Ethereum 2.0 Likely to Affect DeFi and DApps With PoS Introduction
While Ethereum has brought about a whole new realm of possibilities due to its native token Ether (ETH) and its smart contract and tokenization capabilities, it is often faced with challenges such as network congestion, relatively low transaction times and throughput, large blockchain size and excessive electricity use for mining — all issues Bitcoin also shares.
While Bitcoin (BTC) was created by an anonymous developer that left the network to be developed by its capable community, Ethereum was always envisioned with a roadmap and a team behind it. While the plan has been subject to changes and delays, Ethereum has always meant to implement certain measures to combat all of the aforementioned issues, much like the developer community has done with Bitcoin and updates such as Segregated Witness.
Ethereum was created in several stages, many of which have been implemented, but Serenity — or Ethereum 2.0 — is particularly important for the network and community because it will bring about some of the biggest changes in the network, including proof-of-stake and sharding updates. With the Ethereum network use falling so heavily on the decentralized finance and distributed application ecosystem, many wonder what will happen to the DeFi ecosystem as the Ethereum 2.0 update is rolled out.
Ethereum 2.0 is set to launch in the second half of 2020, following its announcement in 2018 and launch delays in 2019 and 2020. The first stage is currently known as “Phase 0” and will see the launch of the Beacon Chain, the blockchain on which the first iteration of Ethereum’s PoS consensus model will be implemented. The second stage, “Phase 1,” will bring the implementation of shard chains that are compatible with each other and can be used simultaneously.
Related: Ethereum 2.0 Staking, Explained
While these two stages will build the foundation of Ethereum 2.0 and the solutions for the congestion and scalability issues Ethereum is currently facing, these two stages will coexist with the current blockchain, and the two will only be merged in the third stage, “Phase 1.5.” Ethereum will coexist alongside 63 other blockchains, with the aforementioned Beacon Chain eliminating the need for token swaps for those that wish to remain on the original chain throughout the implementation of Ethereum 2.0.
Once Ethereum 1.0 is “merged” with Ethereum 2.0, the blockchain history will remain, with Ethereum 2.0 being considered “complete” when Phase 2 and beyond are released, which is expected to happen by 2021. Until then, the proof-of-work consensus model will continue to be supported and developed to ensure a stable basis for DApps and DeFi before the jump from a single-chain PoW protocol to a multichain PoS system is made.
Ether is the second-largest cryptocurrency, but it is currently only capable of processing 15 transactions per second. Moreover, gas use and limits create a fee market where people must often compete for transactions and smart contracts to be processed quickly by paying higher gas prices. NEO, for example, is theoretically capable of processing 10,000 transactions per second, which means Ethereum has some catching up to do.
While increasing the gas use limit is possible and was enabled in September 2019, it comes with a heavy toll, as it further extends an already big blockchain. Ethereum’s blockchain is currently 142 gigabytes, and while Bitcoin’s chain is bigger, just 283 GB have been mounted on after more than 10 years of blockchain history. This makes the Ethereum chain, which is less than five years old, almost as resource-intensive as Bitcoin, and the issues are only bound to get worse as the DeFi ecosystem expands.
So, it seems that Ethereum is in desperate need of new solutions. While some are being developed alongside Ethereum 2.0, such as Plasma and Raiden — the official Ethereum 2.0 and other layer-two solutions — Jon Jordan, the communications director at DappRadar, told Cointelegraph that these come with a certain degree of risk:
“Of course, issues such as gas prices can be solved without Eth 2.0 There are plenty of layer 2 solutions launching and available – Matic, Skale Labs, OMG Network etc – which would solve these problems to some degree. And dapp developers are actively integrating these technologies or attempting to build their own. However, all these add potential risk. Eth 2.0’s advantage is it’s core to the underlying blockchain but for that reason it’s a more complex task.”
When Phase 0 is launched, users that want to stake Ether will have to send their coins to a one-way smart contract. This means that the Ether that leaves the current network during Phase 0 will only be usable on the old blockchain once the Phase 1.5 “merger” happens — at which time the PoS and chain sharding features will already be a reality for all of Ethereum.
Jack O’Holleran, the CEO of the Skale Labs — the company that developed the Skale Network blockchain platform based on Ethereum — previously explained that the shift to Ethereum 2.0 will take time for DeFi and DApps, as most will probably wait until the merger and then take time to transition “at their leisure.”
This transaction period between the current version of Ethereum and Ethereum 2.0 doesn’t seem to be a major concern in the DeFi space. Jordan stated that this period will probably not impact DApps directly but that “any uncertainty or technical issues arising could slow activity” — so, it’s still worth considering.
Upon full completion, the PoS system will likely affect DApps, particularly in the DeFi space, with the change bound to bring improvements to the whole ecosystem, allowing ETH transactions and DApps to compete with other blockchains. According to Jordan, the sharding chains and PoS consensus model will solve some of the most fundamental issues of DApps.
The sharding feature on Ethereum 2.0 will allow 64 chains to run in parallel, meaning that the transaction speed and throughput will be considerably increased. These chains will be interoperable, and users will be able to spend Ether across multiple chains. However, the burden of keeping the blockchain history will be distributed throughout the multiple chains, allowing the network to be more accessible while still secure and supporting legacy DeFi functionalities, as Isa Kivlighan, a digital marketing manager at Aave — an Ethereum-based DeFi app — said in a conversation with Cointelegraph:
“ETH 2.0 will change the dynamics of DeFi in one way as we might see less congestion with transactions in DeFi and potentially the staking model might reduce the costs of transactions. Main thing about sharding is that it should not break the DeFi composability according to Vitalik Buterin. It might on the other hand affect the way of doing Flash Loans […] if the target where the flash borrow is taken is in another shard as Flash Loans rely on the atomicity of Ethereum, which means that Flash Loan happens in one Ethereum transaction.”
All of these improvements have a huge impact on DApps, especially in the long run. As the Ethereum ecosystem develops, more DApps and more people using them means that more resources will be needed. Sharding solves this issue to a degree, and as other solutions are implemented, the community can continue to invest time and resources into the DeFi and DApp space without fear of “technical debt.”
It is still worth noting, however, that while Ethereum 2.0 seems promising for the DeFi space, it is not without its risks, which is why developers are still working on the development of Ethereum 1.0 even as Ethereum 2.0 is being rolled out, as Jordan stated:
“In this context, the advantages offered by Eth 2.0 greatly outweigh the risks. Unlike Bitcoin, which is never going to change much, if Ethereum wants to fulfil its vision — as well as competing with new rivals like Cardano, Flow, Near etc etc — it needs to fundamentally change. But this isn’t to say there aren’t any serious risks. It’s highly unlikely but, handled badly, Eth 2.0 could destroy confidence in the entire project!”
Although sharding and PoS bring obvious benefits to the network, the latter will change the way Ether is produced. Staking will allow anyone with 32 or more ETH to earn new coins by staking theirs, which adds a penalty system for any malicious attempts on the network while rewarding those that process transactions accordingly.
Related: Ethereum 2.0: The Choice Between One’s Own Node and a Staking Service
While there are arguments for and against the PoS model, it’s worth noting that this system resembles lending — the most popular application for DeFi apps — in its most fundamental manner, as users will lock their ETH in order to receive interest. With this in mind, a pertinent question arises: Can these two aspects coexist in Ethereum? Won’t the most profitable take the least profitable activity’s place? According to Jordan, this isn’t likely to happen:
“Staking and lending aren’t mutually exclusive actions. In the short term, I’d expect some value that would otherwise have gone into lending and DeFi dapps to go into staking but most of the value going to staking will come from large scale crypto operators to secure Eth 2.0. These value flows would never have gone into DeFi. I guess what will be exciting to see if/how dapp developers look to combine Eth 2.0 staking mechanics within DeFi dapps for the smaller retail users.”
While Ethereum is currently in need of urgent solutions for its congestion issues among others, it’s also worth noting that Ether is still the largest altcoin out there. This begs the question of how well it can do once Ethereum 2.0 is implemented and its capabilities improve substantially. Some also believe that staking itself can trigger an ETH price rally.
Whatever the price may be in the future, Ethereum 2.0 is very important for the DeFi ecosystem, but it needs to be done right to ensure it does not interfere with one of its major ecosystems: the DeFi space. As Kivlighan put it: “It’s better to build a valid system that works well in practice than launch something that requires changes after deployment.”
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Crypto Exchange Elquirex Offers Loan Services Digital Wallet and Investment Plans – Markethive News
Crypto Exchange Elquirex Offers Loan Services, Digital Wallet, and Investment Plans
Today, there’s no dearth of options when it comes to finding exchanges where users can trade and store popular cryptocurrencies such as Bitcoin (BTC), and Ether (ETH), among others. However, the rapidly congesting crypto exchange space might leave interested users in a state of confusion as to what exchange might best suit their needs.Elquirex, a trusted multi-functional cryptocurrency platform promises to help users participate easily in the budding cryptocurrency industry by providing a wide array of crypto products, including exchange services, a crypto loan system, investment services, and a secure crypto wallet.
Elquirex is a 2 4/7/365 operational legally registered cryptocurrency exchange that offers users unparalleled security and lightning-fast transactions for their digital assets. Elquirex operates its business in compliance with international law and has obtained official permission to conduct financial activities. The exchange has a dedicated internal legal department that supervises each monetary transaction executed on the platform. Elquirex enables users to trade some of the most prominent cryptocurrencies including Bitcoin, Ether, Ripple (XRP), Bitcoin Cash (BCH), Litecoin (LTC), Monero (XMR), and EOS, with support for several more digital assets slated to be introduced in 2020-2021.
Elquirex gives utmost importance to user privacy which reflects in the fact that users are not required to register with the exchange to transact their digital assets. That’s true. Users are only required to enter the wallet address of the pertinent cryptocurrency to send or receive digital assets, and their email address. The transaction is settled within a few minutes depending on the network bandwidth of the cryptocurrency being transacted. For this, the exchange charges a nominal 5% fee of the total amount plus network fees. The simplistic approach to crypto trading makes Elquirex the inarguable go-to platform for traders who are relatively new to the notoriously complex cryptocurrency industry.
A mark of a reputable crypto exchange is the breadth of its service catalog. In this regard, Elquirex — just like other major exchanges like Coinbase and Exodus – offers a wide range of peripheral offerings in addition to its crypto exchange services. Below are some of the prominent services being provided Elquirex.
Elquirex makes the process of obtaining crypto-backed loans a breezy affair. Through the platform, users can secure loans as per their requirements without having to share personal information nor going through preliminary verification of credit history. The process of obtaining loans through Elquirex involves no third-party participation from entities like banks and other financial institutions. The company provides loans to users based on the current market value of their cryptocurrency savings. The digital assets held by users function as the collateral for the loan disbursed by Elquirex. The loan amount can be returned to the platform at any time convenient to the user, i.e., the firm offers unlimited loan term with minimal interest charges. Post complete repayment of the loan, the user’s funds will be transferred to them in full. The company offers loans worth 60% of the collateral amount offered by the user. The minimum loan amount that can be availed is $100 in the form of any of the Top-5 cryptocurrencies. Users can rest assured about their collateral while they use their loan amount, as Elquirex keeps all user funds in secure cold storage.
Elquirex places the security of its users’ crypto funds high up in its priority list. The exchange provides a multi-currency crypto wallet that not only securely stores users’ digital assets but also generates passive income. Users can register their personal wallet through a simple registration process that merely takes a few minutes. Once the user email is confirmed, they can start using the robust Elquirex crypto wallet. By using the Elquirex cryptocurrency wallet, users can easily perform financial transactions with minimal commissions. The wallet provides cutting-edge security for crypto funds and complete anonymity to the users. What’s more, users can also witness their savings grow just by storing them in the Elquirex wallet. All funds stored in the wallet appreciate by a particular percentage each day. The percentage of earning will vary depending on the volatility of different crypto assets. The wallet currently supports some of the most widely traded cryptocurrencies, including BTC, ETH, LTC, and XRP, with plans to introduce support for other Top-20 cryptocurrencies during 2020-2021.
What’s better than HODLing cryptocurrencies for their tremendous upside potential? Investing them to receive fixed passive income. Elquirex makes this possible its users by offering them the option to invest their crypto assets to generate healthy passive income. Users can choose to invest in the platform via their Elquirex multicurrency wallet. This way, they can ensure that their capital doesn’t lay idle and grows simultaneously with the Elquirex ecosystem. Each cryptocurrency on the platform has its own investment plan. The team at Elquirex invests a significant part of the profit it earns from currency exchange and lending services for the development and promotion of the company.
Elquirex has cemented itself as a reputable and trustful cryptocurrency exchange within a short period of time. Crypto exchanges like Elquirex, Coinbase, Luno, Changelly, Binance, and Bitfinex, are all competing fiercely to gain the trust of the users. Elquirex trumps its competition in terms of the sheer breadth of the services it offers to its users, ranging from functioning as an exchange, providing investment plans, a safe cryptocurrency wallet, and an innovative loan system. The Elquirex ecosystem continues to grow at a rapid pace, in line with its elaborate roadmap, that, in the near-term, plans to introduce a loyalty program for the platform’s users. The firm’s long-term road-map includes smart contracts development, tokenization of the platform, and launching a decentralized exchange (DEX) to support the ethos of blockchain technology, among other major developments.Similar to Coinbase and Waves wallet, Elquirex will offer its users an additional bonus for bringing new users to its ecosystem, and consequently, aiding in its growth. The platform’s innovative approach to cryptocurrency wallet which offers a growing balance to its users is a testimony to the team’s out-of-the-box approach to helping its community expand along with it. Become a part of the Elquirex community today to enjoy the benefits of a plethora of products and services the platform has in store for you.
Crypto Tidbits: Bitcoin Holds $9k, Ethereum DeFi Gains Traction, Trump Talked BTC in 2018
Another week, another round of Crypto Tidbits.
It’s been a relatively mild week for the Bitcoin market, much unlike previous ones. The cryptocurrency started the week around $9,300 and ended the week right around that level, with BTC changing hands between $8,900 and $9,550 for the past seven days.
Each attempt at breaking out of the short-term range has failed, with each rejection bringing BTC back to $9,300. With the funding rates of Bitcoin futures markets also trending towards 0.00%, the indecision of this nascent market has been accentuated even further.
Bitcoin price chart over the past week by TradingView.com
Yet a confluence of indicators and fundamental trends is suggesting that bulls will eventually take the upper hand over bears.
As reported by NewsBTC previously, the Puell Multiple — “calculated by dividing the daily issuance value of bitcoins (in USD) by the 365-day moving average of daily issuance value” — has reached a macro buy zone.
“The Bitcoin Puell Multiple has dropped back into the green ‘buy’ zone after almost three weeks. For investors with long-term time horizons these levels below the 0.5 line have historically marked excellent entry points into BTC,” Glassnode explained.
Image Courtesy of Glassnode
This signal appeared at the start of the rally from the ~$200 range to $20,000 in 2015, suggesting that a Bitcoin bull run will arrive in the coming weeks and months.
Other positive factors include an underlying bid seen on exchanges like Bitfinex, along with growing institutional adoption, as observed by crypto-focused social media data firm The TIE.
Bitcoin’s range trading comes as the S&P 500 and other financial markets have been largely stagnant. While the S&P 500 index is up 3% on the week, it is still down a handful of percentage points from the local highs due to uncertainties in the underlying economy.
- Kraken CEO Expects Bitcoin to “Surpass” Gold: Kraken co-founder and early Bitcoin adopter Jesse Powell on June 16th made an appearance on Bloomberg to discuss his latest thoughts on cryptocurrency. He told viewers that with BTC’s chart consistently being “up and to the right” over the past decade, he thinks the asset may eventually “surpass gold as a store of value.” Powell’s optimism was seemingly related to his sentiment about Bitcoin’s 21 million coin supply cap, which differentiates it from traditional fiat money and other crypto assets. BTC surpassing gold would imply a market capitalization of around $10 trillion, or ~$500,000 per coin.
in #CASE you missed it @jespow CEO @krakenfx dropping 🔥on @business #BTC @danheld thanks for the heads up! pic.twitter.com/WwANnWR8KZ
— Matt Case (@matthewryancase) June 16, 2020
- Trump Wanted to Go After Bitcoin In 2018: According to the Washington Examiner, which obtained an excerpt from an upcoming book titled “The Room Where It Happened,” President Trump told Treasury Secretary Mnuchin in 2018 to “go after Bitcoin.” The author of the controversial book, former national security advisor John Bolton, dated the quote to a conversation in May 2018. That would be a year prior to Trump’s anti-crypto tirade on Twitter and while the cryptocurrency market was still near its peak. The book’s release has been delayed due to a lawsuit from the Department of Justice.
- Ethereum’s Vitalik Buterin Challenges Halving Narrative: Ethereum founder Vitalik Buterin this week challenged the decisive statement made by many Bitcoin bulls that block reward halvings boost BTC:
“The ‘halvings cause BTC price rises” theory is unfalsifiable: Was the peak before the halving? Then it ‘rose in anticipation of the halving’ During? ‘Because of the halving’ After? ‘Because of…’
- Ethereum DeFi Gains Strength on Public Release of COMP Token: What is believed to be one of crypto’s most viable use cases, decentralized finance (DeFi), this week gained even more steam with the public launch of the COMP cryptocurrency by Compound, an Ethereum-based DeFi protocol. The cryptocurrency is so valuable it now has a market capitalization in excess of $500 million, despite just launching publicly just days ago. Analysts expect DeFi to be a massive catalyst for the growth of the cryptocurrency industry, especially in terms of the price of Ethereum and related tokens.
I am a writer who has been following Bitcoin for years now. My insights and interviews have been featured in leading publications in the industry such as LongHash and Decrypt. I own a small amount of Bitcoin.
Author: Nick Chong