It’s a possible hurdle to cross, but it could take some time.
Ethereum 2.0 recently fired up its Beacon Chain, concluding Phase 0 of a scaling effort years in the making. Although he expressed faith in Eth2, Celsius CEO and founder Alex Mashinsky believes that the network could lose its spotlight if it doesn’t scale quickly and significantly.
“Ethereum needs to prove it can scale its transactions 100x without compromising on security or decentralization,” Mashinsky told Cointelegraph when asked about Eth2’s next hurdle after its Beacon Chain launch. “If it fails to scale, Cardano and Polkadot will take over.”
As of Thursday, Ethereum’s network hosts about 13 transactions per second, according to data from Blockchair. A 100-times increase from now would total roughly 1,300 TPS.
Ethereum has served as the top network for building decentralized applications over the past several years. In 2020, the decentralized finance, or DeFi, boom has largely taken place on Ethereum, as well. This surge in activity has led to high network traffic that has at times resulted in soaring fees — a scaling problem seen on previous occasions as well.
With Ethereum 2.0’s shift to a proof-of-stake mining algorithm, scaling advancements should soon be on the horizon. Ethereum co-founder Vitalik Buterin previously said that he believes the network can scale to 100,000 transactions per second.
The network’s upgrade, however, faced months of delays before achieving Phase 0 earlier this week. MyEtherWallet’s founder said he expects Eth2’s next phases will take years to fully play out. Mashinsky did not give a specific time estimate, but he did give his vote of confidence in the network upgrade as a whole.
“I am a big believer in ETH 2.0, even if it will take longer than expected to scale and solve all the bugs,” he said.
At approximately $590 apiece at the time of publication, Ethereum’s native token, Ether (ETH), also plays into the equation. Phase 0 required interested parties to lock up at least 32 ETH each, with a total of 524,288 ETH needed for the Beacon Chain launch. Because the ETH must remain locked until Phase 2 hits, which could be years from now, one might wonder how ETH’s price might factor into Eth2’s advancement.
Mashinsky sees higher prices for ETH as a result. He posited:
“As more and more ETH is locked up for ETH 2.0 or used on different DeFi and CeFi platforms the scarcity effect combined with the need to join these platforms pushes its price higher. Almost all DEX exchanges are denominated in ETH, which is a huge advantage for Ethereum.”
Eth2’s completion of Phase 0 also came amid a rising crypto bull market, which recently saw Bitcoin (BTC) break its previous all-time high.