Vitalik Buterin, the cofounder of Ethereum offered some fresh insights about the new upgrades of Ethereum 2.0. Buterin broke the news while speaking during a podcast interview with Percentage Of Volume (POV) Crypto called “Internet Money”
Among the key changes suggested by the Ethereum cofounder is the drastic reduction of ETH issuance from the current 4.7 million to around 2 million annually facilitated by the new upgrade.
Buterin said that the team had chosen to shift to an upgraded Proof of Stake (PoS) consensus mechanism rather than the traditional Proof of Work (PoW). Proof of Work mechanism required the users to solve puzzles using computing power to validate transactions. Proof of Stake, on the other hand, is a mechanism that requires users to verify and validate transactions by accruing the most stake. Users with higher number of tokens are put in charge of validating transactions.
According to Buterin, the use of Proof of Work consensus mechanism was preferred because it would reduce issuance on the Ethereum greatly. According to the calculations carried out by the Ethereum development team, if everyone participated, the maximum issuance of Ethereum 2.0 would be around two Million.
Vitalik Buterin said that according to their testnet participants, only around 100,000 Ethereum tokens will be issued yearly. The current network saw the issuance of about 4.7 million Ethereum issued annually. They expect the issuance of Ethereum 2.0 to be between a minimum of 100,000 and a maximum of 2 Million per year with a very high chance of it being less than 2 million.
Other than reducing the Ethereum token issuance by Ethereum 2.0, the total circulation supply would come a long way in the net reduction of the transaction cost. This would be done by burning the fee used in the transaction. Vitalik Buterin explains that the protocol charges a base fee during transactions, this fee is usually broken into two; one would be received by the miner as a tip and the other portion would get burnt.
The upgraded Ethereum network would also adjust block sizes rather than the fee used during network activity. The upgraded network will have volatility in block size but not in transaction fee. This would go a long way in helping the users determine an optimal fee amount and excessive processing times.
Due to the above upgrades the support for Ethereum 2.0 has continued to grow; OKEx, a major mining pool has also joined the Ethereum 2.0 testnet as a validator. Currently, the testnet has 24,000 active validators and more than 20,000 validators who joined in four days.
Image courtesy Wikimedia Commons
Don’t worry, we hate spam too
one weekly digest, just the important stuff.
How about some social? Follow us on Twitter!