ETH 2.0 Won’t Fix Ethereum’s Scalability Problems, Analyst Argues

Moreover, during the 2017 bubble, non-value based transactions like smart contract execution on Ethereum was less than 2% of the network’s total …

Key Takeaways

  • Unique addresses for DeFi are growing exponentially, crossing the 450,000 mark since the beginning of this year.
  • Ethereum needs to scale considerably to on-board the existing crypto user base of 50 million to DeFi platforms.
  • ETH 2.0 along with the layer-2 implementations might not be able to keep up with the growth in network usage from DeFi.

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The average transaction fee on Ethereum costs $7.5, three times that of Bitcoin. Setting up a wallet on MakerDAO costs over $40, while the fees to lend on Compound amount to $10. These ludicrous fees are not sustainable.

With new yield farming incentives on DeFi platforms being launched every other day, the space continues to expand despite alarming signals around network congestion and high fees.

DeFi users are eagerly awaiting the eventual launch of ETH 2.0, which promises to scale the blockchain, but that too might not be enough to support the existing number of crypto users.

The Realistic Take on ETH 2.0

The number of unique DeFi addresses is rising quickly with the addition of 350,000 addresses since the beginning of the year . While DeFi platforms like Uniswap surpassed Coinbase in terms of trading volume, its user base is still tiny compared to Coinbase’s 32 million customers.

Assuming network gas fees have peaked, it is a good time to realistically assess how much of a difference Ethereum 2.0 will make on fees.

SIMETRI gains of 1031%SIMETRI gains of 1031%

It starts with 64 shards at first so it should be able to handle at least 64x more usage (potentially even more if we get some L2 adoption as well).

— David Iach | davidiach.eth 👨‍🌾 (@davidiach) September 18, 2020

Ethereum 2.0 is initially set to begin with 64 shards, each shard could potentially operate as a separate chain with its own transaction history. Under such a scenario, the network would increase its transaction capacity by 64-fold.

Kruger’s estimate is based on the assumption that each DeFi user has four addresses. Following that logic, that equates to about 114,000 unique users. Under the optimistic assumption that each DeFi user only uses two addresses, that’s closer to 220,000 users. With 64 shards this equates to about 14 million users⁠—still short of what Coinbase can handle. To make matters worse, Coinbase is just one of several large exchanges.

Following this analyst’s logic, sharding on Ethereum 2.0 won’t fully solve its congestion problems alone.

Effectiveness of Ethereum’s Layer-2 Proposal

This is where layer-2 applications come into the picture. Ethereum co-founder Vitalik Buterinendorses the use of existing layer-2 scaling solutions like Zk-sync, OMG, and Loopring for ordinary transactions. According to Buterin’s estimates, it has the potential to scale the number of transactions from 12-15 transactions per second (TPS) to over 2,500 TPS.

High gas fees are starting to affectexchange profits. As a result, exchanges are increasing their transfer fees, pushing users to find other alternatives for moving their crypto. While Tether’simplementation of Zk-roll ups is significant, there has been minimal adoption among other exchanges.

Ethereum Total Transactions vs Ethereum Transfers chart by CoinMetricsEthereum Total Transactions vs Ethereum Transfers chart by CoinMetrics
Ethereum Total Transactions (dotted line) vs Ethereum Transfers (solid line). Source: Coinmetrics

On Sept. 17, Ethereum’s transaction count crossed an all-time high of 1.34 million for the first time since its 2018 peak. Moreover, during the 2017 bubble, non-value based transactions like smart contract execution on Ethereum was less than 2% of the network’s total transactions, which has risen to an extraordinary 50% as of Friday.

Given that layer-2 solutions are proposed only for simple transfers of Ether, its effect on the total gas fees will be minimal. As such, a combination of changes is necessary to scale Ethereum to the needs of DeFi.

The road ahead of scaling Ethereum is still long and arduous, despite the promise of ETH 2.0.

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Privacy Token Enigma Files With SEC After Settlement

“The smart contract governing the ENG Tokens, or the ENG Smart Contract, does not provide holders with any additional rights. Moreover, ENG …

Privacy token company Enigma has filed with the US Securities and Exchange Commission (SEC). According to the registration document, the ENG token is used as a payment system for the aptly named “Secret Network,” a major part of the Enigma Network. But ENG will not be around for long.

In February, Enigma settled a lawsuit alleging it performed a securities sale during its IPO. This document, along with a $500,000 fine, are part of that settlement. Investors who lost money on the IPO may apply to claim compensation.

Though the filing does admit that ENG will be regulated, the tone of the document seems resistant to the idea:

“The smart contract governing the ENG Tokens, or the ENG Smart Contract, does not provide holders with any additional rights. Moreover, ENG Tokens should not be viewed as analogous to more traditional securities (i.e. capital stock, debt securities, warrants to purchase capital stock, etc.), as the ENG Tokens lack features of such securities, including the right to receive a dividend or distribution.”

Meanwhile, Enigma has changed the direction of its project, including the phasing out of the ENG.

Secret Smart Contracts

The Enigma Protocol does have an unusual use: Secret Smart contracts. The technology, first presented in 2018, appears to be a cross between smart contract platforms like Ethereum and privacy platforms like Monero.

On the other hand, the next step for Enigma, the launch of a “Secret Network,” seems transparent enough.

The SEC document describes a new version of the “Secret Network” in some detail. This related project is a proof-of-stake blockchain built on the Cosmos network. The system will use the new SCRT and not ENG tokens.

While admitting the network could be used for crime, the firm believes that secret smart contracts will allow for good in the public sphere. They allege that their system maintains privacy of transactions while allowing for transparency where necessary.

Useful to Useless

As with many blockchain companies, Enigma has seen major changes to its roadmap. The ENG tokens raised in the IPO were meant to be payment tokens on the Enigma Protocol’s network. However, this “Secret Network” took a left turn. Enigma admits:

“ENG tokens were meant to be used by their holders to participate in the protocol by paying transaction fees…In the beginning of 2020, the company decided to divert its business focus and join the Secret Network Community in supporting the development of the Secret Network.”

Now, users can stake another token, SCRT. ENG holders can swap for SCRT here. Unsurprisingly, because of volatility and roadmap changes, many ICO participants lost money.

While blockchain companies do not all flock to the SEC for approval, Enigma appears to have done so because of the settlement. Nonetheless, the filing makes it clear that the SEC found ENG to be a security. Still, taxation of the tokens remains murky:

“The tax characterization of the ENG Tokens is uncertain, and each purchaser must seek its own independent legal and tax advice with respect to the United States and non-U.S. tax treatment of an investment in the ENG Tokens.”

The matter of the ICO funds, a substantial $48.7 million, also appears relevant. The document listed the salaries of executives. According to the payment table, the CEO, CTO, president, and director of Enigma, Guy Zyskind, received a grand total $105 in 2020 for compensation. Though his compensation was $541 the document clarifies, he also received part of a $600,000 bonus in 2017.

Once the registration comes into effect, Enigma will be subject to the stipulation of section 13(a) of the Exchange Act. It must file fiscal statements with the SEC at least until all claimants have been compensated (or missed the deadline).

This is not the only crypto asset under fire for ICO sales. In August, Tezos agreed to pay investors who lost money in their ICO. Tezos, too, was charged with conducting a securities sale.

Spectre Integrates Chainlink’s Price Feeds Directly Into New DeFi Boost Wallet

… layer for building and running decentralized oracle networks that give your smart contract access to secure and reliable data inputs and outputs.

The team at Spectre.ai, the world’s first fraud-free and broker-less retail financial trading platform is excited to announce they are actively consuming Chainlink’s widely used price reference data to correctly price DeFi assets traded and managed in their brand new DeFi Boost wallet.

Why Chainlink?

Spectre selected Chainlink as their go-to oracle solution because it:

  • Provides strong security guarantees of fresh data, using a decentralized network of secure, Sybil-resistant node operators to ensure high availability and tamper-resistance data delivery.
  • Sources high-quality data from multiple independent off-chain data aggregators, guaranteeing our systems have accurate prices that represent the volume-adjusted aggregate across all trading environments.
  • Gives users on-chain visualizations that allow them to independently monitor the health and real-time prices of the of oracle network as a whole and the individual nodes that comprise of it.

It is for these reasons, and more, that Chainlink is the market-leader in blockchain oracle solutions, securing over $3B in value for DeFi applications. Spectre’s aim is to provide their users with the best infrastructure to ensure the most optimal trading experience, hence their integration with Chainlink.

Understanding Spectre

Spectre is a digital contracts trading platform that already reaches over 46,000 traders. It allows users to trade on the direction of hundreds of assets including popular currencies, commodities, stocks and reverse futures known as EPICS, and earn up to 400% ROI, even on weekends! With trade execution times of a few milliseconds and no trade fees or gas cost, Spectre has taken a leap ahead of competitors.

Spectre has always offered their users the option of an off-site decentralized wallet account alongside regular centralized accounts for those who prefer to trade the traditional way. What makes it unique and extremely safe is the fact that our platform registers its trades on the blockchain where it is verified across the publicly distributed ledger network. With their optional wallet account, users never have to deposit in order to trade, ensuring total transparency and complete safety of client funds.

Using Chainlink Oracles in Spectre’s DeFi BOOST wallet

Spectre is now taking this one step further with the introduction of a DeFi Boost wallet. This will allow users to trade and deposit their top DeFi coins to earn between 70–400% within a few seconds to a few hours depending on how they construct their digital contract. Spectre’s Hyper API instantly matches buyers and sellers and, in the event of a liquidity shortfall, the DALP — global decentralised and autonomous liquidity pool — steps in, ensuring constant liquidity 24/7.

Real-time cryptocurrency price data is therefore a necessity, and to that end the DeFi BOOST wallet is only possible thanks to the live Chainlink integration. Chainlink is providing Spectre with price feeds for USDC, LINK, SNX, AAVE, PAX, KNC, SXDT, and SXUT. This means traders will always be able to see the price and balance of the DeFi coins, giving them an even more robust set of tools to properly manage their portfolios on Spectre.

Ian Buck, Spectre’s Head of IR, said: “We’re thrilled to be integrating Chainlink’s market-leading decentralized price reference data as Spectre’s exclusive oracle feed. The high-quality data and on-chain transparency will provide our users with strong guarantees that they are always paying the fair market price when managing their portfolio. This will further enhance our company’s core strengths, as well as position us strongly for the future in the rapidly evolving financial trading and blockchain industries.”

Integrating Chainlink’s world-class oracle technology will strengthen Spectre’s DeFi BOOST wallet with secure, decentralized price data. Spectre’s scalability combined with Chainlink’s oracles will ensure secure, truly reliable DeFi trading on the Spectre platform.

The Spectre DeFi BOOST wallet is expected to go “live” by October (or earlier).

About Chainlink

Chainlink is an open-source blockchain abstraction layer for building and running decentralized oracle networks that give your smart contract access to secure and reliable data inputs and outputs. It provides oracles to leading DeFi applications like Synthetix, Aave, and Kyber Network; numerous blockchains such as Ethereum, Polkadot, and Tezos; as well as large enterprises including Google, Oracle, and SWIFT.

Regulatory Notice: Spectre.ai is strictly closed to U.S citizens. Trading and investing involves high risk and you can lose all your money.

Dvision Network Brings Elrond and eGLD to Virtual Reality and NFTs

Tokens can be directly owned by an account, instead of having ties to a smart contract. For Dvision Network users, this is a major improvement.
CryptoMode Elrond Blockchain eGLD

Elrond has received a lot of attention in the past few weeks. It now seems this blockchain ecosystem is finding its mark in virtual reality. A core partnership with Dvision Network can unlock plenty of use cases for the eGLD currency.

Virtual Reality and Blockchain

For some time now, there have been rumors regarding blockchain and virtual reality. Bridging the gap between these innovative technologies can prove to be a major development. Effectively doing so, however, will not be easy. Several initiatives have been undertaken, albeit none have effectively been too successful.

When Elrond and Dvision Network are joining forces, anything can happen. The native virtual reality marketplace will enable eGLD transactions. Additionally, Elrond’s Smart Accounts can be of great use for Non-Fungible Token ownership.

For the time being, the main point of focus is to make eGLD useful in the virtual reality industry. Users can pay for items, property, and services through this token. Considering how Dvision Network is looking to cater to events and businesses, there may be future eGLD use cases on the horizon.

Exploring the NFT Scene

Perhaps the more interesting option is the use of NFTs, or Non-Fungible Tokens. Considering how the crypto art space has exploded recently, there has been an influx of NFTs. Nearly all of them are issued on the Ethereum blockchain, a network that struggles to scale and has high fees.

Elrond may offer an outlet in this regard. Its Smart Accounts and tokens features can be of great interest. These accounts enable key-value storage, making them somewhat similar to smart contracts without code execution. Tokens can be directly owned by an account, instead of having ties to a smart contract.

For Dvision Network users, this is a major improvement. True ownership of blockchain-based digital assets is crucial in this day and age. Moreover, this will bridge the gap between Elrond and Dvision even further.

ChainX Guide $PCX: Inter-Chain Hub for Digital Assets

… strong privacy but lacks in smart contract functionality, Ethereum brought advanced smart contracts but still struggles with scalability (at present).

The excitement that came with blockchain and decentralization led to the creation of various types of platforms, each solving a unique problem. While this was good, it also brought about unlinked decentralized systems. To elaborate, Bitcoin functions well as an immutable currency but also suffers slow transactions, Monero brought strong privacy but lacks in smart contract functionality, Ethereum brought advanced smart contracts but still struggles with scalability (at present).

The current issue we face is how do we securely and reliably share information between these systems while addressing each individual network’s shortcomings. One area that is still a hard nut to crack is how to share native tokens between chains. And this is why projects like ChainX focus on enabling cross-chain interaction of blockchain assets.

Background

The project stems from the need to rescue trapped blockchain assets and make them available across chains. Being a distributed system, ChainX allows the assets to be transferred in a peer-to-peer manner, significantly leaving less room for fraud and human error.

While the proof-of-work (PoW) consensus mechanism has a higher degree of decentralization, big miners tend to occupy the top seats while newcomers have to buy expensive machines to get a piece of the cake.

In some respects, proof-of-stake (PoS) systems are no better. A large chunk of their native tokens are held by early investors leaving latecomers at the mercy of the secondary market. This even affects the voting powers of the community, making it prone to centralization among those with more coins, which are mostly early investors.

Although ChainX uses a PoS consensus mechanism, its application is different and more welcoming to all users.

What is ChainX?

ChainX is a blockchain platform that interacts with other decentralized platforms to facilitate cross-chain blockchain asset sharing. The protocol employs a PoS algorithm to reach consensus. The project started as a single-system chain was upgraded to a dual-chain network, and currently operates as a multi-chain system.

The multi-chain version runs on the Polkadot blockchain as a layer 2 relay network. Its four major components include:

  • ChainX Relay Chain – It mainly focusses on securing the entire network.
  • Bridge Para-chains – This handles sections of a transaction to improve on throughput and enhance scalability.
  • Trade Para-chain – Acts more like a decentralized exchange. It matches services on the platform, increasing throughput along the way.
  • Dapp Para-chains – This handles decentralized applications (Dapps) developed by the ChainX community.

The platform has what it calls asset mining. Although the system accepts assets from various decentralized platforms with different consensus algorithms, the concept is very simple. First, each asset deposited on the platform carries a single vote.

Therefore, staking on the platform only requires users to deposit BTC, ETH, EOS, and other assets and get PCX in return, leveling the asset mining field. In the protocol, computing power emanates from votes.

As such, users get rewards depending on the computing power they contribute. Once the PCX has been generated, it gets assigned to either a BTC deposit pool, a nodes’ PCX votes pool, or a DOT mapping SDOT pool.

How ChainX works

To enjoy free transactions, a user has to deposit assets on the platform. They then qualify to be a participant. A participant can either be a voting user, validator node, trust node, sync node, deposit portal, inter-chain relayer, or be among the developer community.

  • Voting user – Has to hold the platform’s native currency, PCX. A voter can vote for their preferred sync and validator node and receive incentives.
  • Validator node – A validator is chosen from a pool of top 1000 nodes depending on the votes cast. These nodes are responsible for validating user transactions. In addition, the nodes produce new blocks.
  • Trust node – These are 15 validator nodes with the highest overall strength and host cross-chain assets from users. Also, they are the key community leaders on ChainX.
  • Sync node – These are the total nodes with less validator and trust nodes. They accept transactions and broadcast chain data. However, their rewards are the same as for validators.
  • Deposit portal – Here, you’ll find community developers and all wallet types. Deposit portals help in inter-chain account binding. 10 percent of users’ deposit assets mining is used as rewards.
  • Inter-chain relayer – Although ChainX is open for all, the allowable inter-chain transactions are determined by the protocol depending on their original consensus algorithm.
  • Developer community – To capture different assets’ ability, the network offers the latest smart contract technology for use by developers.

ChainX and Polkadot

The interaction between the two systems is crucial to bring an absolute interconnection between blockchain projects. Polkadot powers the exchange of information between distributed ledgers while ChainX ignites the interaction of blockchain assets.

To bring these two ecosystems together, ChainX operates as a secondary layer on Polkadot. Originally, ChainX operated as an independent chain awaiting the birth of Polkadot. Interfacing the two uses a para-chain system.

The ChainX token (PCX)

ChainX has a total of 21 million PCX coins with halving done every two years. The founding team holds 20 percent of the total coins. However, community distribution is projected to start 24 months after launch.

Uses of PCX

  • To pay miner fees
  • Acts as the market capitalization unit
  • As collateral for both consensus and trustee nodes
  • As a standard during PoS consensus election
  • Forms the base currency and exchange medium

Governance

Community governance on the platform is done by the ChainX parliament. The parliament is made of 11 mature nodes with the Polkadot team having one seat. The remaining 10 seats are shared among reputable nodes that make it to the top ten nodes by votes.

Once chosen, a member of parliament (MP) will occupy the seat for two months. Each member has one vote when settling community-based issues.

Such a process may attract dishonesty among aspiring MPs. To prevent bribery and kickbacks, ChainX rewards whistle-blowers. However, the evidence presented by a whistle-blower has to be validated by six or more MPs.

Conclusion

ChainX drives the possibility of staking cryptocurrencies like BTC that do not support staking. This opens new possibilities in the usage and application of virtual currencies.

The interaction between Polkadot and ChainX is a key combination in enhancing blockchain adoption. ChainX’s governance and token issuance model takes a new approach that ensures transparency and equality among early and late investors.

With the protocol, developers can develop different economic models and users can benefit from free transactions.