Last Thursday saw the activation of the newest upgrade on the Ethereum network, Arrow Glacier. Its main purpose? To delay the transition that will phase out ethereum miners, extending the date back to June 2022, reported CNBC.
It’s an upgrade that shifts the “difficulty bomb” —a mechanism that can potentially freeze ethereum mining on the network and makes mining much more difficult— back and buys developers more time to ensure the transition from proof of work to proof of stake is a smooth one.
The Ethereum network is currently built using a proof of work model in which miners compete to validate transactions by solving complex mathematical puzzles. Bitcoin is also built on a proof of work model, and it has drawn a lot of criticism and scrutiny due to the enormous energy requirements such a system relies on.
By moving to a proof of stake model, miners will become obsolete, thereby making the entire network nearly 99% more energy-efficient, said Tim Beiko, coordinator for Ethereum’s protocol developers. The new proof of stake models will rely on users to validate transactions using the coins they hold and are part of Ethereum 2.0, commonly referred to as Eth2.
The introduction of the “difficulty bomb” will be to encourage users of the network to switch to the new proof of stake model once it goes live as it makes mining significantly more difficult.
A successful transition to Eth2 could directly impact the price of ether, the token of the ethereum blockchain, but it remains to be seen which way the price will go; for now, the clock is ticking down to June 2022.
Investing in Ethereum with Grayscale
For investors looking for a way to gain exposure now to the growth and potential of the Ethereum network, Grayscale offers the first Ethereum-focused fund in the U.S. The Grayscale Ethereum Trust (ETHE) is benchmarked to the CoinDesk Ether Price Index and seeks to track the ETH market price.
The fund allows investors to gain exposure to ether through a secure structure that is passively invested in Ethereum. By gaining exposure in the form of security, investors don’t have to buy, store, and safe keep ether (ETH) themselves. Ether via the fund is stored in cold storage with Coinbase as the custodian.
ETHE allows investors to have shares titled to their name, auditable, easy for financial and tax advisors to account for, and easy to transfer to beneficiaries. The Trust is an SEC-reporting company registered pursuant to Section 12(g) of the Securities Exchange Act of 1934.
The fund has an annual fee of 2.5% and currently has $11.8 billion in AUM.
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