Mapping Out Eth 2.0

In the latest episode of “Mapping out Ethereum 2.0,” CoinDesk’s Christine Kim and Consensys’ Ben Edgington announce the podcast is coming to a close, but finish strong, discussing Visa’s $165,000 CryptoPunk purchase, “orphaned blocks” on the Beacon Chain and the Ethereum gas limit debate.

This episode is sponsored by Unique One Network.

Visa announced on Monday that it acquired a member of one of the most valuable non-fungible token collections within crypto, called a “CryptoPunk”. CryptoPunks are 24x24 pixel art images depicting eccentric cartoon characters with mixed traits and accessories. 

Kim noted that Visa’s purchase of an NFT “wasn’t so much an investment decision as … really [an experiment] with NFTs wanting to learn more about how they work.”

Even so, market participants responded to the news by making investments in NFTs of their own. $100 million in trading volume took place in the 24 hours following Visa’s announcement, Edgington said. 

The duo also discussed a recent issue with the Ethereum 2.0 Beacon Chain that caused network participation rates to drop a few percentage points and some validators to miss out on rewards. 

The root cause of the issue originated with validator operations by staking as a service Lido. Due to a misconfiguration of their validator software client, Lido was producing orphan blocks that had ripple effects on validators across the network. Orphan blocks refer to blocks proposed by validators that are not included in the blockchain. 

Edgington noted that the issue has since been resolved and participation rates are back to 99% from their recent lows between 96-98%. 

Joining Kim and Edgington for their final episode, CoinDesk Research’s Teddy Oosterbaan discusses a recent debate in the Ethereum community about the governance process for raising Ethereum’s block gas limit. 

To learn more about the significance of gas limits on Ethereum and the controversial project seeking to improve governance around changing the gas limit, listen to the full episode of “Mapping Out Eth 2.0.” 

Links:

The Ethereum Gas Limit Project Twitter - https://twitter.com/ETH_EGL/status/1429530226908930048  

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Unique One Network is an interoperable Platform for DeFi enabled NFT Marketplaces, in a variety of sectors, built on Polkadot Parity Substrate. Unique One Network’s crosschain NFT hub facilitates transfers between a variety of blockchains and ecosystems, unleashing the power of NFTs with myriad innovative capabilities. Find out more at Unique One Network.

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In this week’s episode of “Mapping out Ethereum 2.0,” CoinDesk’s Christine Kim and Consensys’ Ben Edgington invite Alexander Blum, the managing director of digital asset investment fund, Two Prime, to discuss institutional interest in ether, regulatory trends in DeFi and key metrics to suggest ether is outperforming bitcoin. 

This episode is sponsored by Unique One Network.

Two Prime is a fund that only invests in two crypto assets, bitcoin (BTC) and ether (ETH). The firm also trades BTC and ETH options to further amplify the returns of their underlying holdings. Near the beginning of the year the fund was equally exposed to both ether and bitcoin, but outperformance and rebalancing have now given the fund an allocation to ether of about 70%. 

“I am not here ideologically. I am here trying to make money for people … and on both a fundamental and technical level, ETH looks more promising right now,” said Blum. “Ether is really open source. People are trying new stuff, they're experimenting, they're making mistakes, there are people who are excited about stuff. To me, bitcoin feels like a bunch of like monks protecting their holy sacred grail.” 

On the decentralized finance (DeFi) side, Blum noted there’s high technical risk associated with these applications due to the composability and lack of segmentation in the DeFi market. Similar to the U.S. subprime mortgage crisis in 2007, the leveraged and layered nature of DeFi products means it could be easier for an error in one application to introduce cascading risk to other applications. 

Kim and Edgington also discussed the first release of formal verification code specifications for the Ethereum 2.0 Beacon Chain. Formal verification goes beyond normal software testing and allows developers to see how their code could react to a variety of real world situations. 

Edgington noted, “Ethereum bugs are particularly serious. I mean, they have devastating effects. If the protocol forks because clients disagree with each other about the state, then there's a huge amount of value at stake.”

Formal verification is the largest step forward in ensuring that serious bugs in Ethereum 2.0’s protocol layer code are caught before the merge to proof-of-stake. Kim saw taking these extra precautions as an important step to transitioning Eth 2.0 from an “experimental project” to a production-ready network. 

To hear the full conversation featuring Blum, Kim and Edgington, check out this week’s episode of “Mapping Out Ethereum 2.0.” 

Links:

A Derivatives Trader's Guide to Institutional Crypto and Defi, A Report by Two Prime - https://twoprime.io/a-derivatives-traders-guide-to-institutional-crypto-and-defi/ 

The Rise of Institutional Ethereum Investors, A Report by Two Prime - https://twoprime.io/the-rise-of-institutional-ethereum-investors/ 

Formally Verifying the Ethereum 2.0 Phase 0 Specifications, Blog Post by Consensys - https://consensys.net/blog/developers/formally-verifying-the-ethereum-2-0-phase-0-specifications/ 

Eth 2.0 Formal Verifications Specs - https://github.com/ConsenSys/eth2.0-dafny 

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Unique One Network is an interoperable Platform for DeFi enabled NFT Marketplaces, in a variety of sectors, built on Polkadot Parity Substrate. Unique One Network’s crosschain NFT hub facilitates transfers between a variety of blockchains and ecosystems, unleashing the power of NFTs with myriad innovative capabilities. Find out more at Unique One Network.

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In this week’s episode, CoinDesk’s Christine Kim and Consensys’ Ben Edgington are joined by cybersecurity and privacy litigator Sean C. Griffin to discuss the regulatory environment of non-fungible tokens (NFTs). 

This episode is sponsored by Unique One Network.

Edgington bought his first NFT from English contemporary artist Damien Hirst. Hirst is expected to raise up to $20 million by selling 10,000 tokens worth $2,000 each. Upon purchase, the NFTs can be redeemed for a physical painting but only for a limited time period of one year. At the end of the year, Hirst will burn the corresponding NFT or painting that the buyer decided not to keep. 

Owning a piece from Hirst’s NFT collection gives the buyer rights to a physical painting and comes with the assurance of limited token supply, which Griffin explains is not always the case with all NFTs. 

The underlying technology of blockchain is able to prove that each NFT token is one of a kind. However, linking NFTs to a physical piece of art requires off-chain trust and verification. Griffin said he often sees NFT buyers “believe they are getting the associated artwork, too,” which is typically not true. According to Griffin, fraudsters have been selling NFTs of valuable artwork and leading people to believe they are buying the rights to the underlying artwork. 

Griffin also highlighted the importance of private key security and avoiding malicious phishing attacks. As the cryptocurrency markets grow in value, so do the privacy and security risks associated with investing in digital assets. 

Griffin hopes increased regulation over NFTs in the U.S. will enforce standards that benefit all market participants. His concern is that regulators will come in from a “zillion” directions and create unnecessary regulations that do more harm than good. 

Kim asked Griffin, “When it comes to holding [individuals] accountable and liable, do you think the main people responsible for abiding to these guidelines are the developers of the marketplaces and developers of the protocol? [Are these] the people that justice authorities go after?”  

Griffin believes the marketplaces facilitating the trading of NFTs are the most at risk of penalties. However, in such a new and changing space it is difficult to judge how regulators will go about governing the industry. 

To hear the full conversation featuring Griffin, Kim and Edgington, check out this week’s episode of “Mapping Out Ethereum 2.0.” 

Links:

Damien Hirst NFTs -- https://www.heni.com/

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Unique One Network is an interoperable Platform for DeFi enabled NFT Marketplaces, in a variety of sectors, built on Polkadot Parity Substrate. Unique One Network’s crosschain NFT hub facilitates transfers between a variety of blockchains and ecosystems, unleashing the power of NFTs with myriad innovative capabilities. Find out more at Unique One Network.

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See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

In this week’s episode, CoinDesk’s Christine Kim and Consensys’ Ben Edgington discuss Uniswap Lab’s contentious decision to censor assets on its website and the release of a new Ethereum 2.0 software client called Lodestar. 

This episode is sponsored by Unique One Network.

Uniswap is the largest decentralized exchange (DEX) on the Ethereum blockchain by both market capitalization and trading volume, facilitating nearly $340 billion in trades annually. The DEX has become a cornerstone of the decentralized finance (DeFi) industry by enabling any token issuer to list their assets on the exchange. 

A recent decision by Uniswap Labs, the development firm behind Uniswap, resulted in the delisting of several tokens from the Uniswap.org website. CoinDesk Research intern Teddy Oosterbaan stated that it was important to note the tokens are “delisted from their front end, which is basically just the Uniswap Labs website for interacting with protocol.” There are additional access points to listing and trading tokens on Uniswap through DEX aggregators such as 1inch. 

The decision by Uniswap Labs was controversial for three main reasons. First, censorship goes against the ethos of decentralization. In addition, there was no vote on the decision with UNI governance token holders, and finally, the decision may be one of several forthcoming actions taken by Uniswap Labs in its bid to partner with mainstream consumer finance applications.  

While discussing Uniswap’s connection with venture capital and a potential look toward consumer finance, Edgington compared Uniswap with one of its largest competitors, SushiSwap. He said, “It’s definitely a hint of corporatization of Uniswap … and this seems to set a more respectable trajectory for them, whereas Sushi is perhaps a bit more like the Wild West.” 

The future of decentralized finance could very well have tiers of decentralization, with certain applications built for the individual DeFi user and others built for institutions and mainstream inventors, sometimes called centralized DeFi (CeDeFi). 

Edgington and Kim also discussed the official release of a new Ethereum 2.0 software client dubbed Lodestar. The addition brings the total Eth 2.0 client number up to five and offers users looking to run validators on the Ethereum Beacon Chain more “lightweight” options for their computers. 

Speaking to the importance of lowering the barrier to becoming a validator on Eth 2.0, Kim said, “I do think it is very important to maintain a sense of ability to keep on that course of trying to make this technology do what it's supposed to do, which is cut out reliance on centralized providers and centralized businesses.”

Tune into the full episode of “Mapping Out Ethereum 2.0” to hear Kim, Oosterbaan and Edgington discuss the latest news about Ethereum and Ethereum 2.0.

Links: 

DEX aggregator that bypasses Uniswap Lab’s front-end - https://app.1inch.io/#/1/swap/ETH/DAI

Public Ethereum blockchain explorer - https://etherscan.io/

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Unique One Network is an interoperable Platform for DeFi enabled NFT Marketplaces, in a variety of sectors, built on Polkadot Parity Substrate. Unique One Network’s crosschain NFT hub facilitates transfers between a variety of blockchains and ecosystems, unleashing the power of NFTs with myriad innovative capabilities. Find out more at Unique One Network.

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See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

In this week’s episode, CoinDesk’s Christine Kim and Consensys’ Ben Edgington are joined by Flashbots researcher Alex Obadia to discuss the noble yet futile fight to vanquish Miner/Maximal Extrable Value (MEV) on Ethereum. 

This episode is sponsored by Unique One Network and Mimo.

MEV is the additional rewards earned by miners as a direct result of their ability to reorder, censor or insert transactions into a block. Since November 2020, Flashbots has created research and built software to assess the impacts of MEV on the network, its users and decentralized applications (dapps). 

The research shows, according to Obadia, that MEV cannot be stopped fully. 

“At Flashbots we definitely believe that MEV should be mitigated, but we also believe that it can't be fully mitigated down to zero,” said Obadia. 

There will always be financial incentives for miners to rearrange transactions within a block due to the auditability and permissionless nature of decentralized blockchains like Ethereum. 

In efforts to mitigate the negative impact of MEV on users, Flashbots created a separate channel for transaction and block ordering earlier this year known as Flashbots Auction. 

Roughly 85% of Ethereum mining computational power, also called hash power, now uses Flashbots Auction to extract MEV rewards. Obadia described Flashbots Auction as a “communication channel between Ethereum users and miners, where they can express their preference over transaction ordering in a more granular way than simply by upping their gas price.” 

While it is difficult to measure the precise impact of the channel on reducing high fees on Ethereum, Edgington asserts that the introduction of Flashbots Auction has been working positively. 

“We can see that gas prices are much better than they were two, three months ago. It seems like Flashbots is working in that sense,” said Edgington. 

Looking ahead, Obadia and his team are figuring out ways to decentralize Flashbots Auction and create mechanisms within it to distribute MEV rewards in a “democratic” way. 

To learn more about Obadia’s work, listen to the full episode of Mapping Out Eth 2.0. 

Links:

Ethereum Community Conference Panel Recordings - https://ethcc.interspace.chat/

Flash Boys 2.0 Paper - https://arxiv.org/abs/1904.05234  

Flashbots Data Dashboard - https://dashboard.flashbots.net/network

Vitalik Buterin’s Proposal on Fee Market Designs to Mitigate MEV - https://ethresear.ch/t/proposer-block-builder-separation-friendly-fee-market-designs/9725

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Unique One Network is an interoperable Platform for DeFi enabled NFT Marketplaces, in a variety of sectors, built on Polkadot Parity Substrate. Unique One Network’s cross chain NFT hub facilitates transfers between a variety of blockchains and ecosystems, unleashing the power of NFTs with myriad innovative capabilities. Find out more at Unique One Network.

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Mimo is home of the world’s #1 euro-algorithmically pegged token minted at an interest rate of just 2%. Lock in your crypto assets, access their liquidity, and stabilize your portfolio by hedging against inflating coins. Open a Vault and experience the power of Mimo today at mimo.capital.

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In this week’s episode, CoinDesk’s Christine Kim and Consensys’ Ben Edgington discuss mounting concerns over the potential for block reorganizations on Ethereum. They also discuss the lack of supply growth in the world’s largest stablecoin, tether (USDT), and the annual Ethereum conference in Paris, France, EthCC. 

This episode is sponsored by Unique One Network and Mimo.

Time bandit attacks are a Miner/Maximal Extrable Value (MEV) strategy involving the reorganization of past blocks. If the reward is great enough, Ethereum miners may be incentivized to propose competing blocks containing altered transactions at the expense of users and other network stakeholders. 

Edgington highlighted the negative effects these attacks would have on the network, saying, “You think your transaction is confirmed and then suddenly it goes away, and it may or may not be included in the next block. So it breaks user experience to a certain extent, and is not really good for the stability of the blockchain.” 

Luckily, these types of network attacks are difficult to pull off. Kim said miners would need to “split the network” using vast amounts of computational power, also called hash power, in order to have their version of transaction history rewrite the main Ethereum chain. 

Miners would need approximately 40% of total network hash power in order to reliably utilize a time bandit attack. This is an exceptionally difficult task, especially in a zero-sum game where miners are competing with each other for block rewards. However, in light of the fact all Ethereum miners will need to retire as the network upgrades to a proof-of-stake consensus protocol, certain miners may not be so resistant to collusion for short-term profit. 

Early attempts to create an open-source application that facilitates time bandit attacks on Ethereum  were met with backlash last week on social media. The negative community response to “open exploration” exposing the root of this issue on the network in Edgington’s eyes sets a bad precedent for transparent discussion about the ways Ethereum needs improvement. 

This kind of reaction “discourages people from coming forward with creative ideas or speaking up about things and turns gray hats into black hats, which is not what we want,” Edgington said. 

To listen to the full conversation between Kim and Edgington, check out this week’s episode of “Mapping Out Eth 2.0.”

Links: 

The Ethereum Community Conference - https://ethcc.io/

Tether Hasn't Printed New USDT in Weeks - https://www.coindesk.com/tether-hasnt-printed-new-usdt-in-weeks-3-possible-explanations 

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Unique One Network is an interoperable Platform for DeFi enabled NFT Marketplaces, in a variety of sectors, built on Polkadot Parity Substrate. Unique One Network’s cross chain NFT hub facilitates transfers between a variety of blockchains and ecosystems, unleashing the power of NFTs with myriad innovative capabilities. Find out more at Unique One Network.

-

Mimo is home of the world’s #1 euro-algorithmically pegged token minted at an interest rate of just 2%. Lock in your crypto assets, access their liquidity, and stabilize your portfolio by hedging against inflating coins. Open a Vault and experience the power of Mimo today at mimo.capital.

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See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

In this week’s episode, CoinDesk’s Christine Kim and Consensys’ Ben Edgington interview Elina Sinelnikova, the Co-founder and CEO of Metis and CryptoChicks, about her Layer 2 scaling project and her role in bringing women into crypto. 

This episode is sponsored by Unique One Network and Mimo.

Metis, named after the Greek goddess of prudence and wisdom, is a Layer 2 solution to help boost the speed and lower the cost of transactions on Ethereum. 

Sinelnikova called the Greek goddess the icon of her project and explained her goals to “move forward with the same spirit as Metis as well as hiring more women,” who make up half of the project’s team. 

Sinelnikova also heads up CryptoChicks, co-founded with the mother of Vitalik Buterin, Natalia Ameline. CryptoChicks is a non-profit organization with the goal of educating women of all ages about blockchain and cryptocurrency. Without outside funding, the team is made up of predominantly volunteers, but has secured sponsorships from the likes of Microsoft, IBM and the Royal Bank of Canada. 

Blockchain engineering jobs have typically been dominated by males and Kim noted that there are “implicit biases that females are less technically minded,” which makes foundations like CryptoChicks even more important. In Sinelnikova’s hiring experience, all of her female employees have been over-qualified for their jobs. 

“We noticed that when the guys apply, they apply without experience and knowledge. When women apply, they’re 200% ready for that job,” said Sinelnikova. 

The female led Metis team is gearing up for a main network release of their product later this month. While boasting a higher transaction throughput than Ethereum, the Metis network will not sacrifice decentralization or security for its speed, according to Sinelnikova. 

Among the many technical solutions for blockchain scalability being developed on Ethereum’s Layer 2 such as state channels, side chains, zk-rollups, plasma and others, Metis uses a technology known as optimistic roll-ups to process and validate transactions in batches. 

To learn more about optimistic roll-ups, female empowerment in crypto, and Circle’s recent $4.5 billion dollar SPAC deal, listen in to this week’s episode of Mapping Out Ethereum 2.0 with Christine Kim and Ben Edgington.

Links:

Crypto Chicks (https://cryptochicks.ca/)

Dai Collateralization Data (https://daistats.com/)

Metis (https://metisdao.medium.com/)

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Unique One Network is an interoperable Platform for DeFi enabled NFT Marketplaces, in a variety of sectors, built on Polkadot Parity Substrate. Unique One Network’s cross chain NFT hub facilitates transfers between a variety of blockchains and ecosystems, unleashing the power of NFTs with myriad innovative capabilities. Find out more at Unique One Network.

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Mimo is home of the world’s #1 euro-algorithmically pegged token minted at an interest rate of just 2%. Lock in your crypto assets, access their liquidity, and stabilize your portfolio by hedging against inflating coins. Open a Vault and experience the power of Mimo today at mimo.capital.

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See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

In this week’s episode, Christine Kim and Ben Edgington chat with CoinDesk Senior Markets Reporter Omkar Godbole about the evolution of ether trading markets. The duo also discussed the earnings of CoinDesk’s Ethereum 2.0 validator in recent months and the ways validator reward dynamics are expected to change after the network’s first system-wide upgrade, Altair.  

This episode is sponsored by Unique One Network and Mimo.

“Compared to 2017, the [ether] market has matured and we have more sophisticated players,” said Godbole. “I’m not surprised by just how fast the ether markets have grown because it’s actually the bitcoin market that first picked up the pace and now we are seeing activity flowing into ether and the [ether] options market.”

Increasingly sophisticated and deep-pocketed investors are turning to the ether derivatives markets as a way to diversify their crypto asset portfolios beyond just bitcoin, according to Godbole. In the process, certain market players are making millions. 

On Tuesday, June 22, 5,000 ether options contracts representing 5,000 ether were bought out at an estimated $5.44 million through a single trade on cryptocurrency exchange Deribit. As Godbole explained, the trade was executed by a market maker who bets on both sides of the market and profits from the spread between bid and ask prices for an option. 

Essentially, “they get commission for providing liquidity,” said Godbole. 

This particular market maker, according to Deribit CCO Luuk Strijers who spoke with Godbole about the events of June 22, made over $3 million from the trade. 

Outside of analyzing individual trades, Godbole also looks at aggregate data on trade activity in crypto derivatives markets in order to glean insights and hints about investor sentiment and broader market trends. 

The put-call skew is one metric measuring the price of put options relative to calls that can signal how worried investors are feeling about further potential sell-offs in bearish market conditions. 

“There is still considerable fear in both the ether and bitcoin options markets where put options are driving more demand or higher prices than calls,” said Godbole.  

Kim and Edgington also discussed a drought in block rewards for CoinDesk’s Eth 2.0 validator, Zelda. It has been over two months since Zelda has proposed a block on the network, which Edgington chalks up to being simply “super unlucky.”

To listen to the full conversation between Godbole, Kim and Edgington, check out this week’s episode of Mapping Out Eth 2.0. 

Links: 

• Ethereum Cat Herders (https://ethereumcatherders.com/index.html)
• How One Ether Options Trader May Have Lost $3M in a trade gone bad (https://www.coindesk.com/how-one-ether-options-trader-lost-3m-in-a-trade-gone-bad)

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Unique One Network is an interoperable Platform for DeFi enabled NFT Marketplaces, in a variety of sectors, built on Polkadot Parity Substrate. Unique One Network’s cross chain NFT hub facilitates transfers between a variety of blockchains and ecosystems, unleashing the power of NFTs with myriad innovative capabilities. Find out more at Unique One Network.

-

Mimo is home of the world’s #1 euro-algorithmically pegged token minted at an interest rate of just 2%. Lock in your crypto assets, access their liquidity, and stabilize your portfolio by hedging against inflating coins. Open a Vault and experience the power of Mimo today at mimo.capital.

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See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

In this week’s episode, CoinDesk’s Christine Kim and Consensys’ Ben Edgington discuss the activation of EIP 1559 on Ethereum’s test network Ropsten and two potential protocol-level changes impacting Ethereum 2.0 validators. 

This episode is sponsored by Unique One Network and Mimo.

The London upgrade containing Ethereum’s fee market change, otherwise known as Ethereum Improvement Proposal (EIP) 1559, was activated Friday, June 25, on the Ropsten test network.

Kim noted early statistics about the activation of London on Ropsten, saying, “It looks like about over 80,000 testnet ETH was taken out of circulation, that is burned, as a result of EIP 1559. And the base fee, which is this new mandatory minimum fee payment required to send a transaction … was trending at about 100 gwei.”

If these figures were also seen on Ethereum after activation of London, it would mean average fee payments at minimum double from roughly 50 gwei to 100 gwei and about 30% of new coin issuance gets counterbalanced on the network through fee burning. 

Edgington warned these figures shouldn’t be taken too seriously as the high gas prices on Ropsten are partially a result of deliberate spamming in efforts to battle test the upgrade for main network deployment. 

“Also, Ropsten ETH is free, right? It’s costless. It’s testnet ETH. Sending a million transactions costs nothing except a bit of time so it differs from mainnet in that respect as well,” said Edgington.  

Looking further down the road to upgrades on the Ethereum 2.0 Beacon Chain, Edgington and Kim discussed the recurring idea to potentially lower the amount of ETH required to become a network validator. While this would make it less costly for users to validate and earn rewards on Eth 2.0, it would also require an “immense” engineering effort on the part of protocol developers, according to Edgington. 

“You can’t just change it to 16 ETH because what about all the people who have already got 32 ETH staked. They now have two validator entities. What a nightmare,” he said. 

Kim also noted that changing the required amount of ETH for validators would not be a long-term solution for encouraging a greater number of validators given the price volatility of the crypto asset, as well as the protocol-level decisions that still need to be made about the overall size of the Eth 2.0 network. 

Edgington and Kim also touched on the recent dispute between cryptocurrency custody provider Fireblocks and Eth 2.0 staking pool StakeHound. For the full overview on the dispute and what Eth 2.0 developers are considering to help users in similar situations, listen to this week’s episode of “Mapping Out Eth 2.0.” 

Links mentioned in this podcast: 

• Camila Russo’s The Infinite Machine (https://www.harpercollins.com/products/the-infinite-machine-camila-russo?variant=32123333836834)   
• Matthew Leising’s Out of the Ether (https://www.amazon.com/Out-Ether-Amazing-Ethereum-Destroyed/dp/1119602939) 
• Data about EIP 1559 on Ropsten (http://watchtheburn.com) 
• Legal Dispute Between Fireblocks and Stakehound (https://www.coindesk.com/fireblocks-being-sued-for-allegedly-losing-over-70m-of-ethereum-report)

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Unique One Network is an interoperable Platform for DeFi enabled NFT Marketplaces, in a variety of sectors, built on Polkadot Parity Substrate. Unique One Network’s crosschain NFT hub facilitates transfers between a variety of blockchains and ecosystems, unleashing the power of NFTs with myriad innovative capabilities. Find out more at Unique One Network.

-

Mimo is home of the world’s #1 euro-algorithmically pegged token minted at an interest rate of just 2%. Lock in your crypto assets, access their liquidity, and stabilize your portfolio by hedging against inflating coins. Open a Vault and experience the power of Mimo today at mimo.capital.

-

See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

In this week’s episode, CoinDesk’s Christine Kim and Consensys’ Ben Edgington chat with the CEO and founder of Allnodes, Konstantin Boyko-Romanovsky. Allnodes is a blockchain node hosting, monitoring and staking service supporting over 25 cryptocurrency networks.  

This episode is sponsored by PumaPay.io.

Among the networks for which Allnodes provides hosting services, Boyko-Romanovsky said, the set up for validator nodes on Ethereum 2.0 was by far “the most stressful.” 

“Ethereum 2.0 is like playing Diablo in nightmare mode. I didn’t sleep well for two months when Ethereum [2.0] was launched because there is a risk of slashing,” said Boyko-Romanovsky.

The risk of slashing, or getting penalized, on Eth 2.0 is greater for staking-as-a-service platforms like Allnodes than for individual users. According to Edgington, this is by design in order to encourage network decentralization.  

“The Ethereum [2.0] protocol was not designed with staking services in mind. It was very much designed for individual stakers,” he said. “It is deliberately not supposed to be easy for [staking] services.” 

Even so, Edgington noted that among staking services Allnodes consistently operates the best-performing Eth 2.0 validator nodes in terms of rewards earned. 

While Boyko-Romanovsky attributed most of that success to “luck,” he also noted that using a single Eth 2.0 software client, Teku, and investing time into understanding Teku enabled him and his team to make “improvements” to their validator set-up based on their knowledge.

The trio also discussed the downfall of decentralized finance (DeFi) protocol Iron Finance and Mark Cuban’s call for action from U.S regulators in light of the fiasco. To listen to the full discussion, check out this week’s episode of “Mapping Out Eth 2.0.” 

Links mentioned in this podcast:

• CoinDesk article about Iron Finance token price crash (https://www.coindesk.com/iron-finance-says-it-suffered-cryptos-first-large-scale-bank-run-in-token-crash-postmortem)
• Iron Finance blog post (https://ironfinance.medium.com/iron-finance-post-mortem-17-june-2021-6a4e9ccf23f5)
• Mark Cuban’s statement in Bloomberg (https://twitter.com/TheStalwart/status/1405536487630798859/photo/1) 

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In this week’s episode, CoinDesk’s Christine Kim and Consensys’ Ben Edgington discuss why the term “validator” is a misnomer on Ethereum 2.0 and the different ways decentralization can be measured on a proof-of-stake (PoS) blockchain. 

This episode is sponsored by PumaPay.io.

The community behind the PoS network, Avalanche, attacked Kim on Twitter for her use of the term “validator” when describing the growth of the Eth 2.0 network. 

“The kind of comments I was getting was, Christine, you’re misleading and intentionally misrepresenting the growth of the Ethereum network. You don’t know what you’re doing,” said Kim. “And to that, I obviously got very riled and said, ‘No, I’m not using this term wrong.’”

In the context of Ethereum 2.0, validators affirm the validity of blocks and transaction data on the network in exchange for earning rewards in the form of interest on a minimum locked deposit of 32 ether. Their growth is directly correlated to the amount of total stake on Eth 2.0 but not with the number of machines or computers, also called “nodes,” running Eth 2.0 client software. This is because a single node can run multiple Eth 2.0 validators concurrently. 

In comparison, a validator on other PoS blockchains such as Avalanche is equivalent to a single node. On these blockchains, having more validators indicates increasing levels of network decentralization and resiliency against single points of failure. 

“Having 10 beacon nodes with one validator each is 10 times more resilient than having one beacon node with 10 validators. So from that point of view, it’s better to have one [validator] per node,” Edgington said. “But what if your 10 nodes are all hosted on [Amazon Web Services] and AWS goes down? It’s the same, right? So, in a sense, you don't really learn much by that comparison.”

In Edington’s view, nodes like Eth 2.0 validators can still be “politically centralized” and controlled by a single user or entity, which is why a blockchain that is architecturally decentralized by the number of nodes may not be politically or logically decentralized. 

The term “validator” on Eth 2.0 can still be misleading for other reasons, the primary of which is that Eth 2.0 validators don’t really validate anything. Beacon chain nodes ensure block validity while the role of validators is to attest and affirm the finality of these blocks. 

Listen to the full conversation between Kim and Edgington on this week’s Mapping Out Eth 2.0 episode where they discuss the role and function of validators on Eth 2.0, as well as the impact of El Salvador’s announcement about bitcoin as legal tender in the country.

Links mentioned in this podcast: 

• The Meaning of Decentralization by Vitalik Buterin (https://medium.com/@VitalikButerin/the-meaning-of-decentralization-a0c92b76a274)   
• El Salvador’s Legislature Votes to Adopt Bitcoin as Legal Tender (https://www.coindesk.com/its-official-el-salvadors-legislature-votes-to-adopt-bitcoin-as-legal-tender) 

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In this week’s episode, CoinDesk’s Christine Kim and Consensys’ Ben Edgington interview Kosala Hemachandra, the co-founder and CEO of My Ether Wallet (MEW), about MEW’s two-step solution to staking on Ethereum 2.0.

This episode is sponsored by PumaPay.io.

“Whenever we see a bottleneck, whenever we see a problem, like an accessibility problem for us … that’s where we jump in,” said Hemachandra. “We’re like, okay, let’s reduce it down to three steps maximum and then let’s take [users] through these steps and then it'll make it easy for them to get into Ethereum and use Ethereum. Therefore, Ethereum will grow.” 

Hemachandra has watched Ethereum grow from as early as 2014 when the network was merely a technical concept defined by a yellow paper. When the network officially launched in July 2015, Hemachandra noticed a major pain point for users trying to access the network. 

There was no user-friendly interface to send and receive on-chain transactions. 

As a back-end developer and web programmer by trade, Hemachandra along with his co-founder Taylor Monahan created MEW as a wallet service that could offer users an alternative for interacting with the Ethereum blockchain, which at the time could only be done through a command line interface. 

Fast forward to 2021 and a lot has changed about Ethereum, as well as MEW. 

MEW is one of several crypto wallet services actively helping onboard new users to the Ethereum blockchain, which has now amassed a market capitalization of over $272 billion. Ethereum has also spawned a second, parallel blockchain network known as the Ethereum 2.0 Beacon Chain on which ETH holders can stake their coins and earn rewards. 

Eth 2.0 is envisioned to one day replace Ethereum’s existing consensus mechanism from proof-of-work (PoW) to proof-of-stake (PoS) and thereby significantly reduce the overall energy costs of the network. 

Similar to 2015, Hemachandra noticed another pain point at the creation of Eth 2.0. 

“[To stake,] you have to be knowledgeable in running nodes, running validators, having them on 24/7, and like a lot of backend stuff,” said Hemachandra. “That’s when we jumped in. We’re like, okay, a regular user will not be able to accomplish these things so we have to make it easy for them.”

This was how the idea to introduce staking services on MEW was born. Since launching their staking services in December 2019, close to $200 million worth of ether has locked into Eth 2.0 using MEW’s 2-step solution. 

To learn more about the MEW’s Eth 2.0 staking services and what Hemachandra sees as the next major pain point on Ethereum to solve, listen to this week’s episode of Mapping Out Eth 2. 

Links mentioned in this podcast: 

• MEV estimations by Ryan Berckmans (https://twitter.com/RyanBerckmans/status/1401586370678829069) 
• Overview of MEV concerns on Ethereum 2.0 (https://hackmd.io/@Izzy-/Eth2VevStaking) 
• Vitalik Buterin’s ideas around MEV (https://ethresear.ch/t/proposer-block-builder-separation-friendly-fee-market-designs/9725) 
• What is Flashbots? (https://github.com/flashbots/pm) 
• Quarterly review of the staking industry by Staked (https://staking.staked.us/state-of-staking) 

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In this week’s episode, CoinDesk’s Christine Kim and Consensys’ Ben Edgington discuss major investments in layer 2 Ethereum scaling solutions and debate whether Elon Musk’s attempts to “greenwash” the Bitcoin network are working. 

This episode is sponsored by PumaPay.io.

Over the last few months, investments in Ethereum startups focusing on layer 2 technologies have been on the rise. 

In late March, billionaire investor Mark Cuban made an investment in Polygon, previously known as the Matic Network. Polygon enables users to send transactions on Ethereum with greater speed and lower cost by moving computations to a separate side blockchain or “sidechain.” 

On March 1, venture capital firm Union Square Ventures led a Series A funding round for Matter Labs, another Ethereum layer 2 scaling solution. In February, Silicon Valley VC Andreessen Horowitz led a $25 million investment for the team behind the Optimistic Ethereum Network, another still yet different layer 2 Ethereum-scaling service. 

“It seems like capital galore going into layer 2s and if any of our listeners we’re around for Consensus [last] week, we also heard a lot of [decentralized finance] developers … talking about how layer 2 scaling is going to be the solution to one of their biggest challenges, which is high fees and limited transaction throughput on Ethereum,” Kim said. 

Along with greater investment in various layer 2 scaling solutions, there is heightened competition among these startups. As end users have started to compare and contrast the merits of one layer 2 solution over another, controversy has been brewing on social media according to Edgington.  

“There are trade-offs all over the space and it’s hard to see how this is going to fall out,” he said. “With Polygon, it’s certainly gaining a lot of traction and [its future] will depend on how people feel in the long term about the security trade-offs in the security model.”

Speaking of controversies, Edgington and Kim also discussed Elon Musk’s latest attempts to improve the environmental footprint of the Bitcoin blockchain by creating a new “green” initiative within the North American Bitcoin mining community. 

While Edgington viewed these efforts as nothing more than a “PR effort to greenwash Bitcoin,” Kim pushed back on whether these efforts could make a significant impact in making bitcoin mining more energy sustainable in the long run. 

Even if bitcoin mining were to become more sustainable, Edgington noted bitcoin would still consume magnitudes more energy than Ethereum’s proof-of-stake (PoS) blockchain because PoS doesn’t rely on intensive computer computations for network security but instead relies on the collective stake, or wealth, of users. 

To listen to the full debate between Edgington and Kim on bitcoin’s energy consumption, listen to this week’s episode of Mapping Out Eth 2.0. 

Links mentioned in this podcast: 

• What’s New In Eth2 (www.eth2.news)   
• Valid Points (https://www.coindesk.com/newsletter/valid-points)   

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In this week’s episode, CoinDesk’s Christine Kim and Consensys’ Ben Edgington discuss a “severe threat” against Ethereum that was recently fixed and disclosed by non-profit organization the Ethereum Foundation. 

This episode is sponsored by hellointerpop.io and The Sun Exchange.

On Tuesday, May 18, the Ethereum Foundation published a blog post detailing a previously unknown attack vector on Ethereum where certain transactions could overwhelm the network and delay block production from a matter of seconds to minutes. 

“It wasn’t a sort of classic security vulnerability in that nobody was going to get hacked,” said Edgington. “It was more a [Denial of Service] opportunity, a griefing attack. So there was potentially a way that the chain could be slowed down. Blocks would take much longer to produce and process than they ought to.”

According to the blog post, this security vulnerability was first discovered by Ethereum researchers Hubert Ritzdorf and Matthias Egli who shared their findings with members of the Ethereum Foundation through the organization’s bug bounty program on October 4, 2019 . 

While attempts were made to reduce the effects of the attack by the broader Ethereum developer community, it wasn’t until April 15, 2021 that the issue was solved for good as a result of the activation of two Ethereum Improvement Proposals (EIPs), EIP 2929 and EIP 2930. 

For the six months that developers were working on a solution to the known threat, it was important to keep work somewhat hidden from the public view. The last thing developers wanted was for a potential attacker to find out about this security vulnerability and take advantage of it before a fix to the network was implemented. 

While this may raise concerns about transparency and centralization, Kim notes that “no code is absolutely perfect.” 

“These kinds of security vulnerabilities are unavoidable,” said Kim. “It’s just a matter of preparing for them by having these centralized players like the Ethereum Foundation to fund bug bounties and to have a known core development team … to keep [things] on the down low until they figure out a fix.” 

To listen to the full commentary about Ethereum development and ongoing progress for Ethereum 2.0, listen to this week’s episode of Mapping Out Eth 2.0. 

Links mentioned in this podcast: 

• What’s New In Eth2 (www.eth2.news)   
• Valid Points (https://www.coindesk.com/newsletter/valid-points)   
• Dodging a bullet: Ethereum State Problems (https://blog.ethereum.org/2021/05/18/eth_state_problems/)  

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In this week’s episode, CoinDesk’s Christine Kim welcomes special guest Tim Beiko who recently took over as chair of the bi-weekly All Core Developers (ACD) meetings. ACD calls bring together various Ethereum stakeholders to discuss and reach consensus on proposed changes to the Ethereum protocol. They are streamed live on YouTube and generally reach an audience of roughly 10,000 viewers for each call. 

This episode is sponsored by hellointerpop.io and The Sun Exchange.

For Beiko, the most nerve-racking thing about his newest role as chair of the ACD calls is setting up the YouTube livestream. 

“Setting up the [Open Broadcaster Software] and all that for streaming and getting the audio right to the mic; this stresses me out so much because there was one call where I streamed it to everybody except myself,” Beiko said. 

Before taking over this role from the previous chair, Hudson Jameson, Beiko had been an active participant in these calls for three years as product manager of one of the Ethereum software client teams. 

As background, ACD calls are a long-running tradition in the Ethereum community that started as early as 2015. Aimed at bringing together and coordinating development of the Ethereum protocol, these meetings are a crucial component of the informal governance process that shapes the ongoing evolution of the world’s second-largest cryptocurrency by market capitalization. 

These calls, according to Beiko, are also how Ethereum protocol developers provide transparency to the broader community of the network, which includes a growing number of users, decentralized application (dapp) developers and investors. 

“It’s very easy for core developers and folks like myself who are basically paid to be on the calls to spend time and prepare for them,” said Beiko. “But if that’s not your job, if you’re running an application or you’re a journalist, you don’t have five hours per week to spend on protocol development for Ethereum. So I’ve tried to summarize it … [and] find ways to describe to the community what’s happening so that folks can keep tabs on [Ethereum] but don’t need to invest hours.”

One area of continued discussion and debate is around the upcoming change to Ethereum’s fees, as outlined by Ethereum Improvement Proposal (EIP) 1559. 

Beiko is confident the majority of users and dapp developers are in favor of activating EIP 1559 later this July. As for other stakeholders such as miners who have not been as enthusiastic about the upgrade, Beiko explained that there are other incentives he believes will encourage their support for the fee market change when it comes time for activation. 

To hear Beiko’s full remarks on EIP 1559 implementation as well as more on the governance process around the other code changes that will be bundled along with EIP 1559, tune in to this week’s episode of “Mapping Out Eth 2.0.”

Links mentioned in this podcast: 

• What’s New In Eth2 (www.eth2.news)   
• Valid Points (https://www.coindesk.com/newsletter/valid-points)   
• London Network Upgrade Specification (https://github.com/ethereum/eth1.0-specs/blob/master/network-upgrades/mainnet-upgrades/london.md#ecosystem-readiness-checklist) 
• Why EIP 1559? By Tim Beiko (https://hackmd.io/@timbeiko/why-1559) 
• Flashbots: Frontrunning the MEV Crisis (https://medium.com/flashbots/frontrunning-the-mev-crisis-40629a613752) 

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In this week’s episode, CoinDesk’s Christine Kim and Consensys’ Ben Edgington discuss the security and running costs of CoinDesk’s Ethereum 2.0 staking operations with special guest, CoinDesk Director of Engineering Spencer Beggs. They also explain the main features of Eth 2.0’s first major backwards-incompatible upgrade, Altair, which is tentatively scheduled for release in July. 

This episode is sponsored by hellointerpop.io and The Sun Exchange.

In February, CoinDesk activated an Eth 2.0 validator, nicknamed Zelda, by staking 32 ETH, worth roughly $52,000 at the time, on Ethereum’s parallel proof-of-stake (PoS) blockchain network. 

Since then, Zelda has been participating in network consensus by helping produce and validate blocks. In return, Zelda’s operations have earned CoinDesk a total of 0.62 ETH over the past three months, worth about $2,600 at time of writing. 

Unlike other validator set-ups, Beggs explained that CoinDesk’s staking operations don’t require any hardware. 

“Our Eth 2.0 validator is set-up in cloud computing so we’re not running our validator locally. We’re running it inside of our multi-tenant environment,” Beggs said. “This produces some challenges regarding the security infrastructure setup because we’re just not able to … unplug it or log into it. We have to account for many users being able to access the same environment that our validator is running.”

On the flip side, one of the main benefits to running Zelda on the cloud is its accessibility to a remote workforce. Due to the restrictions and concerns caused by the ongoing COVID-19 pandemic, most offices, including CoinDesk’s in New York City, were forced to temporarily close. In lieu of a physical space, Beggs turned to Amazon Web Services (AWS) as a safe alternative to host Zelda. 

Beggs is presently looking into the costs associated with running an Eth 2.0 validator on the cloud. 

“The server itself, just running it, we know costs about $200 a month thereabouts, but there’s network charges in and out. So that’s what we’re waiting to learn ... because that can be a lot of data or a little data depending on how the network is running. So it’ll be interesting to see how that’s actually playing out,” said Beggs. 

Looking ahead to the future of Zelda and all Eth 2.0 validators, Edgington noted that a mandatory software upgrade was in the works by protocol developers. 

“It’s time to take off the training wheels,” said Edgington. “We’ve still got some stabilizers on [Eth 2.0] but eventually we’ll be able to put in the full crypto economically correct amounts for these penalties and slashing penalties. So it’s a good sign that we’re moving in the right direction.” 

For the entire explanation of what Eth 2.0 validators can expect to change about the network after the Altair upgrade, listen to the full podcast episode with Edgington and Kim. 

Links mentioned in this podcast: 

• What’s New In Eth2 (www.eth2.news)   
• Valid Points (https://www.coindesk.com/newsletter/valid-points)   

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In this week’s episode, CoinDesk’s Christine Kim and Consensys’ Ben Edgington discuss the future of validator rewards post-merge to proof-of-stake (PoS) and the significance of the Steklo test network launch. 

This episode is sponsored by hellointerpop.io and The Sun Exchange.

Currently, if you’re staking on Ethereum 2.0, Ethereum’s parallel PoS network, your operations are earning you a roughly 8% annual percentage return (APR). 

But once Ethereum and Ethereum 2.0 merge, validators stand to earn more than triple this amount. 

“It looks like around 25% per annum is the expected initial total annual return for [validators]. So on your 32 ether, you’ll be earning about eight ether per year, on average,” said Edgington. 

The reason why is because a merge to Eth 2.0 will mean all transactions and smart-contract operations on Ethereum are processed by validators instead of Ethereum miners. This means validators will begin earning extra rewards from users and decentralized applications (dapps) in the form of transaction fees. 

Prominent Ethereum community members such as Ethereum Foundation’s Tim Beiko and Trenton Van Epps have cautioned miners about planning operations beyond the end of 2021. 

“To all Ethereum miners: Plan conservatively for an end to mining EOY 2021,” said Van Epps in a tweet. 

Testing is ongoing for Ethereum’s merge to PoS. Last Friday, April 30, developers launched the first multi-client test network for this upgrade, dubbed “Steklo.” 

Steklo “was only up for a day. That was pre-planned. It wasn’t supposed to be a test network that would be up and running for weeks a time,” said Kim. 

For the few hours it was functional, Steklo faced a number of issues and errors. 

For the complete commentary on the troubles the network faced and what developers learned from their first major attempt at modelling the merge of Ethereum and Eth 2.0, listen to the full podcast episode with Edgington and Kim. 

Links mentioned in this podcast: 

• What’s New In Eth2 (www.eth2.news)   
• Valid Points (https://www.coindesk.com/newsletter/valid-points)   

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In this week’s episode, CoinDesk’s Christine Kim and Consensys’ Ben Edgington talk about what caused 70% of validators on Ethereum 2.0 to stop producing blocks on the network and the important takeaways for protocol developers in light of this event. They also discuss the updated roadmap for the Eth 2.0 upgrade as outlined by Vitalik Buterin in a recent presentation. 

This episode is sponsored by hellointerpop.io and The Sun Exchange.

Last Friday, April 23, founder of Ethereum, Vitalik Buterin, gave a presentation at the Scaling Ethereum Summit on the upgrades he expects to come after the network’s transition to a new, environmentally friendly proof-of-stake (PoS) protocol. 

“The first set of things here is a lot of security improvements, some economic sustainability improvements and some features,” said Buterin at the event. “The far future is just about really nailing down and improving and having extremely strong guarantees about the security of the system.”

Buterin detailed a number of different upgrades after PoS including sharding, rollups, verifiable delay functions, Ethereum Virtual Machine improvements and more. To Kim, the main takeaway from the presentation was not the individual upgrades and their technicalities, but the sheer breadth of work still to be done on the protocol even after its long-awaited merge with the Eth 2.0 network. 

“When are we going to get to the end here? ... There seems to be a lot more that we’re going to have to continue to talk about when it comes to Ethereum finally reaching its production ready, world computer phase,” said Kim. 

To this, Edgington noted the vision outlined by Buterin was indeed ambitious and big but that he was in full support of such a roadmap. 

“I love this idea that we just keep on growing and evolving. It keeps me engaged. There are lots of very interesting problems to solve,” said Edgington. 

Speaking of a problem, the Ethereum 2.0 network had its first major incident on April 24 after 70% of validators on the network were suddenly unable to produce blocks. Developers quickly identified the root cause of the issue was from a bug in the Eth 2.0 software client, Prym. 

A patch was rolled out to affected validators the same day. The issue still persisted through till Sunday, however, for certain validators who hadn’t upgraded to the latest version of Prysm. 

The important lesson, according to Edgington, is for validators, staking pools and developers to be more proactive about client diversity on Ethereum 2.0. 

“Here’s an example where the network would have been much more robust if each of the four clients had 25% of validators each. In that case, you’d only be missing a quarter of the blocks if this had happened and the network would have been more or less fine,” said Edgington. “But when one client dominates and that client has a problem, it’s really serious for the whole network.”

Catch the full breakdown of how developers are responding to Saturday’s incident by listening to the entire podcast episode of Mapping Out Ethereum 2.0 hosted by Edgington and Kim. 

Links mentioned in this podcast: 

• What’s New In Eth2 (www.eth2.news)   
• Valid Points (https://www.coindesk.com/newsletter/valid-points)   
• ‘What Happens After the Merge’ Presentation by Vitalik Buterin (https://www.youtube.com/watch?v=7ggwLccuN5s) 

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In this week’s episode, CoinDesk’s Christine Kim and Consensys’ Ben Edgington discuss the significance of three events: an Ethereum 2.0 milestone, an Ethereum hard fork upgrade and the public listing of a major cryptocurrency exchange. 

This episode is sponsored by hellointerpop.io, The Sun Exchange.

Beginning with Coinbase’s direct listing on Nasdaq, Kim and Edgington consider whether this watershed moment in the cryptocurrency industry is really something to get excited about. 

“Bitcoin was created to be this peer-to-peer payments network, where you don’t need any financial middlemen; but here’s Coinbase. Everyone is getting so excited and happy [about] Coinbase even though it’s doing the very thing that Bitcoin was created to deal with and get rid of,” Kim said. 

Concerns over centralized actors overshadowing the decentralized purpose of blockchains is also relevant to Ethereum. Ethereum infrastructure provider Infura is an example of a company who has faced criticism in the past for their expanding role as the “gatekeeper” to Ethereum. 

“It’s an interesting spectrum and we’ve only just begun on this journey,” said Edgington. “Only a few million people have interacted with the blockchain, any blockchain, so far, and there are a few billion yet to reach. I think we need to make it as easy as possible from them to do so.” 

Kim and Edgington also discussed the milestone of the Ethereum proof-of-stake network, also called Ethereum 2.0, reaching its one millionth slot. A slot on Eth 2.0 is space for a block containing transactions and user data to be processed and finalized. Every 12 seconds validators, which are the equivalent of miners, can propose a block into a slot and earn rewards. 

“It’s just a number, but it’s a good point to take stock of where we are. [Eth 2.0] has been running for four and a half months now and it’s been totally trouble free. It’s just been incredible,” said Edgington. 

Finally, the two dissect the post mortem of Ethereum’s latest backwards-incompatible system-wide upgrade known as the Berlin hard fork. Everything didn’t go as planned and, as Kim notes, it’ll become increasingly important that things do work as Ethereum releases more ambitious upgrades in future. 

Check out the full podcast episode hosted by Edington and Kim to get all the latest commentary around Ethereum and Ethereum 2.0. 

Links mentioned in this podcast: 

• What’s New In Eth2 (www.eth2.news)   
• Valid Points (https://www.coindesk.com/newsletter/valid-points)   

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In this week’s episode, CoinDesk’s Christine Kim and Consensys’ Ben Edgington discuss the future of cryptocurrency mining and staking with former CoinDesk Market Reporter Will Foxley. 

“I’m pro both proof-of-stake and proof-of-work. I don’t know which one wins out over the years [but] to me it comes down to capital costs,” said Foxley. “Both have capital costs no matter what and both use energy just in different ways.”

To Foxley, the new Editorial Director at Compass Mining, these two seemingly opposing blockchain systems are really two sides of the same coins. Both rely on computers to devote a certain amount of energy towards securing and maintaining a decentralized digital ledger. 

While mining does require comparatively more computing power than staking, validators in proof-of-stake networks do still rely on energy expenditure in some form, according to Foxley. 

The key question is how we define where energy comes from.

From Edgington’s viewpoint, the matter isn’t quite so ill-defined. 

“Proof-of-stake for me wins heavily here,” says Edgington, “because the amount of energy needed to secure the network is something like one ten thousandth of what Ethereum is currently using for proof-of-work mining and that’s not a small difference. That’s a material difference to the heat emissions and CO2 emissions on the planet.”. 

The long-run sustainability of either system depends on the types of users that will be most incentivized to participate either as a miner or staker. While miners are becoming increasingly professionalized and centralized, the more lucrative a cryptocurrency becomes, the more people will be incentivized to become validators in a proof-of-stake network and  greater numbers of users will engage in staking. 

For the full commentary on this topic of mining versus staking, check out this week’s episode of Mapping Out Eth 2.0: Ethereum as it was meant to be. Starting next week, Edgington and Kim will take over as show co-hosts. 

To follow Foxley on his new voyage into the industry of cryptocurrency mining, subscribe to his new newsletter, Compass Mining Memo.  

Links mentioned in this podcast: 

• Justin Drake Bankless Podcast Episode (https://www.youtube.com/watch?v=bWqhn1hXvVc) 
• Rayonism Hackathon (https://rayonism.io/) 
• What’s New In Eth2 (www.eth2.news)   
• Valid Points (https://www.coindesk.com/newsletter/valid-points)   

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