It’s high ‘stakes’ for ETH2: Number of validators more than doubled since Feb
Six months may be a short time in the daily lives of most financial markets participants, but in the lifespan of Ethereum and its development, it is an epoch.
Ever since the beginning of the open-source development which is currently underway in order to perform a major upgrade to Ethereum known as ETH2, many people have joined the now massive community of ‘validators’ who began to take their part in the development under a procedure called staking, which involves depositing 32 ETH to activate validator software.
On November 4 last year, Ethereum’s owners announced that the ETH2 Deposit Contract had gone live, which was the first physical implementation of ETH2 for everyday users, acting as a bridge between proof-of-stake and proof-of-work status.
Today, just over half a year on, the incredible popularity of this process has been revealed in the form of some fascinating figures.
As of May 31, 2021, more than 5.2 million Ethereum has been staked, equating to $13 billion in dollar value, which is now locked into the smart contract.
That is quite a remarkable figure, and represents a considerably larger investment than many large corporate software upgrades, despite this being done by members of the public who have invested their own time and resources into being part of the development of the next generation of the world’s second most popular cryptocurrency.
According to statistics made available this week, 32 ETH-sized transactions are currently waiting to be confirmed.
In order for an individual to become a staking validator, 32 ETH worth over $84,000 in today’s value would be required and metrics from Dune Analytics statistics show that the contract is 993.66% above the 524,000 threshold.
As of February this year, there were over 77,800 active validators on Ethereum 2.0 who are earning 0.0075 ETH (-0.04%) per day, or roughly $11.47, on average however it is becoming increasingly more difficult to become a validator as the entry barriers have become so high.
The number of active validators has grown tremendously, with there being approximately 152,000 current ETH2 validators, and the effectiveness rate of their proof-of-stake work is remarkable, standing at around a 99% success rate for blocks, with around 1% of blocks missed per day.
Opinions vary with regard to the potential reward currently achieved from staking ETH on the network, however it is generally believed to be between 20% and 22% however no participant is allowed to withdraw either their initial deposit or their reward until mid-2022 when phase 1.5 of the ETH2 upgrade goes live.
As with most movements related to cryptocurrency in every aspect from its volatility to its technological development recently, the words of Elon Musk are hard to ignore.
Mr Musk stated last week that Dogecoin, a cryptocurrency that he is very much an advocate of, could be scaled to a level that it may be able to function as a mainstream form of currency. This attracted the attention of the founders of Ethereum at a poignant time during which this huge scale evolution to ETH2 is in place.
Charles Hoskinson, who co-founded Ethereum alongside Vitalik Buterin said “If Elon is actually serious about rebuilding Doge with his elite ninja engineers over at Tesla, which I have no doubt he has great programmers there, here’s how you do it.”
Mr Hoskinson described a potential upgrade in a diatribe aimed directly at Mr Musk last week in a format so complex that it would take several years to implement, which perhaps indicates that there is enough stability and community-influenced market movements combined with the massive influx of members of the public and hedge fund billionaires combined who have become interested in cryptocurrency, however the massive rate at which those joining the ranks as validators despite the cost is a possible indicator that 2022 is very much on target for the 1.5 release of ETH2 in line with expectation.
Now that’s people power!