Coinbase adds ‘ETH2’ even though tomorrow’s Ethereum upgrade will postpone the difficulty bomb
But ETH2 is not a new cryptocurrency and the exchange appears to be preparing for the transition from Ethereum to Evidence-of-Stake.
Cryptocurrency exchange Coinbase added a cloned version of the Ethereum blockchain’s native token Ether (ETH) to its crypto price index, shortly before a major network upgrade in December.
The symbol labeled “ETH2” appears to have tracked the original Ether market data in sync. For example, the cost of buying ETH2 is the same as the cost of ETH. Meanwhile, their market capitalization, volume, circulating supply and price change are also identical.
Has Coinbase advertised eth2 as a new coin? pic.twitter.com/C67UxooLU0
– Nuno (@nvcoelho) December 6, 2021
However, unlike the original, the ETH2 token has no trading activity, popularity or typical holding period, which emphasizes that its role – for now – is only to monitor market data. ETH until at least mid-2022.
That’s likely because ETH2 has apparently been set as the native token for Ethereum’s ongoing upgrade called Ethereum 2, which is expected to be fully operational by June 2022, giving developers more time to prepare for Ethereum 2.
Before Ethereum 2.
The Arrow Glacier Update aims to delay what is known as the “difficulty bomb,” a hard-coded engine within the Ethereum blockchain since its inception in 2015 that will make it difficult for anyone to mine ether. If activated, BOMB will slow down the Ethereum network as long as it remains a proof of work.
Tim Beiko, one of the core developers working on the Ethereum upgrade, noted that Arrow Glacier could be the final upgrade before Ethereum 2 launches next year. Meanwhile, Coinbase seems to be looking at the Arrow Glacier Fork as confirmation that they will be living a new token called ETH2 after the Ethereum 2 upgrade.
In particular, Ethereum 2., also known as “Serenity”, will allow significant changes to its design, including a full transition from Proof-of-Work (PoW). ) – for evidence-of-stake (PoS).
In the current version, nodes have to validate every transaction in order to manage Ethereum’s public ledger. But the Ethereum 2nd upgrade will start “sharding”, which divides the network into different shards (so-called shards) and randomly assigns nodes to each shard.
This eliminates the need for each node to scan the entire chain, which in theory would improve the speed and cost required to maintain the network. In the meantime, individual shards share transaction details with the so-called beacon chain, which serves as the backbone of Ethereum 2.
ETH2 is not a new cryptocurrency
Beacon Chain, which goes live in December 2020, validates transactions on every shard, thus supporting the entire Ethereum 2 network. It also recognizes dishonest validators and initiates a penalty by withdrawing some of the Validator shares from circulation.
Related: Vitalik Buterin outlines an ‘endgame’ roadmap for ETH 2.
The core of Ethereum 2’s PoS design will be ETH (or ETH2), which will primarily act as a staking token for validators who participate in the network’s consensus and receive a block reward for doing so.
Beacon Chain’s deposit agreement has received over 8.42 million ETH tokens from 55,300 unique depositors (validators) since its launch in December 2020.
That being said, ETH2 isn’t a new coin and it won’t change the amount of ETH you hold. Instead, as Coinbase’s index list shows, ETH2 could become a renamed version of the original Ethers without the need for holders to swap one version for another.