Ethereum 2.0 Goes Live and ETH Plunges by 9%: Here’s What You Need to Know
Ethereum 2.0 Phase 0 has just launched today. Phase 0 of Ethereum 2.0, also known as the Beacon Chain will introduce a new consensus mechanism—proof of stake—to the network. Ethereum’s first step towards a massive upgrade has just gone live at 12:00 pm UTC today.
The launch of ETH 2.0 went smoothly, as the required stake participation rate has been reached to finalize the upgrade of the blockchain. The proof-of-stake algorithm allows for the confirmation of the blocks to be more energy-efficient, and requires validators to stake Ether instead of solving a cryptographic puzzle.
A week before the launch of Ethereum 2.0, the minimum required for the deposit contract was reached as over 524,288 were locked up. Ether’s price has rallied prior to its launch, as many investors were bullish on ETH as an enormous amount of Ethereum were deposited.
At the time that the Beacon chain was launching the proof-of-work difficulty on Ethereum also hit an all time high. Vitalik Buterin, the co-founder of Ethereum recently celebrated the first block of ETH after its upgrade, tweeting:
“Normal people: we should really put something profound in the first block of the ethereum PoS chain, something about giant leaps for mankind or whatever.”
Prior to the launch of the Beacon Chain, Ethereum was trading at a high of $632, however, Ether’s price plunged soon after by 9 percent, trading at lows of $571. Ethereum has slightly regained some strength, and is currently trading at $590.
Ethereum’s price crash also comes at a time where Bitcoin dropped by $1,600 within two hours, as selling pressure increases as the world’s largest cryptocurrency nearly tops $20,000. With high levels of volatility seen by Bitcoin, the digital asset attempted to hit a new resistance level at $20,000. However, selling pressure took over and Bitcoin shed 8 percent.
Ethereum’s transition to proof-of-stake will allow the blockchain to see upgrades including sharding, which would improve scalability. The Ether currently staked would likely be locked up until Phase 1.5 of Ethereum 2.0, which is scheduled for late 2021 to early 2022. Ethereum’s current mainnet will merge with the new beacon chain in the next phase.
Although Bitcoin has recently reached a new all-time high, Ethereum still has a long way to go as the crypto is currently still over 125% away from its all-time high.
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