The past 24 hours have been tough for Ethereum, with the price of ETH plunging 11% to $1.760 per coin- its lowest level in more than a year. The sell-off comes as a result of a 7-block deep reorganization on the Ethereum Beacon chain, which is set to introduce Proof-of-Stake (PoS) into the Ethereum network.
A block reorganization is when a chain of blocks in a blockchain is rearranged so that two or more different versions of the blockchain exist. This can happen if two miners solve a block at the same time and then both try to add their blocks to the blockchain. This results in each miner having a different version of the blockchain.
When this happens, the blockchain undergoes a “reorganization” to fix the issue.
While the reorg was due to a bug and not malicious activity, it highlights the potential risks associated with ETH’s upcoming shift to PoS.
Founder Vitalik Buterin has downplayed these risks, but the recent sell-off suggests that investors are still concerned about the stability of the PoS consensus mechanism. As a result, Ethereum may need to take some steps to reassure investors before it can realize its full potential.
While the recent 7-block reorganization was ultimately limited in scope, it has still caused a major stir among the Ethereum community. The network’s lead developers have been rushing to confirm what caused the reorg, and so far it appears that it was not an attack on the blockchain.
However, some members of the community are still skeptical about the stability of Ethereum’s blockchain, especially in light of the upcoming switch to proof-of-stake which will mark the end of Ether crypto mining.
Gnosis founder Martin Koppelmann took to Twitter to state that Buterin may have been too optimistic when he claimed the shift to PoS will improve the stability of the network and prevent chain reorganizations.
The Ethereum beacon chain experienced a 7-block deep reorg ~2.5h ago. This shows that the current attestation strategy of nodes should be reconsidered to hopefully result in a more stable chain! (proposals already exist) pic.twitter.com/BkQrKuUlw1
— Martin Köppelmann 🇺🇦 (@koeppelmann) May 25, 2022
It should be noted that Koppelmann was also quick to praise the Ethereum community for openly discussing the issue and quickly mobilizing to find ‘a better solution, instead of spending time defending an issue.’
Only time will tell if Ethereum’s blockchain can weather the storm of transition to PoS. For now, the community is on high alert and eagerly awaiting any news from Buterin and his team.
Ethereum’s move to a proof-of-stake consensus algorithm is widely anticipated to occur this year. This shift would be a major change for the Ethereum network, and could have wide-ranging implications for the cryptocurrency space more broadly.
There are a number of reasons why this move is anticipated.
First, Buterin has been a strong advocate for moving to proof-of-stake.
Second, Ethereum’s current proof-of-work algorithm is becoming increasingly centralized and difficult to scale. Finally, a number of other major cryptocurrencies have already made the shift to proof-of-stake, and Ethereum is under pressure to keep up.
If and when Ethereum does move to PoS, it is likely to have a major impact on the cryptocurrency landscape. Proof-of-stake is a more energy-efficient way of reaching consensus, and this could set a precedent for other cryptocurrencies to follow suit.
Additionally, Ethereum’s move to PoS could increase mainstream adoption of the technology, as it would make it more accessible to ordinary users.
Ethereum’s shift to PoS is therefore a highly anticipated event that could have major implications for the cryptocurrency world. It remains to be seen exactly how things will play out, but it is sure to be a major turning point for Ethereum and the wider space.
ETH was last changing hands at $1,866.61, down 5.15%. The native token of the Ethereum blockchain has a total market capitalization of $225 billion.
As per CMC, Ether’s 24-hour range: $1,759.20 – $1,976.57
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