Coinbase, a cryptocurrency exchange, has added a mirror version of Ether (ETH), the Ethereum blockchain’s native token (ETH), to its crypto price index just before a key network upgrade Dec. 10.
The symbol was called “ETH2” and appeared to be tracking the Ether market data synchronously. The cost of purchasing ETH2 was the same as ETH. Their market capitalizations, volumes, circulating supplies, and price changes were all identical.
Coinbase has already promoted eth2 to be a new coin. pic.twitter.com/C67UxooLU0
— Nuno (@nvcoelho) December 6, 2021
Nevertheless, unlike the original token, the ETH2 token did not have any Trading Activity, Popularity Score or Typical Hold Times. This underlines that its current role is to monitor the ETH market data until at least mid-2022.
ETH vs ETH2.0 market data. Source: Coinbase
This is likely because ETH2 appears to have been posing for Ethereum 2.0’s native token, which will go live in full by June 2022. The Coinbase index listing is closer to “Arrow Glacier”, a fork that would allow developers to prepare for Ethereum 2.0.
Before Ethereum 2.0
Arrow Glacier’s update seeks to delay the so-called “difficulty Bomb”, an incentive embedded in the Ethereum blockchain since 2015. This incentive would make it difficult to mine Ether. The BOMB would, if it were to be activated, slow down Ethereum’s network for as long as proof-of-work remains.
Tim Beiko, one the core developers involved in the Ethereum upgrade, suggested that Arrow Glacier could be the last upgrade before Ethereum 2.x goes live next year. Coinbase seems to have taken the Arrow Glacier Fork as a confirmation they would be able to create a new token, ETH2, after the Ethereum 2.0 upgrade.
Detail: Ethereum 2.0, also known by “Serenity”, would allow significant changes in its design, including a complete transition from the energy-intensive Proof-of-Work, (also used by Bitcoin [BTC]), to Proof-of-Stake, (PoS).
To maintain Ethereum’s public blockchain, all transactions must be validated by nodes in the current version. The Ethereum 2.0 upgrade would allow for “sharding”, which would split the network into different segments (called shards), and randomly assign nodes to each shard.
Beacon Chain and Sharding Source: Vitalik.ca
This would eliminate the need for every node to scan all of the chain, theoretically increasing the speed and cost required to maintain the network. Individual shards could share transaction details with the Beacon Chain, which is the backbone of Ethereum 2.0.
ETH2 isn’t a new cryptocurrency
The Beacon Chain, which was launched in December 2020, would validate transactions on each shard and help the entire Ethereum 2.0 network achieve consensus. It could also be used to detect dishonest validators, and remove a portion from the stake of validators.
Related: Vitalik Buterin outlines ETH 2.0’s ‘endgame” roadmap
ETH (or ETH2) is the heart of Ethereum 2.0’s PoS design. It serves as a staking token that allows validators to take part in the network consensus and receive block rewards.
Since its December 2020 launch, Beacon Chain’s deposit agreement has received more than 8.42 million ETH tokens and validations from 55.300 unique depositors (validators).
Divided by the total ETH supply, the balance of the Ethereum 2.0 deposit agreement is. Source: CryptoQuant
ETH2 does not represent a new currency and will not alter the ETH amount that one has. Coinbase’s index listing suggests that ETH2 could end up being a rebranded version the original Ether. Holders would not need to swap between versions.
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