Valid Points: New Deposits to Ethereum 2.0 Reach Record High in May
The first Ethereum node was launched into outer space on Thursday, June 3, as part of an initiative to bring enhanced security to blockchain transactions.
Also, the Ethereum 2.0 network received a record-breaking number of new deposits in May, indicating increased interest for and investment in Ethereum’s plans to reduce blockchain energy consumption through a proof-of-stake (PoS) consensus protocol.
Pulse check: Deposits on Eth 2.0 hit record high
In May, the number of deposits for spinning up new Eth 2.0 validators increased 246% to a record-breaking total of 26,681. As of Tuesday, June 8, there are over 160,000 active validators operating on Eth 2.0 and 6,700 pending validators queued for entry.
As the number of deposits has grown, so has the total ETH staked on the network. In order to be an Eth 2.0 validator, users must stake a minimum of 32 ETH, worth roughly $81,000 at the time of writing, to the network.
In dollar terms, total ETH staked on Ethereum 2.0 has risen from roughly $12 billion at the beginning of May to over $13 billion as of Tuesday, June 7. These deposits represent 4.6% of the circulating supply of ether, which indicates that the vast majority of ETH is used for other purposes outside of staking, such as market speculation, lending, trading and decentralized application (dapp) execution.
From May to June, total validators rewards have also increased by 10% from around 900 new ether issued per day to close to 1,000 ETH/day. The rewards issued on Ethereum 2.0 only make up a small fraction of the rewards issued on Ethereum’s proof-of-work (PoW) blockchain, which are awarded to miners. In mid-July, Ethereum miners are anticipating a reduction in their total rewards as a result of a code change to the network’s fee market known as Ethereum Improvement Proposal (EIP) 1559.
Since the major incident in February which ousted 75 validators from the Eth 2.0 network, there have been eight new incidents of slashings reported. Slashings occur when a validator is heavily penalized and forcibly removed from the network for malicious behaviour that goes against the rules of the protocol.
The malicious behavior of the past 8 slashing incidents have all been attestation violations, meaning that these validators intentionally, but more likely accidentally, signed off on two attestations for the same block instead of one.
This can happen if a user is trying to maximize rewards by running the same Eth 2.0 validator using two different setups. When one setup goes down, the plan is to automatically boot up the other to minimize operational downtime. However, when both setups are accidentally running at the same time, this can lead to the validator being slashed.
Check out this Mapping Out Eth 2 podcast episode featuring Raul Jordan, the co-lead developer of Prysmatic Labs, to learn more about slashing events on Eth 2.0 and how new validators can avoid them.
New frontiers: Aboard the International Space Station
On Thursday, June 3, an Ethereum node was launched into outer space from NASA’s Kennedy Space Center aboard a SpaceX Falcon 9 rocket, and on Monday, June 7, the node arrived at NASA’s International Space Station (ISS) for installation.
It’s the fourth blockchain node to be put into Earth-centered orbit, also called low earth orbit (LEO), by cryptocurrency startup SpaceChain. In 2018, two others connected to the Qtum blockchain were deployed into the LEO. Then, in 2019, SpaceChain set up the first active bitcoin node on the ISS.
Speaking to the first Ethereum-enabled payload to be installed and activated on the ISS now in 2021, SpaceChain co-founder and CEO Zee Zheng said in a blog post, “Bitcoin and Ethereum represent the two biggest ecosystems in the blockchain industry. With Ethereum’s smart contract platform running in outer space, it enables us to fortify blockchain applications and transactions with enhanced security and immutability.”
Blockchain technology, which is traditionally run by computers on Earth, is vulnerable to sudden power outages due to severe weather conditions, physical theft and hacking. Spacechain’s mission is to leverage the security and remoteness of space infrastructure to create a decentralized network of blockchain hardware that is immune to the same attack vectors as terrestrial computer systems.
Once installed, the Ethereum “space node” that was launched Thursday will be used to authenticate on-chain, multisignature transactions for digital asset management firm Nexus Inc.
“[Nexus] has a very diverse portfolio of enterprise customers and basically, they want to keep their assets safe. They want to try everything to make it as safe as possible,” said Zee Zheng, the CEO of SpaceChain, in an interview with CoinDesk. “Our technology, that is our data transmission method, is very different and we generate multiple keys and have extremely remote and safe places [for them.]”
Outside of multisignature transactions, Zheng hinted at other uses for the Ethereum space node related to decentralization application (dapp) development and smart contract execution. However, he insisted that activation of the node and further testing of it on the ISS would be needed before those other use cases could be explored further.
Space awaits Ethereum 2.0
Zheng also mentioned that the Ethereum space node would not be able to directly support the network’s upcoming upgrade to a proof-of-stake (PoS) consensus protocol. In order to do that, given the current development roadmap for Ethereum 2.0, SpaceChain would need to launch an additional Beacon Chain node into space to run alongside the first Ethereum space node.
Zheng’s team at SpaceChain will still be tracking Ethereum’s forthcoming transition to PoS closely. If the merge to PoS is successful and the Ethereum network maintains high levels of security, as well as decentralization, Zheng believes that future blockchain-focused space missions could become more cost-effective in the long-run.
“Energy is a huge factor in terms of a lot of space operations,” said Zheng. “So the less energy the node takes, the more potential launches we can do.”
However, Zheng is hesitant about whether a PoS blockchain can operate at “a very large scale without sacrificing security” and insists the SpaceChain team would need to see how the Eth 2.0 upgrade pans out first before directing resources toward supporting it.
“We identify ourselves as the integrator of space and blockchain. So we don’t know where the blockchain [industry] is going to go. In just the last three months, so much has happened,” Zheng said. “Whichever technology really advances the most, we’ll have a market for it.”
If proof-of-stake delivers on its promises, space awaits Ethereum 2.0.
Factoid of the week
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Valid Points incorporates information and data directly from CoinDesk’s own Eth 2.0 validator node in weekly analysis. All profits made from this staking venture will be donated to a charity of our choosing once transfers are enabled on the network. For a full overview of the project, check out our announcement post.
You can verify the activity of the CoinDesk Eth 2.0 validator in real time through our public validator key, which is:
Search for it on any Eth 2.0 block explorer site.
New episodes of “Mapping Out Eth 2.0.” with Christine Kim and Consensys’ Ben Edgington air every Thursday. Listen and subscribe through the CoinDesk podcast feed on Apple Podcasts, Spotify, Pocketcasts, Google Podcasts, Castbox, Stitcher, RadioPublica, IHeartRadio or RSS.Source