After a damp affair with its switch to a POS based blockchain, Ethereum’s next big step as far as staking is concerned is the upcoming Shanghai upgrade, expected to happen sometime in March this year. As a preparatory move, the second most important crypto after bitcoin has moved closer to the aim with a shadow fork with a development network called devnet2 – a test division of the blockchain.
Currently, instead of miners consuming massive amounts of energy to verify transactions, there are “validators” who stake Ether in their wallets to earn the validator status, then verify Ethereum transactions by creating the next block on the chain, and earn rewards. The process is heavily rule-based and is based on a reward and punishment model to keep non-conforming nodes or servers out. Until now, the staked Ether (for which there is a minimum amount) could not be withdrawn. This will change with the Shanghai upgrade.
As per a Decrypt report, there is a total of $22.7 billion worth of Ether, around 27 million ETH, is locked in staking accounts.
Some industry experts believe the Shanghai upgrade will usher in a new era for crypto exchanges – among the major validators – by allowing their staked ETH to be withdrawn.
Ethereum is also now using a burning mechanism to control its token population. While bitcoin has a fixed 21 million supply, alt-coins like Ether, Solana or Dogecoin have infinite supply. This means any number of new coins can be minted – a process currently done with rewards for validators. Ethereum is currently a “deflationary currency”, meaning more coins are being burnt than minted.
All of this hasn’t had much impact on the value of Ethereum in the context of the ongoing slump and the huge aftermath of scams and collapses that continue to roil the industry and market sentiments.Share & like