The most heatedly discussed topic among major communities today is whether the Ethereum ETF will be passed.
Judging from the increase in Ethereum in the past two days, the performance is optimistic, with a 30% increase in a few days.
It can be said that the short-term increase has basically overdrawn the expectations of passing.
The first scenario: We assume that it really passes, it may be a short-term scenario of pushing up the price and selling.
Everyone must grasp this rhythm accurately, especially those who bet on contracts. Since they have added leverage, they need to understand the news more accurately.
What if it doesn’t pass?
The second type of script is that the script kills!
Funds will definitely take this opportunity to clean up contracts, wash the market, and then pull it up again.
In terms of the cost-effectiveness of various market sectors, the Ethereum ecosystem currently has cost-effectiveness, and even if it does not pass this sector, it is necessary to configure it.
So for us, whether it is configured through our community or not.
It’s just that with the positive news of the Ethereum ETF’s approval, everyone is more confident and consensus is reached faster.
We can say that we have been asking everyone to configure it half a month ago!
Therefore, whether it passes or not has little impact on us. Passing is just the icing on the cake.
Let nature take its course and everything will fall into place.
That’s all I have to share about Ethereum ETF!
Another thing that many friends ask about is the plan to remove the pledge in the Ethereum ETF applied for by major institutions.
Ask me what I think?
This goes back to the original intention of why Ethereum changed from the POW proof-of-work mechanism to the current proof-of-stake POS mechanism!
First of all, we must first understand what the POW proof-of-work mechanism is and what are the advantages and disadvantages of this mechanism?
Advantage:
1. High security The PoW algorithm is based on proof of work. To tamper with the data on the blockchain, it is necessary to control the majority of the computing power in the network, which is very difficult, thus providing a high degree of security.
2. Decentralized PoW allows anyone to participate in mining without the need for a centralized control body, thus ensuring the decentralized nature of the network.
3. Widely used PoW is widely used in mainstream blockchains such as Bitcoin, with mature technology and broad community support.
4. Strong resistance to attacks The PoW mechanism makes the network highly resistant to various attacks, such as 51% attacks and denial of service attacks.
5. Fully decentralized nodes can enter and exit the network freely, avoiding excessive concentration of power.
6. The free entry and exit of nodes provides the openness and freedom of the network.
7. Avoiding the situation where one party has the most power. Proof of work can prevent the problem of excessive concentration of power in the network.
Disadvantages:
1. High energy consumption PoW requires a lot of computing power to solve mathematical problems, which leads to extremely high energy consumption and puts a certain amount of pressure on the environment.
2. Centralization Tendency With the specialization of Bitcoin mining and the rise of large-scale farms, computing power has gradually concentrated in a few large mining pools, leading to a certain centralization trend.
3. Low efficiency The PoW mechanism requires a lot of computing time and resources, which makes transaction confirmation relatively slow, especially under high load.
4. Not suitable for lightweight devices PoW requires high computing power, which makes some lightweight or mobile devices unsuitable for mining operations.
5. Long-term potential threats The development of emerging technologies such as quantum computers may pose a threat to the security of PoW because they may crack current encryption algorithms in a short period of time.
6. High resource consumption, low performance efficiency, and poor fault tolerance.
7. It wastes computing power and may be subject to malicious attacks by nodes with more than 50% of the computing power of the entire network to rewrite blocks (the so-called 51% attack).
8. The transaction frequency is low, with a maximum of seven transactions per second, which is inefficient.
Summary: The proof-of-work mechanism is secure and decentralized, but its disadvantages are slow, energy-consuming, and poor plasticity. Using first principles to understand Ethereum, it is a public chain used to develop applications, which requires high scalability and sufficient security.
It is impossible to achieve both speed and stability by relying on the POW mechanism.
So the original POW mechanism was abandoned and replaced with the current POS proof-of-stake mechanism.
Characteristics of Proof of Stake
The characteristics of the POS (Proof of Stake) mechanism can be summarized as follows:
1. Low resource consumption Compared with PoW, PoS does not rely on a large amount of computing power to maintain network security, so the energy consumption is relatively low and the impact on the environment is small.
2. Staking participation In the PoS mechanism, participants need to hold a certain number of tokens and stake them to obtain the right to create new blocks and verify transactions, which reduces dependence on professional mining hardware.
3. Anti-centralization PoS makes the control of the network more decentralized through the staking mechanism, because attackers need to hold a large number of tokens to pose a threat to the network, which increases the cost and difficulty of the attack.
4. Reward Mechanism In the PoS system, holders are rewarded based on the number and time of tokens they hold ("coin age"), which encourages long-term holding and participation in network maintenance.
5. Transaction speed and efficiency PoS is generally able to provide faster transaction confirmation speeds and higher network throughput than PoW because there is no need to solve complex mathematical puzzles to create new blocks.
After Ethereum changed to the POS proof-of-stake mechanism, it became more flexible, TPS could be faster, and real developers could also develop DAPPs that users needed in the ecosystem.
So having said so much, let’s get back to the topic above.
The POS mechanism cannot avoid pledge, so deleting pledge in the Ethereum ETF application form should be a consideration in terms of expression.
The impact on the Ethereum staking sector is minimal
My view is that as long as the market crashes due to this kind of news, I will dare to buy it.
Okay, that’s all I’m sharing today!