Modification, evolution and cost of Ethereum

Ethereum is a proven network with the world's largest and most trusted community and ecosystem in the blockchain and cryptocurrency space, with years of operation and millions of dollars in transactions.

Ethereum developers are always looking for new ways to improve their network and build new applications. DeFi (Decentralized Finance), the Ethereum Implementation Agreement (EIP-1559) and future Proof of Stake (PoW → PoS) changes, organization of all parties, will jointly improve the Ethereum infrastructure and therefore the token industry. changed.

Installation of the Ethereum protocol

Every challenge that corrects Ethereum's financial policies is to make ETH less secure and to make Ethereum more secure.Clearly, these improvements are necessary and appropriate, and ETH is now critical.

Two major changes to ETH

Participation Certification (PoS): Minimum ETH coverage and the possibility of receiving ETH coverage guarantee maximum independence.

EIP-1559: Ethereum's economic scale makes Ethereum scarce The "hotter" the Ethereum market is, the more ETH will be burnt. In return, if the Ethereum market cools down, it will burn. ETH will be less. ;

1. From PoW to PoS

At the start of Ethereum's development, it was ultimately decided to adopt Stake Certification (PoS) to secure the business and replace the unprofitable and efficient use of Certification.Work (PoW).

PoS uses less energy and makes the blockchain more efficient. In the PoS model, a user can mine or analyze the exchange based on the number of tokens they own. In the PoW model, miners have to compete to solve difficult problems in order to ensure change.

However, the process of switching from PoW to PoS does not happen overnight and requires a “heavy bomb” to do it.

2. The hard bomb

A hard shell is a machine that solidifies mining when Ethereum changes from Proof of Work (PoW) to Proof of Stake (PoS). It refers to the difficulty calculation, and in addition to adjusting for block time and the difficulty of the previous block, a new expansion is added every 100,000 blocks. The goal is to improve the complexity of block building and increase the time needed to build blocks in order to reduce the mining income of the PoW.

Why does the transition from PoW to PoS have to be a hard bomb?

First, the PoW is expected to drop from historic levels when the integration of ETH2.0 is complete, and by then both contracts will no longer exist. The ETH2.0 merger phase marks the end of PoW. mining methods.

The transition to the PoS mechanism reduces the initial mining, so you don't need to buy expensive mining hardware, you only have to buy part of the ETH. You can prove your honesty and get rewards.

As a result, older miners who have already purchased the more expensive commercial miners will not be able to recoup the costs they have already paid, leading to dissatisfaction among miners. A hard bomb has been reported to prevent miners from collecting, attacking, and branching off two Ethereum blockchains on their way from PoW to PoS.

The timing of the hard shell launch can be seen as the end of PoW, and the Ethereum integration is expected to be completed within 2-3 months of the hard shell launch to improve the business of miners and Ethereum. . .

3. EIP-1559 entry

With the introduction of the EIP-1559 after London's hardship in August of this year, exchange rate volatility and ETH entered the path of deflation.

One important change in EIP-1559 is that a portion of each exchange rate will be burnt or removed from circulation, lowering the cost of ether and increasing its cost.

According to EIP-1559, current exchange rates have two components. The starting price (damages) and optional instructions for minors (instructions that help the crew to work before the market is full);

Each block has a fuel limit of 12.5 million to 25 million, but over time the average size target is 50% or 12.5 million. This objective can be achieved by increasing the base tariff when the blocking capacity exceeds 50% (when the network is congested) and by lowering the base tariff when the blocking capacity is less than 50%.

These changes reduce the need for users to estimate the amount of fuel needed to make a change, and compared to competitive models for the first time, these changes make costs higher and lower.

What does EIP-1559 mean for traders?

Compliance with EIP-1559 reduces transmission of ETH, making ETH more susceptible to deflation.

In the long run, the ultimate goal of the strategy is to reduce the supply of ether to deflate the currency.. This is beneficial for traders (improvements can improve users' knowledge of Ethereum and increase the value of Ethereum).

The initial cost of damage will reduce the cost of ETH depending on the amount of Ethereum activity. This is because the cost begins to increase to reach a 50% bulk usage plan when the network is congested.

It is difficult to estimate the impact due to the great success of Ethereum network gaming. In addition, using the current exchange rate as a benchmark is incorrect because the starting value of the sample is not well known.

Since the adoption of EIP-1559 on August 4, 620,000 ETH (market value of $ 2.6 billion) has been lost on exchange rates.

Impact of DeFi on the evolution of Ethereum

Every upgrade on DeFi is a modification of ETH.

DeFi's main asset is ETH, only DeFi app assets can capture value and are also 'financially decisive'. This means that the growth of DeFi is the driving force behind the growth of ETH value, and the more the DeFi market grows, the higher the ETH value.

DeFi is known for its many innovations and innovations. DeFi's stagnation means falling behind quickly.

New platforms appear almost every week on the DeFi market. Every DeFi application deployed by Ethereum is a financial exchange of ETH policy. When the new DeFi app was developed by Ethereum, it opened up new capabilities for ETH.

On the other hand, Ethereum is the backbone of the DeFi ecosystem, whose developers are DeFi's main force, accounting for half of the market and closing 2 million ETH. Other popular platforms include Synthetix, Aave, and Send tokens now.

ETH rate

In an interview with "The Stakeborg Talks", Ethereum founder V God said:

“The biggest difference between Ethereum and Bitcoin is that Bitcoin is the platform and the value of the ecosystem comes from the value of money, whereas in Ethereum the value of money comes from the value of money. 'ecosystem."

Perhaps it's more realistic to think of Ethereum as a tool that supports multiple apps, and not a cryptocurrency where users can send money to each other. Since its release in 2015, Ethereum has provided the world with a variety of in-game applications, self-management, DeFi, and more to support the growth of the blockchain industry.

What is ETH?

On the Ethereum network, ETH works as a team, in particular:

Payment: Ethereum fees (such as fuel fees) are paid as a method of payment to specialty retailers or service providers.

Payments: Used as collateral in many decentralized financial applications (such as MakerDAO and Compound).

Borrowing: borrowing or borrowing with money (for example, using the Dharma contract)

NFT: Backed by Ethereum, it allows artists or other vendors to sell artwork or other items directly to customers using smart contracts.

DeFi: Ethereum effectively avoids management in the middle of money or other assets by the intermediary organization.

Digital Applications or DApps: Ethereum supports digital applications including games, investments, money transfers, advertising, etc.

Additionally, in the future Ethereum 2.0 (Serenity) phase, users will be able to become more user-friendly by providing included devices and 32 ETH loans for Ethereum network security protection (so we can expect the Ethereum PoS mechanism i.e. the cost of ETH in circulation).

In addition to the positive benefits, ETH also has an estimated cost, for example, the value derived from taking into account activities (for example, market and investment), which are immediately This is a significant value across the cryptocurrency market.

concludes

Ethereum is a revolutionary application in the application industry, and with growing demand for a wide range of applications, Ethereum is considering ways to evolve into a more secure, scalable, and greener network.

The most important messages for investors due to the expansion of contracts and policy development are:Ethereum is still a development project and refuses to sit idle and unused.

According to V God, we hope that the future will be ruled by strong financial management, a strong ENS ecosystem (Ethrerum Name Service), various ZK certifications (like self) and decentralized autonomous organizations. UA DAO .. They are investing a lot of capital and investing outside of the cryptocurrency space to do something big.