The smart contract required for triggering the first phase of Ethereum 2.0 has enough funds to begin activation of Ethereum’s most ambitious upgrade yet, which will radically shift Ethereum’s economic model, resource usage and governance.
The Ethereum 2.0 deposit contract, which was released in early November, has accrued more than 540,000 ETH ($300 million) late Monday night, ensuring that the beacon chain for Ethereum 2.0 will launch next week, formally beginning the second-largest cryptocurrency’s shift from a proof-of-work consensus mechanism to a proof-of-stake one in hopes of solving a number of issues, including scalability.
The Ethereum Foundation had previously set a soft launch date for Dec. 1, assuming the deposit contract saw 524,288 ETH staked by Nov. 24. It hit the target with hours to spare, after more than 150,000 ETH were deposited in a 24-hour period.
The last 25% of the ETH needed to trigger the contract was deposited in four hours. The contract held just 385,440 ETH as of 22:45 UTC on Monday.
Ethereum saw its price rise nearly 10% over a 24-hour period Monday, surpassing $600 for the first time in two years.
To be clear, the network itself isn’t launching just yet. The launch of Ethereum 2.0 will activate a parallel proof-of-stake blockchain dubbed “the beacon chain” to run in parallel alongside the existing Ethereum network. The initial phases of its development will not impact existing users and decentralized applications on Ethereum.
The primary stakeholders of the beacon chain at Ethereum 2.0 launch will be validators, the equivalent to miners on a proof-of-stake network. Like miners, validators earn rewards on the network in exchange for processing transactions and creating new blocks. In order to become an Ethereum 2.0 validator, a user must stake a minimum of 32 ETH through the deposit contract.
At the outset of the network, validators are expected to earn roughly a 20% annualized reward on their staked ETH. More than 16,300 validators will be securing the network at launch.
The beacon chain activation is the first of four phases of the Ethereum 2.0 migration, which begins with the onboarding of validators and eventually leads to the full transition of all users and dapps to the new network. There are several theories on how the crypto markets will react to the dual blockchain system of Ethereum in the interim before the full migration is complete.
Speaking to the uncertainty, Danny Ryan, Ethereum 2.0 coordinator and Ethereum Foundation developer, told CoinDesk in an interview back in July: “I very much believe that [Ethereum 2.0] adds a ton over time to the intrinsic value of the system … I think that crypto markets are pretty wild and new and people have trouble figuring out how to value these things but in terms of intrinsic value [Ethereum 2.0] is an incredible upgrade that is going to enable Ethereum to be the backbone of a decentralized internet.”