The ETH 2.0 deposit contract can only be unlocked once the transition to PoS is complete.
The deposit contract for staking Ethereum (ETH) on the Beacon Chain reached a balance of 12 million ETH on Friday. The total value of Ether locked in the Eth2 contract amounts to about $34.5 billion at current prices.
The deposit contract started in November 2020 and currently has around 10% of the total ETH supply in circulation.
The Beacon Chain is the first big step in Ethereum’s transition from a proof-of-work (PoW) to a proof-of-stake (PoS) consensus model. A trader must invest a minimum of 32 ETH to become an Eth2 validator. Thus, the largest contract of the Beacon chain highlights the enormous demand and confidence in the future Eth2, despite several delays in the last year.
ETH developers started community testing of the PoS network last December; however, there was a change to the tentative merger date for June 2022, without offering any certain date for it to take place.
Ethereum’s biggest update since its inception has faced numerous challenges and ongoing delays along the way. However, despite all this, the deposit contract has grown significantly with more than 2 million ETH deposited in the last two months.
The move from Ethereum to PoS has generated mixed sentiments in the cryptocurrency market. On the one hand, the energy-conscious group has praised the move, stating that it would reduce the electrical consumption of the network by 90%; on the other hand, Bitcoin advocates, such as Jack Dorsey, believe that PoS mining consensus is more centralized and less secure than a PoW-based model.
The merger of the Beacon Chain with the Ethereum main net would complete the transition to Eth2. Experts expect the upcoming merger to bring the Ethereum network up to par with centralized payment processors, increasing its processing speed by several magnitudes with the help of sharding (parallel processing).
Progress on the Ethereum Merger
Despite shaky price action and an apparently delayed merger date, the appetite to help secure the Ethereum network as it transitions from proof-of-work to proof-of-stake continues to grow.
According to Etherscan, the Ethereum consensus layer deposit contract has reached the 12 million ETH mark, which represents more than 10% of the total circulating supply of Ethereum. This represents a rapid rate of growth, as the deposit contract reached 10 million ETH on March 10.
The long-awaited merger describes the moment when the Ethereum mainnet, or execution layer, merges with the Beacon Chain, or consensus layer. This marks the network’s transition from Proof-of-Work, where transactions in blocks (on the Blockchain) are validated by solving complex mathematical equations using computing hardware, to Proof-of-Stake, where transactions are validated by validators, who bet their funds on the net. The initial schedule for the merger was June, but there has been a delay.
Trent Van Epps of the Ethereum Foundation has emphasized that the merger should not only make the chain more secure but also reduce the power usage of the Ethereum network by up to 99.95%. Additionally, the Merger could reduce Ethereum’s annual issuance to 0% net, down from the current 3-5% net.
In addition to the more than 12 million ETH now locked in the deposit contract for Beacon Chain, approximately 2.18 million ETH have been destroyed since the Ethereum-1559 Improvement Proposal was released on London Hardfork last August. That update sought to stabilize the network’s transaction fees and introduced a base fee for burning Ethereum.
By Audy Castaneda
e
