Ethereum 2.0 is coming, unlikely to speed up enterprise DeFi adoption
Many members of the blockchain community have been anxiously awaiting the arrival of Ethereum 2.0, the major upgrade to the Ethereum blockchain set to be released in multiple phases. Phase 0 is the first expected release on the Ethereum 2.0 roadmap, scheduled to launch this year.
While speculation around the exact release date remains, Ethereum co-founder and founder of software company ConsenSys, Joseph Lubin, revealed in a recent interview on the Baseline Protocol YouTube channel that Ethereum 2.0 will indeed arrive soon: “Ethereum 2.0 is coming. We are now in the middle of what we believe to be the final testnet. We had many smooth operations on the testnet among a lot of Ethereum 2.0 clients built by different teams.”
Lubin further commented that without the issues that were resolved on the Ethereum 2.0 “Medalla” final testnet, he would be concerned about the mainnet launch of the Ethereum 2.0 beacon chain.
Ethereum 1.0 isn’t ever going away
Lubin also mentioned during his interview that Ethereum 1.0 is here to stay — for good. The reason being that Ethereum 2.0 simply serves as a natural transition from Ethereum 1.0. “Ethereum 1.0 isnt going away, ever. Ethereum 1.0 is evolving into Ethereum 1.5, which will be stateless and easily absorbable by Ethereum 2.0,” he said.
According to Lubin, Ethereum 1.0 is a staking platform that enables the launch of Ethereum 2.0, which uses a proof-of-stake consensus mechanism. As such, the two platforms will be intimately connected: “Ethereum 2.0 will reach back into Ethereum 1.0 and finalize blocks there, enabling greater security and production of issues of blocks on Ethereum 1.0,” he said. Lubin further mentioned that Ethereum 2.0 will be the “biggest, most sophisticated DeFi application” on Ethereum 1.0.
Additionally, Ethereum 2.0 will provide features such as increased scalability, throughput and security to the Ethereum public mainnet, all of which are lacking in Ethereum 1.0. The highly anticipated beacon chain will serve as the backbone of Ethereum 2.0.
Will enterprises adopt Ethereum 2.0?
While the Ethereum 2.0 advancements are notable, it’s important to point out that enterprise adoption may take some time. Lubin commented that the third phase of Ethereum 2.0 will take place in late 2021 or sometime in 2022. Once this occurs, organizations will then have the ability to smoothly onboard clients from Ethereum 1.0.
Dan Burnett, executive director of the Enterprise Ethereum Alliance, a group that enables enterprise use of the Ethereum blockchain, told Cointelegraph that interest in Ethereum 2.0 is relatively high:
“Many of our members see it as a strong testimony to the larger vision of the network, giving them even greater backing internally for their investments in Ethereum. The primary interest from members appears to be with the evolving validation market, along with some of the tooling and access methods.”
This shouldn’t come as a surprise though, given the fact that the decentralized finance ecosystem continues to grow, with explosive market capitalization and new use cases that go well beyond DeFi tokens.
In terms of deploying Ethereum 2.0, Burnett shared that most Enterprise Ethereum Alliance members are largely focusing on areas higher up the stack, such as security, data privacy, data custody and token management. “We expect members to focus more on Ethereum 2.0 adoption once the tooling and enabling services make it easier and more straightforward to make use of ETH 2.0 nodes,” he explained.
As such, solutions like the Baseline Protocol as well as other tools that enable privacy and confidentiality of transactions will continue to advance as enterprise adoption becomes a reality in the coming years.
Enterprises staking Ether?
While enterprise adoption of Ethereum 2.0 may take a few years, it’s interesting to note that the idea of staking is gaining traction. Ben Edgington, product owner for Teku, an Ethereum 2.0 client designed for enterprise and institutional stakers, told Cointelegraph:
“We will be delivering the first phase of Ethereum 2.0 by the end of this year, which is a proof-of-stake beacon chain. Ether can be staked, and substantial rewards earned for running validators on the network. Any institution that has custody of significant amounts of Ether may wish to participate in staking.”
Enterprises gaining interest in staking Ether is notable in a number of ways, but overall, it shows the coming of a new trend: the rise of decentralized finance and how this may enable an entire decentralized economy.
Lubin even commented on this during his YouTube interview, noting that DeFi is the new financial plumbing layer for the decentralized economy. As such, according to him, this will enable new decentralized applications being adopted for enterprise use cases: “The reason why the American economy is the strongest in the world is because it has a deep financial system. Once you have that deep financial infrastructure built, all businesses will come.”