Ethereum community is celebrated a major milestone on Monday, May 4, 2020 as the blockchain’s 10 millionth block was mined. The event presents a bitter-sweet moment for Ethereum, which starts its move to the proof-of-stake (PoS) mechanism in July (pending any further delays) switching from the proof-of-work (PoW) mechanism employed by Bitcoin. However, there remain doubts about the launch of “Phase 0” and possible inflation rate increase as the blockchain switches to PoS.
Ethereum at #Block 10,000,000
Block number 10,000,000 was mined on Ethereum on May-04-2020 01:22:13 PM +UTC setting the number of blocks mined on the second-largest blockchain over 15 times more than Bitcoin despite being 5 years younger. However, Ethereum block times are mined way faster than BTC’s blocks i.e. at an average of 20 seconds compared to Bitcoin’s 10-minute blocks.
The original time set for ETH in its whitepaper is 12.4 seconds but due to the network congestion at times and difficulty adjustments, the time bumped up. During the 2017 bull run when ETH eclipsed the $1,400 mark, the average block times skyrocketed to 50 seconds on average.
As the network moves to PoS consensus mechanisms, such issues will be a thing of the past. However, the complexity of ETH 2.0 implementation remains a key challenge for the developers at the moment.
Can the ETH 2.0 Phase 0 launch in July?
The long-awaited ETH 2.0 test phase in July may not be as significant as the community expects it to be this coming July. According to a publication by BitMEX exchange, Ethereum 2.0 may be a very complicated feat to achieve and may even take longer than the expected date. The new system is focused on solving the issue of scalability on the blockchain using sharding that will tear up the network into smaller pieces to allow faster processing of transactions.
The two main problems that ETH developers face in implementing sharding protocols are; the existing smart contracts cannot simply move into a sharded network and the set increase in ETH inflation rate as the transition from ETH 1 to ETH 2.0 takes place.
· The sharding network core issue
In a bid to integrate the current smart contracts into sharded networks, the developers will have to build a compatible blockchain from scratch. Once built, then each and every smart contract on the ETH 1 chain will transition to ETH 2.0 in what could take years.
To combat this, the ETH dev team will ease the transition from ETH 1 to ETH 2.0 by simultaneously using both versions, and merge the two in the future.
· An inflation rate increase?
As both the ETH 1 PoW network will be running alongside the PoS ETH 2.0 model, several validators across the chain including miners and stakers will need to be fed from the same pot. This is set to hike the issuance rate of ETH over the years leading to increased supply levels of eth and possible price effects.
“Therefore the Ethereum inflation rate will increase, at least temporarily, until the two systems eventually merge. This may be considered a disadvantage, but it may be a price worth paying to ensure a successful transition to Eth2.”