Ethereum Delays Difficulty Bomb As Beacon Chain Deposits Cross 13 Million ETH

On June 30, the Ethereum developers further delayed the network difficulty bomb through the Gray Glacier update, meaning The Merge won’t happen at least until September 2022. Meanwhile, there is now over 13 million ETH locked into the Beacon Chain, which is worth $15.8 billion at current prices.

This week, the ETH 2.0 contract received a total of over 13 million ETH and currently has 406,640 validators. At some point, the Ethereum blockchain is expected to move to PoS consensus. Currently, the network works with a system that combines both PoW for the main chain and PoS for the Beacon Chain. At the time of writing, 13,012,469 ETH locked in an ETH 2.0 contract is worth over $15.8 billion at current prices.

According to Dune Analytics statistics, 13 million ETH came from 76,506 sender addresses and this total represents 10.88% of the entire ETH supply today. Of which, 31.73% are staked through the Lido liquidity staking app.

In addition to Lido, there are other major staking services including the likes of Kraken, Staked.us, Stakefish, Bitcoin Suisse, and Figment. While many thought the PoS transition, also known as The Merge, could happen in August, the difficulty bomb update pushed The Merge later.

On June 30, the Ethereum network updated to Gray Glacier at a block height of 15,050,000, pushing the difficulty bomb back 100 days.

Ethereum developer Tim Beiko revealed this on June 16, 2022:

“The Gray Glacier network upgrade changes the parameters of the Ice Age/Difficulty Bomb, pushing it back by 700,000 blocks, or roughly 100 days. This has also been done in the Byzantium, Constantinople, Muir Glacier, London and Arrow Glacier network upgrades. No other changes are introduced as part of Gray Glacier.”

Aside from the delay, Ethereum network fees remain low, and at the time of writing the average network fee is 0.0018 ETH or $2.16 per transaction. Today, the Ethereum network fee averages 0.00078 ETH or $0.955 per data transfer. Furthermore, since August 5, 2021 or since the implementation of EIP 1559, approximately 2,523,831 ETH worth $8.4 billion has been destroyed.

Essentially, the difficulty bomb is “an exponential increase in a planned PoW difficulty setting designed to accelerate the transition to PoS, reducing the risk of the fork.” The EIP 5133 notes explain the delay motive is to “avoid loss of network value due to premature activation of the difficulty bomb”.

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

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