The Bulls Are Still Betting On Ethereum 2.0

Delayed, Again, When Will It Ever Come

Despite being delayed again Vitalik Buterin says ETH 2.0 is still on track to begin launching in 2020. I say begin launching because even the upgrade, more than three years in coming, will take at least three phases. The first phase, slated for later this year, is called Phase 0 and involves the switch to POS. POS or proof of stake is a different kind of mining in which miners have to put up stakes to fund a transaction node, the mining rig. Miners make a fee for handling transactions which is good for them and the network as fees will be much lower than today. What POS means for traders is that folks who want to run Ethereum mines and make money the easy way will have to own and hold ETH to stake a mine.

The third phase, called Phase Two, is a loosely defined stage that will finalize the process. In between, Phase One is when the really exciting work will be done, the Sharding. By breaking Ethereum into 64 sister-chains with inter-operability the network will be able to handle upwards of 100,000 transactions per second, many orders of magnitude greater than the 15 or 20 per second it can handle now. Until then, Buterin says ZK-rollups are the answer to scalability and will likely become standard upon completion of Phase 0.

ZK-rollups are part of the ZCash/ZK-snarks technology. They allow users, in this case Ethereum, to use the ZK chain to mimic transactions on the main chain. What this means is that developers will be able to use ZK-snarks to handle transactions and then periodically upload the data to the main Ethereum chain. While a boon to the network it also poses risks including corruption of the ZK-node.

Regardless, Ethereum appears to be on track to produce an upgrade the only questions are when it will actually start and when it will be finished. Oh, and one more, if they will totally destroy the network by accident or worse, unleash some kind of uncontrollable AI that lives within the ether. What this means for traders is that ETH/USD still looks like it is well-supported and ready to move up. The most recent action has reconfirmed support at the $225 level and produced a solid buy-signal in the indicators so I am optimistic. A move higher is expected but it will take a move above $250 to get me moving on a big trade. When that happens a move up to $310 is likely.