After a recent slump in the cryptocurrency markets, Ether has hit new highs due to a number of key events and metrics. Overall, 2021 promises to be a pivotal year for the Ethereum blockchain as developers continue to work towards integrating the network into Eth2, which separates the blockchain with its original consensus algorithm to prove work in favor of the advertised energy and cost-efficient consensus to prove the commitment.
While the technical details may not affect many everyday users and traders of Ether (ETH), the recent price movement of ETH, coupled with a number of significant events, suggests that the momentum that led to ETH becoming a new all- The time high at the end of April could continue for some time.
The price of ETH has risen by around 15% in the past week. This is also considered the world’s second largest cryptocurrency by market capitalization, hitting a record $ 312 billion. ETH price continued to recover on April 28th when it became known that the European Investment Bank was starting a sale of “digital bonds” for the Ethereum blockchain.
These bonds are worth around $ 120 million over two years, with financial services heavyweights Goldman Sachs, Banco Santander and Societe Generale managing the bonds. Most importantly, the bonds were registered directly on the Ethereum blockchain.
The Ethereum ecosystem celebrated another milestone towards the end of April as major decentralized financial platforms Uniswap, Compound, Maker, and other leading companies set out to break the $ 73 billion net worth mark in their smart contracts is set in the Ethereum blockchain. That’s an increase of $ 18 billion in one month.
Another factor driving the price of ETH to a new all-time high is the record open interest for Ethereum options contracts, which reached an all-time high of around $ 4.2 billion in April. As previously reported, $ 930 million of these options expired at the end of the month, allowing buyers to purchase ETH at a price already agreed with the seller of each contract.
A combination of factors, it seems
Analysts seem to agree that a variety of factors influenced Ether’s recent push to new all-time highs. Simon Peters, market analyst at eToro Social Trading Platform, told Cointelegraph that the popularity and success of DeFi platforms and other Ethereum-powered applications and use cases are driving institutional investors to get involved with ETH. “That is based on demand from institutional investors, while they may now have some exposure to Bitcoin, institutions are now diversifying their exposure, and Ethereum is the natural next choice,” he said.
Johannes Rude Jensen, Product and Project Manager at eToroX Labs, highlighted the Ethereum-based issuance of bonds by the EIB as an important milestone in the introduction of blockchain technology in the traditional banking sector. Jensen told Cointelegraph that the issue of blockchain-based bonds has become more important as a climate-friendly answer to the costly voting processes in analogue traditional bond markets. “In choosing Ethereum, the EIB signals its intention to play an increasingly active role in the continuation of EU policies on climate and innovation, in line with the ECB’s recent emphasis on green banking,” he said.
Jensen agreed that the move suggests major banks and financial institutions will use public blockchains for more traditional financial products in the future. This further signals the general trend towards open standards in corporate banking:
“A single consolidated source of data in the bond markets will reduce reliance on intermediaries, which is likely to lower costs and help reduce risk in the pre-issue and post-trade processes.”
Jordan Stoev, head of crypto and trading at financial services providers Skrill & Neteller, emphasized that Ethereum users and active wallets are at a peak, proving “strong network effects in the ecosystem” leading to rising gas prices and a higher market value of ETH . Stoev told Cointelegraph that the increasing popularity of DeFi platforms and decentralized applications is a major factor attracting investors to Ethereum:
“Unlike previous cycles where ICOs and speculation were the main drivers of Ethereum’s growth, this cycle has legitimate use cases like DeFi and NFTs and others that people are actually using. Highly anticipated upgrades like EIP-1559 and Eth2 are also expected to add further ease of use, speed and price to Ethereum, and investors want to get in before they happen. ”
One step closer to London
Ethereum’s evolution towards a proof-of-stake future continued this month as the latest Berlin upgrade introduced some key suggestions for improving Ethereum into the blockchain protocol.
Since Berlin has been active since April 15, the ecosystem has had some time to measure the impact of the four EIPs that were part of the latest upgrade. Ethereum analyst Viktor Bunin told Cointelegraph that EIP-2929 would ultimately “guarantee a maximum size of Merkle evidence needed to validate a given block” but would ultimately achieve two main goals.
According to him, “it” reduces Ethereum’s largest remaining DoS vector where an attacker could slow the network down by sending transactions that accessed storage in a way that was very cheap but took a long time to process. ” Bunin added that “The EIP will ultimately bring us closer to stateless clients, allowing devices such as cell phones to interact with Ethereum in a trustworthy manner without the need to run a full node.”
Bunin added that the change in gas cost associated with EIP-2929 could affect some smart contracts that rely on previous gas cost figures. ConsenSys’s Mattison Asher, who conducts research on Ethereum, non-fungible tokens, and decentralized funding, highlighted the role of EIP-2930 in offsetting the gas gains caused by the previous EIP, telling Cointelegraph:
“EIP-2930 mitigates some of the gas surges caused by EIP-2929 by introducing a type of transaction that includes an access list, a list of addresses, and storage keys that the transaction wants to access. Accessing these variables is cheaper than accessing variables outside the list. This effectively reduces some of the potential gas surge in EIP-2929. “
The next proposal, EIP-2565, will also introduce some cost-cutting measures for certain cryptographic functions. As Bunin explained, this will make it cheaper to perform functions like signatures, verifiable delay functions, SNARKs, and other executions. Asher summed up the importance of this EIP in reducing gas costs associated with many of the features required to use and build Ethereum.
EIP-2718 provides a way to expedite the addition of support for various types of transactions. This is a useful enhancement that significantly reduces the complexity of certain smart contract transactions and their parameters. Bunin added:
“You could have a type of transaction where someone other than the transaction sender can pay for the gas. Nowadays, each new type of transaction would have to be added individually, which becomes very complex over time. However, EIP-2718 creates a meta-transaction type that serves as an envelope for future transaction types and makes it easy to add and support them. “
Laying important building blocks for the integration of Eth2
There is often a remarkable reaction from the community to the latest improvements to the Ethereum protocol, but it is unlikely that the average user has noticed a major change in the way they use ETH or interact with the blockchain through normal transactions .
As Bunin explained to Cointelegraph, it may take some time for the changes brought about by these four EIPs to be implemented by Ethereum developers who are working on various decentralized applications and taking advantage of the new proposals. “One of the proposed transaction types is a first-level multi-signature type. Bitcoin has this feature, but Ethereum does not. Therefore, multiple signatures on Ethereum can only be created through smart contracts like Gnosis Safe. “
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Nick Johnson, the lead developer of the Ethereum Name Service – a wallet naming tool – told Cointelegraph that an important role EIP-2929 will play in the gradual transition to Eth2 is making “stateless Ethereum” more viable by allowing the maximum number of reads and reads it reduces writes that are possible in a transaction. Stateless approaches are an integral part of the Eth2 roadmap. “
Meanwhile, Bunin pointed to EIP-2565 as an important foundation for Ethereum’s ability to incorporate advanced cryptography in the future. “Justin Drake coined the term ‘lunar math’ to describe the advanced cryptography that made the Eth2 dream possible. The focus is on the thinking that shards are used as the data availability layer for second-tier scalability solutions. “According to him:” Very promising solutions like zk rollups depend on the Ethereum layer 1, which supports advanced forms of cryptography. This EIP therefore makes a major contribution to this.
The upcoming London fork is hot under the collar
The Berlin hard fork was implemented with relatively little reaction from the broader cryptocurrency community. Bunin believes this is largely due to the fact that the upgrade did not include controversial EIPs, unlike Ethereum London’s emerging hard fork which includes the divisive EIP-1559. According to him, this will “change the way users pay for gasoline, which will improve the user experience and burn up some of the ETH that is spent on transaction fees. Around the same time, Eth2 will receive its first upgrade called Altair. “
Bunin has addressed the upcoming changes to the Ethereum network in its latest update to Bison Trails. The key takeaways are the 3.5 million ETH set under the Eth2 Smart contract, which is currently valued at around $ 6.5 billion, or 3% of the total circulating ETH in circulation. There are currently 110,000 validators and counts.
Johnson paid particular attention to the impact of the London hard fork on transaction fees, as well as the importance of upgrades to smart contract features. “It will also allow smart contracts to receive the ‘base fee’ – effectively the current block’s gas cost – enabling projects like gas price derivatives and tokens.”
Sajida Zouarhi, a senior product manager for ConsenSys’s Besu mainnet customer, gave an overview of the next steps in the evolution of Ethereum and the positive progress towards Eth2 in her correspondence with Cointelegraph. “The next step is the London fork. Notable EIPs are 1559 (Basefee) and 3238 (Ethereum Difficulty Bomb Delay), which then leads to “merge and sharding”, the transition of Ethereum from proof-of-work to proof-of-stake. She added:
“The goal is ambitious, but all core developers are dedicated to this goal. Early prototypes have already been implemented by several customer teams, including Teku and Besu. We are currently testing them on a cross-client Devnet. Things are moving very quickly and looking good so far. “
Bunin’s latest finding highlighted the overall stability of the Ethereum network – despite the high fees incurred by the burgeoning DeFi sector and increased use of the network during the ongoing bull run – as a promising sign of the ongoing transition to a proof -of-stake network future. “The development of Eth2 is advancing rapidly in 2021 as several efforts are made in flight to get us to merge Eth1 <> Eth2 as soon as possible.”