Steklo test moves ETH closer to proof-of-stake
Ethereum teased the potential of 2.0 this weekend with a test net release of an update called ‘Steklo’ intended to test ideas around executing and finalizing transactions. Additionally, the token price of ETH hit an all-time high as the total value locked (TVL) in Ethereum DeFi increased 3037% year on year to over $70 billion.
Ethereums relevance as the most important blockchain has been put to the test recently. A slew of competitors are eating its DeFi market share whilst numerous dapps are transitioning over to layer-2 and alternative blockchains to avoid gas fees. In an even more monumental moment, Binance Smart Chain overtook Ethereum in Q1 in regards to transactions and users. Not only does this show that customers are ready to embrace alternatives but also that a new thirst for the services provided by dapps is here to stay.
At the time of writing the total value locked (TVL) in the Ethereum DeFi ecosystem is over $77 billion dollars. Considering that one year ago that figure was just over $2 billion shows how far DeFi has come in just 12 months. That’s an increase of 3037%.
The increasing price of ETH also plays its part here and in many instances, people will not be aware that a rising token price will increase the total value locked. For that reason, DappRadar developed a metric called Adjusted TVL or aTVL. This metric locks token prices 30 days prior and can be used alongside TVL to paint a more realistic picture. The reason for this is that funds are ‘locked’ into DeFi protocols in tokens. Therefore when the price of the token increases, so does the total value locked. Discounting the increasing token value shows us that the TVL currently locked in Ethereum DeFi dapps is around $42 billion, considerably less.
Ethereum is under attack right now from rival chains like Binance Smart Chain, but it appears it’s not even breaking a sweat. Established finance dapps such as Uniswap and SushiSwap are retaining users interested in higher-value transactions. While other solutions are attracting users looking at smaller amounts and don’t want to pay gas fees.
2.0 getting closer
Since its inception, the way in which Ethereum validates transactions and adds new blocks to the blockchain—has impersonated Bitcoins. Ethereum 2.0 is the forthcoming proof-of-stake blockchain that promises to be faster and cheaper than the current network. A testnet known as Steklo aimed at exploring a new way of executing and finalizing transactions was launched on the 1st May 2021. The new proof-of-stake blockchain will rely on users locking up their Ethereum as a way of verifying the legitimacy of transactions.
Initially, Ethereum developers had been planning on adding upgrades to Ethereum 2.0 until it supersedes the current Ethereum network. A new “Rayonism” approach—if adopted—would maintain and merge two different systems: transactions would occur on the current network while the consensus of transactions would happen on Ethereum 2.0. To test out the concept, developers first need a test net. Which is where Steklo comes in.
Amidst talk of Ethereum fading to insignificance, it’s vital to remember that most of the so-called ‘Ethereum Killers’ are simply sidechains of Ethereum and therefore contributing massively to its overall success. As time moves forward Ethereum may become just another option for developers as delays thus far in delivering 2.0 have allowed competitors to get a proper foothold in the market.
At the time of writing the price of ETH has increased almost 9% in 24 hours taking it to a new all-time high of $3,190. Judging by the excitement and associated token price increase that came along with this relatively minor announcement it’s clear the community is ready for Ethereum 2.0.