Ethereum 2.0 Sees Poor Participation; More Than Meets The Eye?

The Ethereum ecosystem is all set to deliver a system-wide upgrade in a bid to boost its compatibility, scalability, and security. Dubbed Ethereum 2.0, this involves the introduction of several protocol improvements, including economic changes impacting regular users. As it unravels after numerous delays, the participation has been a cause of concern.

Yet Another Hold-Up For Etheruem 2.0

At the time of writing, 95,168 ETH has been deposited so far and there are still over 16.3K 32-ETH validators to meet its 524,288 ETH genesis threshold. The lucrative reward is very much real. So why the hindrance? The main issue that remains is the fear of the ETH stakers is of facing the risks of having their tokens locked in for an indefinite period. It does not end there. In addition, there is always the risk of getting “slashed” if they fail to perform their duties effectively would get them “slashed.” The risk is dual, despite the lucrative rewards involved here.

Further impeding the growth curve of user participation is the complexity involved in the transition to Ethereum 2.0. While the uncertain roadmap of staking rewards has acted as a roadblock. Currently, the deposit contract has collected a little more than 18% of the entire target despite the fact that the upgrade went live in the first week of November. It is important to note that the contract will need to receive the minimum stake threshold a week before the deadline to meet the threshold.

Brighter Side

In yet another interesting development, Bitfly observed that a single entity owns nearly 35% of all the validator nodes.

Ethereum 2.0 Deposits

💸69,856 ETH has been deposited over the past 10 days.

👀A single address deposited 16,000 ETH (=500 validators)

🥧A single entity currently owns ~35%

454,432 ETH left for a launch on the 1st of December.
Projected launch January 31st, 2021. pic.twitter.com/MttAEku3SN

— Bitfly (@etherchain_org) November 14, 2020

On the 14th of November, a single address purportedly deposited a whopping16,000 ETH. This comes a week after Ethreuem Founder Vitalik Buterin deposited $1.4M worth of ETH in the Phase 0 contract. This a significant development since most stakers have found themselves in a “to stake or to not stake” conundrum.

Amidst the poor stakers’ count, this news could indeed demonstrate confidence in the Ethereum 2.0 transition since the staking rewards are yields are more than 20%.

Ethereum 2.0 Drives ETH’s Value

Ethereum has witnessed an impressive rally along with its compadre, Bitcoin. Recent data points suggested that the fundamentals appear to be strong for a continuation of the ongoing rally.

According to the crypto analytic platform, Santiment, the percentage of total ETH being held on exchanges dropped to its lowest levels since the 13th of November, 2018. The almost exact two-year milestone is believed to be a positive sign for the ETH holders, who have historically benefited when supply held off of exchanges is kept low. According to Santiment, this trend essentially suggested that large whale sell-off probabilities will remain limited in the coming days.

This can be attributed to the launch of the deposit contract for Ethereum 2.0 which has been a moving target for the longest time.