Ethereum 2.0 Transition

Ethereum is about to undergo a significant update – Ethereum 2.0 Serenity. Phase 0 of the Serenity update is scheduled for 1:30 PM EDT on September 10, 2020. The Phase 0 transition implies a remarkable change in mechanism of the blockchain, Ethereum will no longer support PoW mechanism and will switch to PoS. Ethereum blockchain will further apply shard chains, which is expected to take place in Phase 1, one year after the launch of Phase 0, where main chain – Beacon Chain will be launched.

To launch the initial block of Beacon Chain, the number of deposits in the network must be more than 524 218ETH, the total number of validators must exceed 16 384. It should be noted that until the above figures are reached, no share reward will be made.

The current PoW mechanism restrains the scalability of the network, the block which is capable of storing a limited amount of data, new block cannot be mined until the previous block is complete. Another key takeaway is very related to mining, since miners use resources like electric power, they are bound to external factors, such us global and local economic state, hence the transaction fee may ignorantly increase if there is a high demand.

Speaking of the transaction fee, Ethereum transaction fee already reached all-time highs at 0.032361 ETH, which is tantamount to $15.

In Proof-of-Stake mechanism, miners will be replaced by validators, each validator is obliged to stake 32ETH into the official deposit contract of the Ethereum Foundation. The validator then will need to download the Ethereum 2.0 software and validate blocks, to keep the high commission for each validation, the validator is advised to remain on-line for as long as possible.

Serenity will also improve one of the main scalability problems of Ethereum – transaction speed. Implementation of shard chains – smaller blockchains which operate simultaneously will increase the transaction speed, as the transaction will no longer be bound to the completion of a block in the blockchain, thus transaction fee will also be decreased.

The high demand of Ethereum required to launch the Beacon Chain, and the transition to PoS is driving investors into investing in Ethereum.

According to the weekly chart, the price might as well reach $730 and $800 if the current resistance of $488 is overtaken.

The show-stopper here could be delays on the launch and not reaching the 524 218 ETH amount to launch the Beacon Chain. There were no reports on postponement of the launch on Phase 0 until now.

As Ethereum is the second coin by market capitalization, it surely does follow the global market sentiment, recent correction is similar to the correction of Bitcoin and Gold against the USD.

Ethereum is currently testing the dynamic support of August 30, and might drop to $444 if bulls to do not push the price back to uptrend. There is an important support and resistance level at $444, which we might consider as decisive for short-term, if the ETHUSD closes below the $444, it might as well drop towards $418.20.