Total Value Locked On Eth2 Deposit Contract Soars To New Highs As The Merge Nears ⋆ ZyCrypto

According to data from Glassnode, the total number of Ether (ETH) locked in Ethereum’s Eth 2.0 has surpassed 12.764M as the layer one network inches closer to upgrading to a proof of stake blockchain.

Since Eth 2.0 staking went live in November 2020, 398,000 unique validators have deposited Ether on the beacon chain with 19,800 additional validators onboarding in the past 30 or so days. The total number of Ether staked is now equivalent to 10.73% of the circulating supply and is worth roughly $23.2 billion at today’s prices.

Staking entails depositing 32 Eth to activate validator software. Just like the way proof-of-work blockchains rely on miners to validate transactions, proof of stake consensus mechanism relies on “stakers” to validate transactions by running nodes. This keeps the blockchain secure rewarding stakers with ETH in the process. According to data from Staking Rewards validators are currently receiving 4.14% in annualized rewards for staking on Eth 2.0.

Eth 2.0. also known as “Serenity” is a multi-stage shift of the Ethereum network from a proof of work, to a proof of stake consensus mechanism. The shift is aimed at enhancing the network’s scalability, efficiency, and speed. The current PoW network has been weighed down by several shortcomings with the worst of them all being high gas fees. 

Ethereum is still the most developed blockchain network and attracts the highest percentage of projects entering web 3. The network has also the highest number of transactions, which sometimes causes congestion, leading to exorbitant prices.

Ethereum’s transition to PoS is captured in three phases, the Beacon chain, The Merge, and Shard chains. Atop these phases are smaller testnets aimed at allowing developers to test applications and features in a controlled setting. Currently, Eth 2.0 is in the so-called “Ropsten” public testnet, a major dry run before the merge in August.

Apart from the aforementioned improvements, once Eth 2.0 goes mainnet, the network will be able to handle up to 100,000 transactions per second without bottlenecks according to developers. Currently, the PoW network only supports around 30 transactions per second, which explains the incessant problem of gas fees. Eth 2.0 is also expected to lower the network’s carbon footprint by 99%, positioning the cryptocurrency as the big “green” choice for crypto developers and users.

In the past 24 hours, Ether saw nominal gains of 2.42% as the broader crypto market remained relatively mute. As of press time, the crypto asset was trading at $1,820 per unit according to data from CoinMarketCap.