Ethereum 2.0 and Polkadot Offer Alternative Solutions to Scaling Issue
After Ethereum co-founder Gavin Wood left the Ethereum Foundation in 2016, he wrote a white paper for a new kind of blockchain — one that would use an innovative form of sharding and cross-chain communication to achieve the kind of scalability and interoperability that Ethereum 1.0 would never be able to manage. Wood’s new blockchain, called Polkadot, launched its first iteration in May and has recently moved to the second stage of the mainnet.
In the time that Wood has been developing Polkadot, the Ethereum core development team has been working on the biggest upgrade to Ethereum’s infrastructure since it launched in 2015. Ethereum 2.0, also dubbed Serenity, is due to launch its own first iteration this year, with a phased rollout over the next two years. Ethereum 2.0 will also use a variant of sharding as a means of ending the scalability woes that have plagued it since the initial coin offering boom in 2017.
Bearing in mind the entwined history of these two platforms, are the two comparable? And if so, in what ways?
Both Ethereum 2.0 and Polkadot use sharding to achieve scalability. Sharding involves partitioning the blockchain network, or its data, to enable parallel processing and thus increase throughput. However, sharding is a broad term, and these two projects utilize different methods.
Currently, Ethereum 1.0 operates on a single-chain structure where every node must validate every transaction. In contrast, Ethereum 2.0 has a main chain called the Beacon Chain that facilitates communication between the shards, which connect to the Beacon Chain. Shards can process in parallel, allowing a higher throughput than the single-chain structure.
Ethereum 2.0 will impose a particular condition on shards connecting to the Beacon Chain, in that each shard must have a uniform method for changing state with each block added to the blockchain. Essentially, a Beacon Chain is a series of ports or sockets like a USB connector where only those shards with the right shape of USB plug can connect to it.
Polkadot uses a different variant of sharding. The network also has a main chain called the Relay Chain. Shards on Polkadot are known as parachains and can also execute transactions in parallel. However, Polkadot uses a far more flexible meta-protocol to allow parachains to connect to the main chain, meaning that any parachain can determine its own rules regarding how it changes state. The only condition is that the Relay Chain validators can execute it using the meta-protocol, which uses standard WebAssembly. Coming back to the USB connector analogy, the Relay Chain serves as a kind of universal socket. Now anyone with any kind of plug can connect to Polkadot.
The flexibility described above means that Polkadot offers a high level of interoperability that won’t be possible with Ethereum 2.0, as only Ethereum-specific shards can be part of the Ethereum ecosystem. Polkadot uses bridge parachains that can connect to external blockchains, offering two-way compatibility.
Effectively, Ethereum could connect to the Polkadot ecosystem via a bridge parachain so that DApp developers could interact with any other Polkadot parachain. However, the reverse isn’t possible: Polkadot could not become a shard on Ethereum’s Beacon Chain. Moonbeam is one example of a bridge parachain that provides developers with an Ethereum-compatible smart contract platform that’s built on Polkadot.
So far in the evolution of blockchain, interoperability hasn’t played a significant role. However, perhaps because so many blockchains have evolved to become “walled gardens,” interoperability is starting to take more of a starring role in 2020. At last year’s Blockstack Summit in San Francisco, blockchain entrepreneur Andreas Antonopoulos put forward a compelling case for interoperability, explaining that any single chain that attracts sufficient development will eventually eat itself, requiring an infrastructure upgrade.
Related: Interoperable Blockchains May Be the Future of Finance but Have a Ways Yet to Go
If Antonopoulos is right, then much of the current infrastructure such as blockchain bridges or interoperable platforms like Polkadot could be key enablers of Ethereum’s future development.
It’s also worth pointing out that Wood recognizes the inherent symbiosis in this relationship between the two platforms, having stated in a blog post that, ever since the Polkadot white paper was issued: “We knew that bridging with the Ethereum ecosystem to help extend capabilities on either side would be one of the key points of the network.”
Polkadot launched on mainnet in May, with the project’s roadmap involving phased upgrades to a fully decentralized infrastructure with all planned governance in place. The first phase is proof-of-authority, which involves assembling validators for the network. The project recently launched its second phase, which is known as nominated proof-of-stake. This refers to an initial go-live of the network’s consensus model. Assuming all goes well, the next step will involve implementation of the network’s governance model.
Ethereum 2.0 is taking a somewhat different approach to the phased implementation whereby the full launch will come after phased updates. The Beacon Chain is expected to launch this summer, along with staking under the new proof-of-stake consensus. The move to full sharding is slated to come in the next phases.
While the Ethereum 2.0 project boasts some leading names within the blockchain developer space, including Ethereum co-founder Vitalik Buterin himself, there is no single team responsible for Ethereum 2.0 development and implementation. Several teams, or clients, are working on various iterations of Ethereum 2.0 as a means of maintaining network security.
Polkadot has been developed by a single firm called Parity Technologies — a global team of engineers, cryptographers, solutions architects and researchers. Along with Polkadot, Parity has developed its Parity Ethereum client and Parity Zcash client.
Parity Technologies was founded by Wood and Jutta Steiner. Wood’s credentials are well established through his history with Ethereum and as the creator of the Solidity programming language, with Steiner also being one of the original Ethereum team members, having served as its first security chief. She is an applied mathematician and now the CEO of Parity.
One of the most significant challenges facing Ethereum 2.0 is the time it’s taking to bring the project to fruition. There’s been talk of a scalability upgrade since around 2017, and it’s likely to be 2022 by the time the full implementation is completed — and that’s assuming there are no further delays. However, Ethereum holds a critical advantage over Polkadot and all other blockchain platforms: It has a long-established developer base and community, and the most developer activity when compared to its competitors.
However, Ethereum 2.0 implementation delays have allowed other projects, of which Polkadot is obviously a top competitor, to develop their own platforms that offer additional attributes, such as interoperability. Polkadot does offer compatibility with Ethereum, meaning that developers could adopt the platform without necessarily moving away from their original base.
It will be intriguing to see how the two platforms play together once the full Ethereum 2.0 implementation is completed. If all goes well, each platform can complement the strengths of the other to create a connected blockchain network greater than the sum of its parts.
Author: by admin
Big Crypto Hacks: Bad Crypto News of the Week
Check out this week’s Bad Crypto podcast.
It has been all over the news about the great Twitter Bitcoin hack of 2020. We’ve got you covered if you haven’t been paying attention to #CryptoTwitter this week.
After a period of calm in the cryptomarkets, last week showed some movement. Unfortunately, it went in the wrong direction. Bitcoin was down about 3 percent over the last seven days—and it got off lightly. Ethereum fell more than 5 percent and Bitcoin Cash dropped over 8 percent.
One reason for the fall might be a relationship between stocks and digital coins. Analysts note that Bitcoin shows a 95 percent correlation with the S&P 500, and the Fear and Greed Index suggests that greed is moving the stock market while fear is holding onto cryptocurrencies.
There has been plenty of movement and in different directions: Tesla stock is rocketing even as Bitcoin volatility hits a three-year low. Binance coin has risen 17 percent. Other analysts suggest that a “crypto winter” could be over as take-up of digital coins increases, especially those with proof-of-stake protocols, but the data says that people are holding onto Bitcoin but trading Ether.
People should certainly be holding tightly onto their Bitcoins when they’re using Twitter. A massive hack of the social media platform placed scam messages on the accounts of Elon Musk, Kanye West, Bill Gates, and Joe Biden among others. The messages asked for donations of Bitcoin and promised a 2:1 return. Reports suggest that victims sent around $118,000 worth of Bitcoin to the address in the posts.
One set of transactions, though, contained a hidden message apparently suggesting that the scammers use Monero instead of Bitcoin. The hackers appear to be associated with the now-defunct website CryptoforHealth.com but we still don’t know who was behind it. Justin Sun wants to find out. His was one of the accounts hacked. He’s offering a million dollars to anyone who can help track them down.
He probably shouldn’t give that million dollars to Joshua Thomas Argires though. The 29-year-old Texan is alleged to have filed false loan applications worth $1.1 million to the Covid-19 Paycheck Protection Program. He then used the funds to buy cryptocurrency. Argires has been charged but he should count himself lucky.
The bodies of two promoters of the OneCoin scam have been found in suitcases in Mexico. The men, Oscar Brito Ibarra and Ignacio Ibarra, had been kidnapped and suffocated to death.
While Joe Biden scratches his head over the Bitcoin Twitter hack, Ron Paul’s political director is quietly mining Bitcoin and building a new blockchain company. In China, the central bank is considering allowing the Tencent delivery giant Meituan Dianping to accept digital yuan and Japan’s giant financial institution, Mitsubishi UFJ Financial Group, is planning to release a token later this year.
OKEx CEO Jay Hao is continuing to insist that Dogecoin is serious despite the recent TikTok pump scheme. It’s not just Twitter that struggles with cryptoscams.
Check out the audio version here:
Joel Comm is an internet pioneer, New York Times best-selling author, futurist speaker and co-host of The Bad Crypto Podcast. That’s a fancy way of saying he writes words, says things and loves to play with cryptos
The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Author: Written by btcethereumadmin
Y Curve Interest Rates Reach 2,000% as Hot New Ethereum Token, YFI, Launches
Depositors to the Y Curve decentralized finance (defi) pool have received as much as 2,000% in interest this Saturday, and in total about 600% (pictured) for the entire day, although annualized.
That’s after Yearn Finance released they YFI token to govern the Y pool that runs on the Curve defi platform.
This token has no value whatever, Andre Cronje of Yearn Finance said, and yet the market seems to completely disagree with him.
As soon as the token launched, the assets under management (AUM) in the pool jumped from about $8 million to $100 million.
The interest rate went nuts, from 10% a year to 2,000%, albeit somewhat briefly with these interest rates constantly changing based on supply and demand rather than being fixed.
Y pool has “control mechanisms, configurable fees, maintenance controls, and rules that can be modified. Thus far, these have been managed by us,” Cronje said, adding:
“In further efforts to give up this control (mostly because we are lazy and don’t want to do it), we have released YFI, a completely valueless 0 supply token. We re-iterate, it has 0 financial value. There is no pre-mine, there is no sale, no you cannot buy it, no, it won’t be on uniswap, no, there won’t be an auction. We don’t have any of it.
Earning YFI is simple, provide liquidity to one of the platforms above, stake the output tokens in the distribution contracts (we will provide an interface for this), and you will earn a (governance controlled) amount per day.”
Uniswap is a decentralized broker with many likewise platforms in eth and in quite a few of them people can list tokens by themselves, they don’t need anyone’s permission.
Both YFI and Uniswap confound SEC. The former because nothing is being paid for this token, so there can’t be a security. The second because there is no order book, and therefore it can’t fall within SEC regulations regarding exchanges that trade securities.
Meaning this defi space and this new token based business model is a very free environment right now with much innovation.
Yearn Finance for example is to launch Ytrade which “allows you to trade at leverage capped at 1000x with initiation fee pre-paid or 250x without initation fee. Ytrade allows trades between $DAI, $USDC, $USDT, $TUSD, and $sUSD.”
1000x is probably the highest leverage ever, anywhere, as forexes go ‘only’ up to 500x.
While this Y pool “does profit switching for lending providers, moving your funds between dydx, Aave, and Compound autonomously,” they say.
So it’s kind of like giving your money to investment managers to do things with it in the hope it leads to capital appreciation.
The investment managers here are bots, coded by usually pretty smart people, and many of them.
These individuals, plenty who make a living out of this now, crawl the web for any arbitrage opportunities, or any half long half short games, or any flashloaning, and if they find any they just take your deposit and use it.
All under the supreme command of the irrefutable, indisputable, unchallengeable, absolute dictatorialist code. So they can’t run away with your deposit because the smart contract code is the owner of it, and that code must be obeyed fully. Hopefully as intended because bugs, hacks, disclaimer disclaimer, can thief.
Depending on how many people want to use the funds deposited there for whatever they want to do, interest rates can go up and down with Curve especially known to have the most volatile of them all as this 2,000% shows.