum miners, the transition could mean the end for them. People who have benefited from mining ETH, either by managing large mining farms or by contributing moderate amounts of GPU power to mining pools, may be left stranded. They have invested large amounts of money in expensive GPUs or specialized mining rigs that are useless in staking. Some will not even be able to recoup their initial investment as they hoped to profit from mining.
Although validating via proof-of-stake only requires a home PC with stable internet connection, it would require a minimum contribution of 32 ETH, which is a sum far greater than most people’s savings. Essentially, in order to fully cover the hole of lost mining revenues via staking, individual miners would have to establish and operate their own staking pools, which would be a considerably more difficult task than maintaining their own mining rigs.
Potential Solutions for Ethereum Miners
There is really no good option for ETH miners. They can still salvage their GPUs by selling them in the market as gaming computers are still popular products, but it is safe to say that there is certainly no demand for ASICs in the market. They could use them to mine other cryptocurrencies that are compatible with their processors such as Ethereum Classic, Ravencoin or Ergo, but they are also much less in demand than Ethereum. The profit margins are substantially lower.
However, there are certain staking pools that encourage bringing current miners into the fold. According to Bitfly, EtherMine’s parent company, their goal is to “onboard current miners from proof-of-work to proof-of-stake.” They also noted that most deposits to EtherMine’s new staking platform have come from existing miners. But whatever the case is, there is still no easy answer as to how Ethereum miners will ever again come close to generating the revenue produced by mining ETH.
A hard fork is a major change to the blockchain’s protocol that results in the splitting of the blockchain, creating a seperate blockchain that inherits all of its history with the original, but is on its own towards a new direction.
Hours after Ethereum’s successful merge on 15th September 2022, a group known as ETHW Core launched a proof-of-work hard fork of Ethereum known as ETHPoW or ETHW. The hard fork’s purpose is to preserve PoW and keep ETH mining alive beyond the Merge.
The Problems with ETHW
Although ETHW could be a safe haven for ETH miners, there is not a lot of optimism about its success. In fact, there are a lot of underlying issues that the core team has yet to address.
ETHW Post-Launch Network Error
ETHW is getting off to a bad start. Shortly after the ETHW mainnet debut, users began experiencing issues accessing the network. It became clear that the problem was that ETHW had chosen a chain ID already in use by a Bitcoin Cash testnet. If ETHW fails to change its network’s chain ID from the Ethereum mainnet, users could be susceptible to a replay attack — an exploit in which the attacker intercepts and then replicates a valid data transmission going through a network. Given the transparent nature of blockchains, this means that hackers can duplicate your transactions, allowing them to withdraw your funds.
No Backing for Forked Stablecoins
The two leading stablecoins USD Coin (USDC) and Tether (USDT) have officially confirmed to exclusively support Ethereum 2.0. This results in a smooth transition that is essential for the long-term growth of the decentralized finance (DeFi) ecosystem and its platforms.
However, that leaves ETHW high and dry as lack of stablecoin support means insufficient liquidity. This is because 1:1 backing will only exist for the officially recognized blockchains, thus USDC and USDT balances cannot be duplicated onto a new blockchain. This is further amplified by the fact that ETHW announced they would temporarily freeze tokens in certain liquidity pools to “protect user funds.” This did not go well with many as this move is done without their consent and the community did not vote on such change.
No Oracle Support
Apart from facilitating transactions, decentralized applications (DApps) also interact with external data which requires off-chain computing. This is where blockchain oracle technology like Chainlink comes into play. They enhance smart contracts by connecting them with real-world data, events and transactions.
On August 8, Chainlink has also officially confirmed to stay with Ethereum 2.0. This means that any DApps on ETHW can be negatively affected since oracle solutions are essential in retrieving and sharing data without jeopardizing the security of the blockchain.
Lack of Support from Leading DApps and Projects
On 16th August 2022, Aave, a leading decentralized lending protocol on Ethereum, proposed a governance vote to commit to using Ethereum 2.0, giving power to shut down any Aave deployments on any alternative Ethrereum forks. On their blog post, Aave advised developers and DApp teams on the Ethereum network to halt smart contract operations on forked Ethereum blockchains until they become stable.
The lack of support from projects means that any tokens or NFTs on the forked Ethereum chain will less likely be accepted in marketplaces or DeFi applications. In turn this would affect investors who are looking to profit from trading these assets.
Ethereum is one of the world’s most versatile blockchains, with functionality that supports innumerable decentralized applications and blockchain assets. Although conceived in 2013 by Vitalik Buterin, Ethereum did not launch until 2015, it has since been at the forefront of blockchain utility, especially with the recent popularity of non-fungible tokens (NFTs).
An NFT is an asset on a blockchain that is completely verifiably unique and therefore irreplaceable. Today, many people use NFTs to digitize real-world assets and expose these assets to a global audience. NFTs are very popular in art and photography, as they allow creators to access a wide pool of potential fans and buyers. Currently, most NFTs are on the Ethereum blockchain.
Ethereum is also the most popular network for decentralized applications (DApps). These apps are powered by smart contracts that drive several functions on the blockchain using specified agreements and conditions. Since the NFT and DApp markets exploded, the Ethereum network has become very busy, and sometimes leaves some transactions stuck for long periods.
Check out our video on how to fix stuck transactions on Ethereum:
FIX stuck transactions on Ethereum
Why Do Some Transactions Get Stuck?
A delay in processing simply means that no miner has picked up the transaction yet. All Ethereum transactions require a gas fee (gwei), a processing fee set to incentivize miners to pick up and process the transaction. This fee is never static, as it depends on the network congestion at transaction time. Sometimes, gas fees may be very high if there are a lot of people transacting simultaneously.
Ethereum wallets usually recommend a gas fee based on current network specifics but would let the user increase or reduce it as preferred. If a transaction is delayed for too long, it’s likely that the gas fees for other transactions on the network are considerably higher, and miners are ignoring the lower prices.
What is a Nonce?
Used in cryptography as an acronym for “Number Only Used Once,” a nonce is a number that functions as an identifier for a transaction. This number is sequential and follows an order such that transactions with lower nonces get processed before others. Since one Ethereum wallet can initiate any number of transactions, nonces represent a (sometimes chronological) sequence that transaction processing follows.
How to Fix a Stuck Transaction
There are three main ways to fix a stuck transaction: cancelling the transaction, increasing the gas fee, or introducing a new transaction with a custom nonce. Before fixing a stuck transaction, it is important to verify the transaction in a block explorer like Etherscan to confirm that it is pending. An ETH wallet may provide users with a cancel or reset button that helps to delete the transaction. After cancelling, it might be necessary to close the wallet application or browser and then reopen it.
If it is a hardware wallet, turning off and disconnecting the device is also required. Although this is a simple and quick way to solve stuck transactions, users should note that this method may not always work. It is also possible to fix a transaction by increasing the set gas fee. If a user initiates a transaction with a low gas fee but later increases it to match the market’s current price, miners will pick up and process the transaction.
Another way is to use a new transaction to clear the old one by setting a custom nonce. For instance, a wallet might have three pending transactions, each with nonces 3, 4, and 5, respectively. The network would process nonce 3 first before the others. However, if the gas fee for that transaction is low and miners aren’t picking it, all three transactions could remain stuck.
The solution here is to initiate a new 0 ETH transaction with a high gas price and send the transaction to the user’s own address. To clear out the transaction, the user must ensure that the nonce specified in the new transaction is the same as the old one. Although this will cost some gas, it immediately clears out the clog and resolves all the other transactions.
How to Prevent a Stuck Transaction
The simplest way to prevent a stuck transaction is to ensure the gas fee you are setting agrees with current market prices. If the gas fee is high enough, miners pick it up almost immediately and process the transaction without delay. Users can confirm current gas prices from the wallet or from other online sources. If you are looking to save on gas fees, there are gas tracking websites and applications that will help you optimize this process.
Conclusion
Fixing a stuck Ethereum transaction is easy and usually takes a few minutes. When the transaction is still “pending” on the block explorer, these methods can help solve any problems concerning transaction delay. However, users should note that it is mostly impossible to fix any transactions where the status has moved from “pending” to “completed.”
EtherDrops is a Telegram based bot designed to track major crypto markets and NFTs. Many crypto enthusiasts would use data tracking sites such as CoinMarketCap and CoinGecko, and these tools are excellent as ‘wikipedias’ for all the altcoins out there. However, for those with more advanced needs, there are much better resources available that can make your life easier.
If you’ve been in crypto for several years, you’ll probably have a Telegram account. Most of the crypto projects in existence have official Telegram channels to keep their communities informed and up to date on developments, so the chances are you also use the messaging platform.
This is just as well, because one thing that makes Telegram very useful is its ability to add bots that serve different purposes to the end-user. This is where EtherDrops comes in, so you can be part of the various crypto communities and track your tokens all on the Telegram app.
What is EtherDrops?
Originally created in 2018 as a tool to monitor Ethereum wallets, EtherDrops was mainly used to track the transactions of Ether ‘whales’ as well as one’s own wallets on the first smart-contract blockchain.
Four years later, EtherDrops has evolved into something much bigger than wallet monitoring. It is now integrated with Ethereum, Polygon, Fantom, Avalanche and BNB Smart Chain, providing a convenient place to track all your crypto activities within one Telegram bot.
Users are equipped with simple-to-use tools to follow coin prices, as well as track and receive real-time notifications on wallet transactions, DEX and CEX swaps, NFTs, liquidity pools, Binance funding, gas prices, and more.
By shaping settings according to your own personalized needs using a unique combination of advanced tools and instruments, EtherDrops becomes a simple yet essential bot that notifies you about anything you want, or alerts you to certain conditions. Thousands of investors, traders, and holders use it to navigate their crypto journeys.
The bot already has more than 400,000 users on board and keeps growing steadily. With the product sending over 5,000,000 notifications daily, it’s no surprise that each day they welcome hundreds of new users onboard.
EtherDrops Features
Major features of EtherDrops include:
Price tracking;
Wallet tracking;
Liquidity pools;
OpenSea integration;
Gas price notifications;
Integration with Telegram groups and channels; and
Token distribution alerts.
Price Tracking
Tracking the prices of various cryptocurrencies is a basic need for long-term investors or traders. Add coins by name, ticker or contract address. Apply your personalized settings to receive instant notifications about price changes and swaps.
Price Change Notifications – Set % Price Change to generate an alert.
Swap Alerts – Set $ Value to track Swaps on Uniswap, Sushiswap, Balancer and other supported DEXs.
Wallet Tracking
Add a wallet by its address to monitor incoming and outgoing transactions, airdrops, NFT transactions, and created contracts.
Transaction Notifications – Choose between different event types and set $ alerts to be notified about transactions.
Wallet Balance – Check Balances of assets and NFTs.
Liquidity Pools
Add a liquidity pool by its contract address and receive % pool changes should it increase or decrease within the specified range.
LP Changes – Set the % change value to stay on top of your added pool.
OpenSea Integration
Track the floor price and metrics of NFTs and arts on the Ethereum network. To follow your collection, add it by the name or address and set a % price change or generate a $ price target.
Gas Price Notifications
At times ETH gas prices can be really high and leave you with an eye-watering bill in fees to pay if you make a transaction. Set gas price notifications and save yourself a fortune!
Set Gas Alerts – Set Gwei amount to generate an alert. As soon as it hits the target or lower, you’ll be immediately notified.
Check out our Advanced Tips and Tricks to Save on Ethereum Gas Fees:
Integration with Groups & Channels
If you are an admin or a community manager of a project using Telegram, or you run a trading group, your channel could benefit from integration with the EtherDrops bot.
All Bot Features in your Groups and Channels – The same alerts and notifications you set in your individual account can be applied to groups and channels.
Token Distribution Alerts
Token distributions often create market price pressure and increase capitalization. Be the first to obtain such info and assess market conditions to make a play in your favor (if you use Margin or Futures trading).
Token Distribution – Receive distribution alerts from seed, private and other events for tokens that you’ve added to monitoring.
Tutorial: How to use EtherDrops
1. How to install EtherDrops bot
To install EtherDrops, simply follow this link to open the bot in Telegram. It will automatically link the bot to your account. Here is an official list of the available EtherDrops install links. If you experience any delays with bot updates, you can switch to any other official link.
2. How to add a wallet
In the Main Menu, select “+Add wallet”. Tick ✅ which networks you wish to add to monitoring for your wallet and press ✔ Done (for example ETH and Polygon). Then type in your wallet address and name it. You’ll now be immediately notified whenever there are any transactions happening within the wallet, including NFT activity, in/out transactions, airdrops, etc.
3. How to edit wallets
In the Main Menu, select “Edit Wallets”. Choose the wallet you wish to edit. The menu with available options will open up. You can Delete, Rename, make it your Favourite (if ON, notifications with this wallet will be illuminated for better visibility), follow only IN, OUT or ALL transactions, check Balances, add/remove Networks for this wallet, set Alert Transactions filter (you’ll only be notified about transactions that are bigger than the specified threshold).
4. How to add a liquidity pool
In the Main Menu, select “+Add pool”. Choose the network. Next, enter the address of the liquidity pool. Enter the % liquidity change to create a notification. When the liquidity of a pool changes within your specified range, you’ll be instantly notified.
5. How to edit liquidity pools
In the Main Menu, proceed to “Edit pools”. Choose the liquidity pool to add additional settings. You can Delete, Rename, turn your Notifications ON or OFF for this specific pool, or change the % notification alert.
6. How to add a new coin
In the Main Menu, select “+Add coin”. Next, enter the contract address, symbol, or name of the coin. Choose the coin from the list and select network (ETH, BSC, ERC-20, Polygon, or CEX). Finally, enter the % price change and $ value for swaps (in case the coin is traded on a DEX) to create a notification. Now you are following this coin. Whenever there is a swap or price change within the range you specified, you’ll receive an instant notification.
7. How to edit coins
In the Main Menu, proceed to “Edit coins”. Choose the coin. You can Delete, turn your Notifications ON or OFF for this specific coin, change Price Denomination (in USD, BNB, ETH, BTC), change the price % notification alert, create a price alert (if a coin is x USD, you’ll receive a notification), or change swap alerts.
8. How to add an NFT
In the Main Menu, select “+Add NFT”. Enter the contract address or name of the NFT. Select the right one and type in the % price change alert to receive notifications.
9. How to edit NFTs
In the Main Menu, select “Edit NFT”. Choose the NFT. You can Delete, change % alert or price, set a new price alert, or turn notifications ON/OFF.
10. How to set gas price alerts
In the Main Menu, select “Set gas alert”. Type in the desired fast gas price to create an alert.
Conclusion
EtherDrops is a simple yet comprehensive one-stop tool for all your crypto tracking needs and continues to add new networks, coins, and exchanges as the market expands so you’ll never be short of what you need. It just takes one click and a few easy-to-follow steps within Telegram to get set up, and that short initial setup time proves to be well worth it.
For a comprehensive tutorial on the more advanced features of EtherDrops such as quick shortcuts, special commands, managing profiles, how to set up the bot for groups and channels, and subscription options, read to the end of this quide. If TL;DR you can also watch a video tutorial here.
Follow DropsTab / EtherDrops for more information:
The Ethereum network is said to be the fastest and most scalable blockchain after the Merge in September, effectively cementing its position as the front-runner of smart-contract networks. What will this mean for other popular competing layer-1 blockchains known as “Ethereum Killers?” If you are holding any of these coins, you might want to consider its future prospects.
The Ethereum Merge in September
Ethereum founder Vitalik Buterin addressed at the Ethereum Community Conference in Paris that the Ethereum network will hit the 55% roadmap completion level after its much-anticipated “Merge” in September. The Merge will mark the beginning of Ethereum’s proof-of-stake upgrade, potentially enabling the network to process 100,000 transactions per second (tps), according to Buterin, which is significantly higher than even centralized financial services like Visa and Mastercard.
For the longest time, the biggest problem that has been plaguing Ethereum is scalability. In its current state, Ethereum can only process 12 to 25 tps with an average confirmation time of around six minutes. As a result, the network gets congested, leading to extremely high gas fees. To address that problem, the Merge involves many protocol changes that would allow users to enjoy fast transactions and low gas fees. Buterin has even given each of these planned upgrades rhyming names which he calls the “merge”, “surge”, “verge” and “purge.“
Merge
Refers to combining the Ethereum mainnet with the proof-of-stake beacon chain, also known as EIP-3675.
Surge
Refers to the addition of Ethereum sharding, a scaling solution which will further enable cheap layer-2 blockchains and lower the cost of rollups or bundled transactions, making it easier for users to operate nodes that secure the Ethereum network. This reduces congestion on the main chain by distributing traffic to 64 shard chains.
Verge
Refers to the implementaion of “Verkle trees” (a kind of mathematical proof) and “stateless clients”, aimed at making the network more decentralized. These features will allow users to become network validators without having to store large amounts of data on their nodes.
Purge
Refers to the removal of historical data in a bid to streamline the network, also known as EIP-4444, a proposal focused on storing said historical data in execution clients such as The Graph, BitTorrent and block explorers, since relying to store everything on existing nodes can hamper scalability.
What are “Ethereum Killer” Blockchains?
“Ethereum Killers” refer to Ethereum’s competing layer-1 blockchains, namely Solana, Avalanche, Polkadot, Algorand, and Cardano. They inherited the killer name because they offer similar features to Ethereum but at significantly lower costs and faster speed.
Ethereum Killer coins have been a very popular asset to investors looking for an alternative network to Ethereum. Smart-contract platforms have been dominating the market cap in the crypto space. According to Coingecko, it is the second highest crypto category by market cap, just behind the Ethereum ecosystem.
What will happen to “Ethereum Killers” after Merge in September?
If Buterin is able to deliver what he promised, then Ethereum will most certainly be the front-runner of smart-contract networks. People will look to Ethereum to being the primary platform for DApp development, DeFi activities, NFT minting and marketplace and more.
Although Ethereum Killer coins have been pumping recently due to bullish sentiment surrounding Ethereum and its long-awaited Merge, communities are speculating whether this is just hype as competing blockchains of Ethereum will no longer have competitive advantage in terms of speed and scalability. Even until now, none of them have been able to dethrone Ethereum from its number two spot by market cap. The upcoming merge will only propel Ethereum upward, but that is if Buterin delivers what he promised. He stated that they will soon test the merge on Ropsten (Ethereum’s testnet).
The largest future problem for Ethereum will most likely remain to be scalability. Although the new system will be faster, it is unlikely to solve the issue of high gas fees immediately since network demand is likely to rise as efficiency increases. But that is not to say that gas fees will forever be expensive on the Ethereum blockchain. But until Ethereum is able to achieve high scalability, Ethereum Killer blockchains remain to be viable alternatives for fast transactions and low gas fees. We will just have to wait and see in September.
