In 2021, new Ethereum 2.0 rules will be introduced to process more transactions per second. It is worth pointing out that the Ethereum update was already planned before, but the recent growing popularity in the network, led to the need to accelerate the work. It is known that the changes will take place in stages and their total change is expected to take up to two years.
Dangers of transition
There are risks in Ether's supply as a result of the changes. Consider that with such a transition, some of Ether's supply will shut down, which could contribute to a smaller market supply, and kickback fees will contribute to larger investors investing in the market. All of this could change Ether's value early in its transition. So the danger that Ethereum 2.0 faces is touched by an excessive desire to buy what is referred to as fear of missing out - FOMO for short. Explaining this phenomenon briefly, it is the fear of missing out, and in practice this means that the person investing, before the fear of missing out on a favorable price, the subject decides to quickly buy the cryptocurrency for fear that he might miss out on a favorable price. This leads to a psychological situation - instead of rationally waiting for the price to go lower, he invests when the price peaks.
Changes
In the changes introduced, the main element is the shift from the Proof-of-Work (PoW) consensus to the Proof-of-Stake (PoS) consensus. Compared to the previous consensus, now, validators will be required to bet no less than 32 ETH. Then, the validators will collect the amount and then activate Ehtereum 2.0, where random selection and confirmation of the next blocks in the blockchain will take place. The verifier who confirms the transaction will receive a certain reward in ETH. However, in this case, the main danger is that this remuneration can be reduced for the verifier (for example, if the verifier does not fulfill its obligations and is not online). If the working time is interrupted, the validator may be penalized and may be deprived of any future reward. financial. Thus, the fact of a bad internet connection or the independence of an interruption without our control is not relevant here.
Handling
The handling of Ethereum 2.0 itself may prove problematic, as it can be expected to be more complicated than before. There is also a risk that without knowledge, the validator, which will be required to put up 32 ETH, may accidentally lose part of the amount due to the possibility of even the smallest errors, and when some of them are received, the node will be removed and the validator will not be allowed to continue participating. It is worth noting that understanding the specifics of Ethereum 2.0 as well, can be quite a challenge due to the time required to familiarize yourself with the changes, which in this case can be problematic due to the speed at which Ethereum 2.0 is implemented.
In addition, the new changes require keys to be secured, due to the possibility of them being lost or damaged. By running their own node, Ethereum 2.0 validators carry the risk of the possibility of a lost or broken tool where keys are stored. As a result, such circumstances will result for them not only in a reduction of the rate of remuneration, but the entirety of the factors, may contribute to lowering the price of ETH.