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You are here: Home / News / Altcoin News / Ethereum 2.0: Major Parts You Didn’t Know About ETH’s Imminent Move
Bitcoin: Twitter Hack brings in Limelight

Ethereum 2.0: Major Parts You Didn’t Know About ETH’s Imminent Move

July 19, 2020 by Utkarsh Gupta

The Ethereum community has been anticipating the launch of phase 0 of ETH 2.0 for quite some time now. Discussions on various platforms and forums with regard to potential benefits, changes in economic structure, etc. have been fervently debated, but many other important aspects have gone under the radar.

Thus, the recent evaluation by Tanner Hoban and Tom Borgers of Consensys shed light on the various important implications of the eventual implementation of Ethereum 2.0.

The duo received handsome funding from MolockDAO, and after 4 months of analysis, Hoban and Borgers reviewed the economics network of Ethereum 2.0. The study was developed keeping in mind a set of assumptions that assisted them to validate the profitability and cost of network attacks.

Ethereum 2.0 much more complex than Ethereum 1

A no-brainer derivation of their study indicated that ETH 2.0 is notch above the current system in terms of functionality and network design. The analysis suggested that the staking perspective of validators is more complex than what meets the eye, presenting a challenge and uncertainty for potential efficient validators.

Network dependent highly on ETH Price and Market Volatility

A stark contrast to the current network; the study revealed that Ethereum 2.0 will be highly dependent on the price of Ether and market volatility. Market volatility is an uncontrollable variable on the market, and therefore, such a situation may give rise to concerns from the community. For example, future volatility repeating the March 2020 conundrum may have enormous implications for the said future network, indirectly reducing the cost of an attack on the blockchain.

ETH 2.0 easier to attack than ETH 1

A statement that will attract a lot of attention, a reduction in physical hardware and power consumption is apparently going to open up new attack vectors on the imminent ETH 2.0 network. In order to orchestrate an attack, perpetuators would only need more ETH and no more machines to make hack easier.

This might be a major worrying sign, given that DeFi was the gateway to several security breaches in 2020. DeFi growth and eventual connectivity to ETH 2.0 can greatly accelerate such attacks.

Lack of Liquidity may lead to Centralization in Phase 0 and Phase 1

Finally, the lack of a bridge between ETH 1 and ETH 2.0 is likely to be a red flag as it suggests a lack of transaction capability in Phase 0 and Phase 1. With capacity greatly reduced in ETH 2.0, a lack of liquidity may lead to a concentration of validators using their positions in a more centralized structure.

As a result, the complete picture surrounding Ethereum 2.0 continues to be unclear at multiple levels as the Imminent shift draws nearer.

Filed Under: Altcoin News, News Tagged With: Ethereum (ETH), Ethereum 2.0

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