Waiting for Ethereum 2.0, but Layer-Two Solutions Are Needed Now
Ethereum has been the center of focus in the cryptosphere for some time now, and for good reasons. As the popularity of the second-largest blockchain network continues to grow, so too does the urgency for improved performance and scalability. The Ethereum network has been dealing with some congestion issues, the most recent of which resulted in its transaction fees ballooning in June 2020.
The network congestion even led to an increase in the maximum gas allowed per block on the Ethereum blockchain, enabling more transactions to be processed but also meaning that the size of the blockchain continues to grow — another scalability issue that Ethereum 2.0 sharding aims to solve.
As previously reported by Cointelegraph, the Tether (USDT) stablecoin is the biggest user of gas in the network, a trend that may be exacerbated by swaps from other blockchains to Ethereum, like the recent $300 million transfer of TRC-20 USDT into ERC-20 USDT. Following Tether, other popular DeFi applications are among the biggest gas-guzzlers in the network, with some of the tokens in these apps severely outperforming Bitcoin on the price charts.
As the DeFi ecosystem continues to grow, the urgency for scaling solutions that can ensure network usability continues to rise. Ethereum 2.0 is regarded as the long-term solution that can bring stability to the network, and the long-awaited upgrade is set to be released this summer.
While the initial release of Ethereum 2.0 is a noteworthy event, it will not bring about immediate changes. The first iteration will serve as a testing ground for what will eventually become the only Ethereum. This change is estimated to take one to two years. In fact, Ethereum’s creator, Vitalik Buterin, recently admitted that the team underestimated how long the sharding and proof-of-stake features that characterize Ethereum 2.0 would take to develop.
As such, the need for an alternative scaling solution that can either compete, coexist or precede Ethereum 2.0 becomes apparent. So, what are some of these solutions, and do they actually work? While some projects like Plasma have been abandoned, there are other independent projects that can help Ethereum now, some of which even build on technology left by the now-extinct Plasma, as Jon Jordan, the communications director at DappRadar, told Cointelegraph:
“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.”
Second layer solutions aim to provide all, or most of the functionalities and security of their underlying blockchain without using it, or more accurately, using it in a different way. This is helpful in the short-term, as it relieves the Ethereum network of congestion, and in the long-term, keeps the blockchain free of “unnecessary” transaction history.
Layer-two solutions are complex and difficult to develop because they walk a very thin line between security and convenience. Blockchain networks are safe because every single transaction is recorded on an immutable ledger, however, these solutions bypass this constraint. Although this may seem counterintuitive, “maximum” security isn’t always necessary. For example, frequent transactions between trusted parties can be done through a second-layer network, and that’s just the start.
The concept of second-layer networks is not new, nor is it unique to Ethereum. Bitcoin itself is no stranger to congestion and scalability issues. Although the recent “emergency” of 2018 was handled with SegWit, a hard fork that changed the rules of Bitcoin and allowed more transactions to fit in each block, second-layer solutions have been in the works for years and may become widely used in the future.
RSK and the Lightning Network are examples of such solutions. Today, there are a few independent projects that leverage this same concept in order to provide an immediate solution for Ethereum’s scalability problems as well as a better ecosystem for the DeFi industry to flourish.
Matic Network builds on the Plasma project and provides an alternative proof-of-stake blockchain based on an adapted version of the technology. It uses a decentralized network of stakers who have deposited Matic to act as checkpoints between the two blockchains. This method allows for cheaper, faster and a higher volume of transactions per second, or TPS, on the second network, which can then be settled on the Ethereum network.
Matic provides solutions for multiple players in the decentralized app space, including payment networks, decentralized exchanges and even gaming DApps, which, according to Jon at DappRadar are in urgent need of alternative solutions:
“To a degree this depends on what sort of dapp you’re running. I don’t think the situation is particularly urgent for DeFi and DEX operators. They see more value being put into their dapps. But gaming activity has dropped around 90% since April, so it is urgent for that sector.”
Skale provides developers with a subscription service that can bypass the traditional gas fees applied to each transaction in Ethereum. Put simply, The Skale Network is like an unlimited WiFi package, useful for those that spend a lot of time online. Skale uses “Ethereum-compatible elastic side chains” to provide this service.
The OMG network has been around for a while and allows for faster ETH and ERC-20 token transfer using a similar system to the projects mentioned above. OMG focuses on enterprise use and claims to be the “only production-ready scaling solution for the Ethereum blockchain,” providing business-to-business solutions for companies looking to transact on the Ethereum blockchain.
So, there are several solutions that can help Ethereum deal with its current issues, but can they be used now? Sandeep Nailwal, chief operations officer at Matic Network, told Cointelegraph that Matic is actually the only viable option at the moment:
“[A] fully functional version of [Ethereum 2.0] which would be available for applications to run their smart contract transactions on is at least 1.5 to 2 years from now whilst the scalability on Ethereum is required today.”
While these solutions may be the only chance for survival, once Ethereum 2.0 is launched, the question becomes: Will these “solutions” become obsolete? However, it is always possible that they can coexist or even compete with the official Ethereum scaling solution. Nailwal believes that “Layer ones are settlement platforms, they are not meant to have the ‘business activity,’” adding:
“Eth2.0 doesn’t provide Ethereum infinite scalability. The best case scenario is 64 shards with shards which can be similar to today’s Ethereum chain. Assume a single chain improves with PoS and has 50 TPS. Even then 64 shards can offer 3200 TPS. The moment the supply of this TPS hits, the Dapps will start utilizing onchain aspects even faster and the demand will rise faster. We will again end up in the same situation.”
Moreover, these solutions are not exclusive to Ethereum. Some of the layer-two solutions aim to provide their services on multiple blockchain networks in the future and even enable decentralized cross-blockchain transfers.
Related: Ethereum 2.0 Staking, Explained
As individuals and businesses continue to invest and engage with the decentralized finance space, the Ethereum ecosystem faces a pivotal challenge where it must either scale or fade into irrelevance. Although second-layer solutions can be extremely helpful, they are still useless without a sound basis to stand on and businesses to provide their services to.
Nevertheless, the current struggles of Ethereum create the opportunity for these solutions to mature, as does the testing time for Ethereum 2.0. As Jon Jordan put it:
“Eth 2.0 will be a gradual process, so even when it’s ‘launched’ developers will be careful about using it so certainly for the next 6 months, I think there’s a big opportunity for other layer 2 solutions to gain market share.”
Neo News: Week in Review – June 29th – July 5th
Neo co-founder, Da Hongfei, published an op-ed on Coin Telegraph that outlined how he believes the USDT stablecoin has impacted geopolitics and the future development of sovereign digital currencies.
Da was the opening keynote speaker on the second day of the 2nd Chain Plus Blockchain New Finance Summit in Shanghai, China.
NNT released episode 34 of its podcast, featuring Paul DiMarzio, marketing director for the IWA. In this episode, topics of discussion included the purpose of the IWA, its member-driven organization, what “tokenization” means to businesses, and much more.
In the conversation, DiMarzio noted, “After 36 years in the industry, I feel like a kid again. This is a lot of fun; it’s a great place to be.”
NNT published an article that discussed how Neo can take a leadership role in the adoption of token standards through its work with the InterWork Alliance (IWA). The article examined the need for token standards, assets that can be tokenized, and Neo’s role within the organization.
NNT released the first videos in a new series that will provide functional introductions to various wallets that support Neo. The initial videos featured Neon Wallet and NeoLine mobile wallet, outlining the basic features so users can decide if they suit their needs.
NEXT released its monthly report for June 2020, which included NeoLine mobile wallet updates, information on adjustments to the API for non-fungible tokens, and a community t-shirt design and giveaway campaign.
June 29th, QLC Chain released its Q2 2020 quarterly report that highlighted the growth in QWallet users, integrated support for decentralized finance (DeFi) projects, and increased use of QGAS for mobile payments. QLC Chain noted exponential growth in downloads and daily users, with 120,000 downloads and nearly 78,000 daily active users.
June 30th, Nash announced a new fee schedule, which now is based on individual user volume rather than the exchange’s volume.
July 1st, O3 Labs announced the beta relaunch of its desktop and mobile wallets. Along with the announcement, O3 Labs released a step-by-step guide to downloading its wallets across operating systems and a guide for connecting the O3 Wallet to the Nano S Ledger, Switcheo, and Staketology.
July 1st, TranslateMe updated its application, which included the removal of advertisements, the addition of NEO Tracker support, support for Malaysian and Kannada languages, and small tweaks to the UI.
July 2nd, QLC Chain released its fortnightly report, which highlighted its Q2 2020 progress report, winners of the 150,000 QLC Confidant referral program, and a call for blockchain developers and engineers.
July 2nd, Novem minted 15,000 NNN tokens, backed by 150 grams in gold, which increased the total NNN supply to 3,998,766 tokens.
July 2nd, Nash released an FAQ guide to explain its technology, differences between custodial and non-custodial exchanges, the need for know your customer (KYC) information, plus more. It also put out a call for Rust developers to contribute to its open-source cryptocurrency trading API, OpenLimits.
July 3rd, Novem’s gold-backed NNN token listed on the Nash exchange.
July 3rd, Switcheo delisted ACAT, FTWX, PROQ, RCPT, HASH, and OBT from its non-custodial exchange.
July 4th, Bridge listed its ETH-based BRDG token on Uniswap non-custodial exchange.
July 5th, Novem participated in an AMA with the Nash community.
Switcheo listed ALEPH.
Nash listed NNN.
MXC, Hoo, and HBTC listed SWTH.
Switcheo delisted ACAT, FTWX, PROQ, RCPT, HASH, and OBT.
July 6th: Da Hongfei to deliver a keynote speech at Unitize Blockchain Conference virtual event.
Author: News Bureau
Performance Art Film Is Now Tokenized on the Ethereum Blockchain
HOW ARE WE, a performance art collaboration consisting of 15 short works filmed in COVID-19 quarantine, has been hashed and minted into a non-fungible token on the Ethereum blockchain.
Additionally, a mechanism has been put in place to reward the project’s contributors whenever the asset is sold.
A legally binding contract grants the rights to the film to the holder of the ERC-721 token in which the hash and metadata of the artwork is stored. This means that if, for instance, the Museum of Modern Art wanted to purchase the piece, it would first need to acquire an Ethereum wallet.
Additional tokens have been minted and distributed between the contributors to the film. If somebody buys the piece, the proceeds will be split based on the percentage holdings of these additional tokens.
For any further sales, 10% of the sale price will go directly back to the original artists. Any fan donations sent to an Ethereum address will also be split between contributors.
HOW ARE WE’s head of blockchain technology, Rob Solomon explained the idea behind the project, which was commissioned by the Onassis Foundation.
“Digital art forms have exploded in recent decades. Technology enables today’s artists to mix otherworldly music, draw up complex illustrations, and produce impossibly augmented films … While we’ve dramatically advanced the means by which art is created and shared, we’ve yet to adequately advance the means by which legitimacy is proven and artists can own, and be compensated for, their work.”
Ethereum Embarks on a “Moon Mission” as Analysts Eye a Move to $290
Ethereum is beginning to flash some signs of strength as it pushes up against the upper boundary of its long-established trading range between $230 and $250.
If it can surmount the resistance it is currently facing, it is a strong possibility that it will soon set fresh post-March highs.
Analysts are growing increasingly optimistic regarding the cryptocurrency’s near-term outlook. One is even going so far as to note that it is currently embarking on a “moon mission” due to it forming an incredibly bullish market structure.
As for where this market structure could lead ETH in the near-term, analysts are noting that $290 is a reasonable next target.
This happens to coincide with the crypto’s 2020 highs that were set in February.
For this bullish path forward to come to fruition, it must close the day above $248.
At the time of writing, Ethereum is trading up 3% at its current price of $246. The cryptocurrency is beginning to flash some significant signs of strength as it outperforms Bitcoin and many of its peers.
While BTC remains squarely in the middle of its multi-month consolidation channel between $9,000 and $10,000, ETH is currently pushing up against the upper boundary of its range – which was formed in early-May.
If it can break above $250 and set fresh post-March highs of over $255, the token could then set its sights on $290.
One analyst spoke about this possibility in a recent tweet, explaining that a firm break above $250 is all that is needed for it to start journeying up towards its YTD highs.
“Hello 250$, we meet again. 290$ is next,” he concisely stated while pointing to the chart seen below.
Image Courtesy of Cryptorangutang. Chart via TradingView.
Another analyst echoed this bullish sentiment, explaining that he believes the cryptocurrency is currently on a “moon mission” that will result in it seeing significantly further upside in the days and weeks ahead.
In the near-term, it appears that a robust four-hour candle close above $248 is imperative in order for Ethereum to continue climbing higher in the days and weeks ahead.
While looking at the chart below, there have been multiple occasions over the past few weeks where the crypto was rejected at this level.
Chart via TradingView.
If it is able to close above the level – especially on its daily chart – it is a strong possibility that Ethereum will soon make a bid at $290. How it reacts to this level could offer significant insights into its mid-term outlook.
A firm break above it could trigger a parabolic advance higher.
Ethereum, Dash, BAT price analysis: July 08
While Dash and ETH are seemingly bullish, BAT is eying for a retracement to its immediate support. This comes at a time when altcoins are surging while Bitcoin heads down.
Ethereum has seen a small pump leading to the breach of the resistance at $234.43. A retest of this seems plausible but the failure also seems more than likely, especially considering ETH’s correlation with BTC.
At press time, ETH stands tall as the second-largest crypto with a market cap of $26 billion and a 24-hour volume of $7.5 billion. With DeFi being the attention grabber, about $60 million worth of Bitcoin has now been transferred to ETH blockchain for various purposes.
As mentioned earlier, Dash looked bullish with the formation of a symmetrical triangle. Since then, the coin has pulled through with a surge of 6.14%. For Dash’s future, the price looks bullish, at least until the price hits a target of $72.54. If the momentum continues, the price could go as high as $75.46 which is a 4% surge from the current price.
The privacy coin is worth $72.54 and has a total market cap stands at a whopping $690 million making it the 24th largest cryptocurrency in the world.
Basic Attention Token is the utility token used as a reward for Brave Browser. Although the developers have come under scrutiny a few times, the community still believes in Brave’s ideas, which gives customers’ privacy a priority. At press time, the token is trading at $0.2675 and has a market cap of $393 million, making it the 33rd largest cryptocurrency in the world.
The uptrend for BAT seems to be coming to an end as the price has formed a lower high. However, it is not a solid confirmation as there are chances of price breaching this trendline. The RSI is at the overbought zone, although not quite yet, hence, the chances of price retracing are higher.
Author: Published 14 hours ago