The Ethereum anniversary is coming as the network plans for the London upgrade scheduled for early August, also gearing up for ETH 2.0.
The Ethereum blockchain is celebrating its sixth anniversary since its inception on July 30, 2015. Starting with the ‘Frontier’ version at the time, the network now has a market capitalization of $278, only second to Bitcoin. It has also been utilized by many other protocols, including Decentralized Finance (DeFi), Non-Fungible Tokens (NFTs), and Decentralized Autonomous Organizations (DAOs).
In early 2022, the blockchain will upgrade to Ethereum 2.0, a faster and more efficient model. These upgrades are required to keep up with the rising demands and expectations of the network’s success. The proof-of-stake Ethereum 2.0 network promises to be a simple evolution of the blockchain and will consolidate Ethereum’s history without erasing it.
The Ethereum Blockchain as a Veritable Hub for DeFi, NFTs and DAOs
DeFi usage has skyrocketed since last year by about 1500%, after a relatively slow start and lengthy period to gain mainstream acceptance. An increasing number of people now turn to the application to lend, borrow and trade crypto without ever needing the services of a third party. To put into perspective how much DeFi has grown, the Ethereum-based DeFi protocols now have over $60 billion in assets. Exactly a year ago, that number was at about $4 billion. The increased DeFi usage severely slowed down the Ethereum network, which could only manage about 15 transactions per second. Furthermore, constant use of smart contracts also added to the workload of the network and drove up the prices of transaction fees.
NFTs, which are blockchain-based ownership deeds to digital and physical assets, were created on Ethereum. This is the primary reason why the application works well on the network. This relationship goes back to 2017, when CryptoKitties, an early form of NFT, crashed the Ethereum network. Since then, the NFT space has experienced substantial growth, especially since the turn of 2021. In the first half of this year, NFT sales volume hit $2.5 billion, with most of that coming through Ethereum, according to DappRadar.
DAOs are also on a steady rise as more people adopt them for network participation. They are used to make decisions for business and protocol actions, through tokens.
Notable Challenges Ethereum Weathered as It Celebrates Anniversary
Despite progress made by the popular blockchain in the last six years, it hasn’t been an entirely easy ride. Ethereum cannot celebrate its anniversary without noting the hurdles it overcame. For instance, there was the infamous $55 million DAO hack in June 2016. This was a challenging period that saw unknown attackers hack into a $150 million crowd sale of a DAO and pillage over $50 million worth of ETH. The fallout from this hack subsequently led to the split between the Ethereum Classic smart contract and the newer Ethereum blockchain.
Ethereum retained the lion’s share of its users and kept its prices high in the wake of that split. It currently has a value of $2,400, which is a sixfold increase from this point last year.
The Ethereum London Upgrade
Ethereum is scheduled to undergo a software upgrade called London. The new upgrade will bring a few changes, including reducing the rate of Ether’s supply. One of the Ethereum Improvement Proposals, EIP-1559, seeks to divide the gas fees issued daily into three parts. Of the approximately 13,000 daily issues, the minimal fee users pay for transaction processing will now be burnt. According to Ethereum developers coordinator, Tim Beiko, the burn will reduce Ether’s supply increase.
Another benefit is that the upgrade would reduce transaction delays in most cases, and make fees more predictable. The public also expects that fewer transactions would fail.
Furthermore, miners believe that the London upgrade is better for the network even though their revenue will initially reduce. The Ethereum community expects the London upgrade on the 4th or 5th of August.
Tolu is a cryptocurrency and blockchain enthusiast based in Lagos. He likes to demystify crypto stories to the bare basics so that anyone anywhere can understand without too much background knowledge.
When he’s not neck-deep in crypto stories, Tolu enjoys music, loves to sing and is an avid movie lover.