eth2 Updates: The first months
December 1, 2021
An archive of eth2 updates and analysis from the network's launch and first months of operation
Welcome to the archive of our monthly eth2 updates from Protocol Specialist Viktor Bunin. These updates provide inside access to our thoughts on the most important information to know about eth2 during the network's earliest days, starting with preparation for the beacon chain launch.
001: October 2020
ETH2 PHASE 0 LAUNCH
Danny Ryan (eth2 lead) recently opened EIP-2982: Serenity Phase 0, an official PR to launch eth2 and begin a phased rollout of PoS onto Ethereum. I imagine that he did not do so lightly. This move speaks to his confidence that the launch is near.
The eth2 team released the first public checklist to track the progress of Phase 0. The most important card to track is Ceremony Day. On that day the team will deploy the deposit smart contract (required to start the beacon chain), release the final protocol spec, and announce the protocol launch date.
The swift arrival of Ceremony Day is dependent upon two things: the stability of eth2’s Medalla testnet and at least one successful dress rehearsal / dry run (deposit and genesis testnet).
As you may have heard, Medalla was unstable last month due to a bug in one of the clients. Impressively, Medalla recovered successfully, the client bug was fixed, and the testnet has been stable since. If it continues to be stable, the testnet will have been running almost two months by the time of the Spadina dry run, and almost three months by the time mainnet is slated to launch in November.
Spadina is the first dry run. It began on Tuesday, September 29th and is meant to run for three days. It got off to a slow start and had trouble finalizing; small errors in a client’s release process highlighted issues closer to the edge of the stack - CLI options, testnet configs, bootnodes, and genesis calculation bugs. The network was soon able to finalize and, although it would have been better for the dry run to go off without a hitch, it was good to identify these process-related issues now. It also showed that clients have generally become much more robust even in turbulent network conditions.
As a precaution, there will be at least one more dry run prior to genesis. The next, and hopefully final, one is called Zinken and genesis is planned for Monday, October 12th.
Although Ceremony Day was originally slated for the first week of October, the addition of another dry run will likely push it back a week. If Zinken goes well, we expect Ceremony Day to occur shortly after.
Bison Trails (now Coinbase Cloud) speaks with various eth2 researchers and client teams every week. The focus now is getting ready for launch. We currently anticipate a mid-November mainnet launch and are preparing to help our customers participate.
IMPLICATIONS FOR TOKEN HOLDERS AND SERVICE PROVIDERS
Given the amount of participation in DeFi, Keep’s Stake Drop, and NuCypher’s WorkLock (where an astounding $125M of ETH was locked), it is clear ETH holders are actively looking for opportunities to deploy their tokens. There is cautious, but intense, excitement for eth2 staking. From our conversations, few ETH holders are willing to stake all their ETH, but most are planning to stake a portion.
Being early is important. Per eth2’s design, the first stakers will be earning a significantly higher rate of reward on their ETH. Service providers like exchanges, custodians, and wallets will find eth2 staking customers and their assets are highly sticky as staked BETH cannot be moved until Phase 1.5, which is two or more years away.
Most importantly, we expect to see a flight to quality in eth2 participation. Due to the expected wait before staked tokens become transferable, we expect ETH holders to prioritize working with companies they believe can stand the test of time and will continue to operate in the coming two to four years.
002: October 2020
ETH2 PHASE 0 LAUNCH
EIP-2982: Serenity Phase 0, the official PR to launch eth2 and begin a phased rollout of PoS onto Ethereum, was merged in early October bringing eth2 one step closer to mainnet.
The latest beacon chain dry run, Zinken, went well and the chain successfully launched and finalized, after the first beacon chain launch dry run, Spadina, had initially underperformed. Unfortunately, shortly after Zinken went live, Medalla started experiencing finalization issues as validators became delinquent.
Based on our experience with other protocols, there’s a pretty big operational overhead to support just a single testnet. Eth2 has had Medalla running for several months now and has launched two more (Spadina and Zinken) in the last few weeks. None of these testnets are incentivized and a lot of the same folks are running nodes across all of them. At this point folks are just getting a bit overwhelmed from an operational resourcing perspective, and, because there’s no money at risk, are slacking when it comes to maintaining their testnet support to the same standards they would if it were a mainnet.
As a result, we do not expect for mainnet to be pushed out due to the decreasing Medalla participation. If anything, we think it may almost have the opposite effect of enticing the eth2 team to launch sooner. As the eth2 team already knows Medalla can run very smoothly in good network conditions, and can recover from catastrophic conditions, the current decrease in participation isn’t presenting any new learning opportunities.
We expect the deposit smart contract and more exact dates are likely to be released sometime in the next two weeks. We still expect for mainnet to launch in mid to late November. However, we gave the eth2 team the feedback that if they can’t launch comfortably before Thanksgiving the best option may be to wait until early December, when folks in the U.S. are back from the holiday break.
We're eagerly anticipating eth2’s launch and look forward to providing you with another update soon.
003: November 2020
eth2 Phase 0 Launch
Cosmic Egg, the v1.0.0 release containing Phase 0 mainnet configurations (along with some additional tooling and components) was publicly released by Danny Ryan. This final code makes it possible to launch the eth2 network.
The eth2 deposit smart contract launched and is already accepting deposits. About 25,829 ETH was deposited at the time of publication (roughly $10.64M USD). There needs to be at least 524,288 ETH (roughly $200M USD) deposited for the network to launch, equalling 16,384 validators.
What happens next?
The earliest that the network can launch is December 1st, 2020, at 12pm UTC. In order for eth2 genesis to be triggered at this time, the minimum amount of ETH must be deposited by Tuesday November 24th at 12pm UTC, seven days before launch and less than three weeks from today. You can track the progress of the eth2 deposit smart contract using the eth2 launchpad.
Based on our conversations with folks planning to stake in Phase 0 from across the ecosystem, we expect large chunks of deposits will come from exchanges, custodians, funds, and other large token holders. Some folks are ready, but many more are still in the process of adding support for eth2 and are not in a rush to be the first to stake. Some token holders are planning to wait for a few weeks to make sure the network is stable before staking. This is expected behavior as the network launches.
What happens if the minimum 524k ETH is not deposited by November 24th? The deposit contract will continue accepting deposits until it reaches the minimum threshold. For example, if we cross the threshold on December 2nd, genesis will be on December 9th.
We are including all relevant details for your reference for informational purposes. If you choose to participate in the eth2 genesis, please double-check all information and addresses before sending your ETH. It’s been reported that scammers are already looking to take advantage of the community’s enthusiasm.
Human: December 1, 2020, 12pm UTC
Commit hash for v1.0.0: 9310de0ff3e1154c718a260ce3e5c71e9f187133
More eth2 Insights
Elias Simos, Protocol Specialist at Bison Trails (now Coinbase Cloud), recently published a data-driven deep dive into the Medalla testnet with Sid Shekhar, Blockchain Research lead at Coinbase. Elias published the first of a four-part series based on this research, analyzing aggregation performance over the course of the Medalla testnet.
004: November 2020
eth2 Phase 0 Launch
The eth2 deposit smart contract has 53k ETH deposited out of the required 524K, so we’re a little over 10% of the way there!
The initial pace of deposits was rapid as first movers piled into the contract to signal support. Vitalik personally deposited 3,200 ETH. But after the first few days, the pace of deposits has slowed significantly.
The reality is that there’s simply no tangible benefit to being early, while waiting to deposit until the last moment has several advantages.
The longer the contract has funds in it without any incidents, the more likely it is that the contract is secure
Instead of depositing and waiting on standby, ETH token holders are able to deploy their ETH in DeFi or in other opportunities to earn rewards for the next 2 weeks, and then deposit on the 24th
It gives additional time for the completion of any preparations and infrastructure improvements before joining the network
The NuCypher WorkLock is a great example of this precedent. There was hardly any participation for the first three weeks. In the final week, an absolutely colossal amount of ETH found its way into the WorkLock contract.
This is normal and expected behavior. We anticipate the slow pace of new deposits to continue with sudden spikes as whales or institutions make big deposits. Then on the 24th, we expect a large gain as well, that should hopefully push us over the 524k threshold. If it does not, our expectation is that the final push will happen on December 1st, with a subsequent genesis launch on the 8th.
As community members, we thank the early movers! They are true believers in the eth2 vision and we are incredibly excited to be among this cohort supporting the launch of eth2.
Below are some great dashboards you can use to stay on top of the deposit activity:
After several weeks (almost 5,000 epochs!) of non-finality because of validator downtime, Medalla finally finalized! Although we’re glad to see it operating smoothly again, we’re also thankful that this period allowed us to see how the network and individual clients behave under extreme duress, with the eventual activation of the inactivity leak. These are not conditions we expect to see on mainnet with real ETH on the line, so these learnings have been invaluable.
More eth2 Insights
The second edition of the four-part eth2 insights series written by Elias Simos, Protocol Specialist at Bison Trails (now Coinbase Cloud), was published this week focusing on slashings in Medalla and examining their correlates and probable causes. The series is based on Elias’ recently published research on the Medalla testnet data, conducted jointly with Sid Shekhar, Blockchain Research Lead at Coinbase. Those new to the world of eth2 (or just in need of a refresher) can check out our accompanying eth2 Terminology Guide, a living and non-exhaustive list of key terms to understand the eth2 protocol.
Mara Schmiedt, Business Development Manager at Bison Trails (now Coinbase Cloud), co-authored and published a white paper and financial model on eth2 and its economics with Collin Myers of ConsenSys. Their work models staked ETH as a bond with the aim of helping investors to better understand the asset via traditional financial methodologies.
005: November 2020
eth2 Phase 0 Launch
The eth2 deposit smart contract broke 100k ETH deposited out of the required 524K, bringing us to just shy of 20% of the minimum threshold! While this is great progress, it does not bode well for a December 1st launch date as the community only has a week left to hit the 524k ETH goal.
However, one of the interesting stories is seeing who it is depositing the ETH to push us forward.
Digging into some of these deposits is fascinating. A huge whale deposited 17,088 ETH on the 14th, explaining a large amount of the increase in the total deposits. But looking into their transaction history is particularly revealing. They appear to have acquired all of this ETH (and likely more) from many different exchanges during the 2017 bullrun when ETH was trading at $300. They then held it in various addresses without touching it for more than three years, until it was time to stake it on eth2.
Another whale, who deposited 5,504 ETH, first began accumulating ETH more than four years ago. One more deposited 5,024 ETH after holding on to it for three years, and their transaction history shows they have another 15k ETH on standby.
This is forming a theme — Ethereum OG’s were and still are believers in Ethereum’s vision, whether you call it proof of stake, Serenity, or eth2. They are putting a lot of capital on the line after sitting on it for so long because they want to be part of making this vision a reality.
Uniswap Liquidity Update
There’s been a lot of speculation that the liquidity rewards ending on Uniswap will free up ETH to be used for the deposit contract. While directionally correct, we think this will not be as large of a catalyst as some folks expect. Participants in liquidity reward programs value freedom, optionality, and returns, above all else. Participating in eth2 is the opposite —l ong term lock up, lack of liquidity, and more reasonable rewards.
At the time of publication, liquidity on Uniswap dropped ~43% (>$1.5 billion decrease) since the rewards program ended on Tuesday morning. Nick from Hex Capital did a cursory look as to where this liquidity is heading, and it still remains to be seen how much — if any of it — ends up in the deposit contract.
Testnet and Client Update & Say Hello to Pyrmont
After a long and storied life, Medalla is being deprecated in favor of the new Pyrmont testnet, which aligns with the v1.0.0 of the official eth2 specification. Pyrmont’s genesis is scheduled for Wednesday, November 18th at 12pm UTC, and will later be open for public participation. You can follow along with the explorer and eth2stats.
Additionally, all client teams, including the two leads in Prysm and Lighthouse, are still pushing out releases and plan to have a client release between November 24th and December 1st (in time for genesis).
This testnet and client release schedule likely explains some of the decrease in activity we’re seeing with deposits. A lack of finalization, and now a total deprecation, of Medalla slowed down testing in the crucial final weeks before launch. Client teams pushing final versions mere days before genesis is also likely giving people pause before depositing ETH into the eth2 staking contract.
While many in the community are still hopeful that genesis can happen on December 1st, some folks are getting ready for other eventualities. Eric Conner of EthHub opened an issue with the proposal to add a maximum date for genesis of December 15th. As he states, “This would mean that eth2 genesis kicks off even if we don't hit the required minimum deposit amount (524,288 ETH) in the current spec.” Eric’s proposal resulted in heated debate. The community is squarely divided.
Although it is likely that the minimum threshold will not be met by November 24th, delaying genesis, we do not expect the delay to last long. There’s simply too much pressure and anticipation for launch. Our current forecast is the threshold will be met by December 1st and for genesis to trigger on the 8th. But, regardless of when genesis gets triggered, our advice is for everyone to remain calm. It’s a stressful time for everyone and a bit of kindness, patience, and understanding with each other — and with the launch — goes a long way.
More eth2 Insights
The third edition of the four-part eth2 insights series written by Elias Simos, Protocol Specialist at Bison Trails (now Coinbase Cloud), was published this week focusing on validator effectiveness along with the parameters governing it and how validators were distributed along those parameters in Medalla.
The series is based on Elias’ research on the Medalla testnet data, conducted jointly with Sid Shekhar, Blockchain Research Lead at Coinbase. Elias and Sid were just recognized by the Ethereum Foundation as some of the winners of the eth2 Medalla Data Challenge! Don’t miss our live event with Messari on December 2nd: “The Road to ETH 2.0.”
006: November 2020
eth2 Phase 0 Launch
First things first, congratulations on successfully meeting the deposit threshold! This is an incredible achievement and we should take the time to really appreciate it. Reaching this milestone is the result of six years of research, design, and development by hundreds of people.
In one of the earlier issues of this update series, we noted that NuCypher’s WorkLock had the vast majority of its ETH arrive in the final days. We saw the same dynamic play out in many other token distributions and sales, including Algorand, Edgeware, Celo, and other protocols. I thought eth2 would be different, due to the size of the threshold and the meager trickle of deposits we were seeing in prior weeks, and I incorrectly predicted that we might slightly miss the deadline.
The deposit threshold was hit with roughly 10 hours to spare and deposits have continued pouring in since. At the time of writing there is 725k ETH in the deposit contract, a full 200k more than the minimum, with some transactions still pending to be deposited. Interestingly, this would put eth2 into the top 50 cryptocurrencies by marketcap if it were listed separately from Ethereum. Although of course, it is important to keep in mind that ETH, whether on eth1 or eth2, is still ETH.
One of the most important success metrics for this process is that there were no invalid deposits or double deposits. The community spent a long time educating each other and providing support to help folks avoid making mistakes throughout this genesis process and it paid off! I’d like to extend an especially huge shout out to the Launchpad team for helping to make this process a great success.
21,063 validators made it into genesis, approximately 5,000 more than the minimum, meaning that anyone who joined after that time must wait in the activation queue. Given that only 900 validators can enter or exit the active set on a daily basis, this means new validators depositing in the contract will currently have to wait for approximately two days before they can begin validating. If anyone is still waiting to deposit, consider doing so now to avoid a longer wait!
One other interesting bit to call out from the statistics Vitalik shared is the time at which deposits were made. Ethereum is a truly global phenomenon, without any clear outliers for timing of participation. This is important from a community and decentralization perspective.
Digging into some of the top depositors is continuing to be a fascinating exercise.
Of the depositors that have chosen to publicly identify themselves, more than ⅓ of the deposited ETH (33.5732% to be exact) was deposited by just three entities: Staked, Bitcoin Suisse, and Stakefish. While we and the Ethereum community are thankful for their enthusiastic participation, this should also serve as a signal that eth2 needs more participation from a more diverse set of participants!
The teams behind the four clients (Prysm, Lighthouse, Teku, and Nimbus) have independently determined the genesis state and are in agreement on it. Eth2 will launch with the following parameters:
Genesis state root: 0x7e76880eb67bbdc86250aa578958e9d0675e64e714337855204fb5abaaf82c2b
Genesis block root: 0x4d611d5b93fdab69013a7f0a2f961caca0c853f87cfe9595fe5003816307936
Genesis time: 2020-12-01 12:00:23 GMT
Number of genesis validators: 21,063
Post-Genesis eth2 Roadmap
On October 2nd, Vitalik published a proposed a rollup-centric Ethereum roadmap which outlined how rollups impact Ethereum’s scaling and eth2’s phases. In last week’s AMA, he reiterated these changes and provided more context, which we think is helpful.
Research and development on the eth2 phases has been proceeding in parallel for years. While a neat, sequential, phased rollout is appealing, I think it’s good to reset expectations and inform the community that this is still a work in progress. After years of roadmap changes in launching PoS, this change should surprise no one. But just as PoS was eventually launched, the community should have confidence that full functionality will be delivered as well.
007: December 2020
eth2 Phase 0 Launch
Congratulations to the entire Ethereum community on an uneventful and highly successful genesis! Eth2 launched without issues on Tuesday, December 1st, 2020 at 12:00:23 UTC and the network has continued making blocks and finalizing since.
The first slashing occurred on December 2nd, 2020 at 10:14:11 UTC, less than 24 hours after eth2 launched. Validator 20,075 made 213 attestations, but when it came time to finally propose a block, it proposed two different blocks and was slashed for that offense (called equivocation).
The two blocks they proposed agreed on the parent block of each proposal, but included different things inside the blocks. This implies that the validator attempted to over-optimize for liveness by having their validator keys on multiple machines that had slightly different attestations pools. At Bison Trails (now Coinbase Cloud) we’ve seen this across several protocols at this point, which is why we design our architecture to reduce the chances of slashing by prioritizing double-signing prevention over downtime because the penalty for double-signing is higher.
Digging into the slash, the offense was committed in slot 6,668 and was caught in slot 6,669. This quick catch shows that the slashing client functionality is working as intended. The community should keep an eye on this metric, as more validators join the network, because it’s important that offenses continue to be caught quickly as the number of participants rises. The slashed validator only lost ~.25 ETH instead of a minimum of 1 ETH because the base slashed amount was significantly decreased for the early days on the network. However, if there are more slashings in the coming days, there can be an additional punishment due to the correlated slashing mechanism.
The most important punishment for this validator, however, is not the slashed ETH, but the missed rewards. This validator has been forcefully exited from the protocol (they will fully exit the system in 36 days). At that point, they will also know their final balances after all penalties have been applied. They cannot rejoin the network until Phase 1.5, which is several years away, meaning they will not be able to earn any rewards until then.
Taking into account this inability to earn future rewards and the opportunity cost of their ETH laying idle and unproductive for years increases their total economic losses by several orders of magnitude.
The proposer at slot 6,669 was a StakeFish validator that earned .0625 ETH ($37) for whistleblowing and reporting the slashing. The amount awarded is proportional to the slashed validator’s effective balance (which in this case was 32 ETH). This makes this StakeFish validator the largest validator by ETH balance on the network at the moment! The rest of the slashed ETH was burned, decreasing the total amount of outstanding ETH.
Lastly, who is the operator of the slashed validator? Taking a look at the eth1 address they used to initiate this validator, we can see they spun up a total of four validators, implying they are an “enthusiast.” But upon further exploration of the parent address of their ETH, we can begin to paint a fuller picture. They are an Ethereum whale who appears to have acquired their ETH in 2016. They are a very active DeFi participant, interacting with Uniswap, Aave, Curve, Compound, and several stablecoins. While we can’t know their motivations with certainty, it appears that they believe in eth2 and wanted to support it, have a degree of technical comfort, and could have participated with much more ETH if they chose to.
Observations and Insights
1. Unlike the Bitcoin genesis block or the block marking the latest halving, the inscription in eth2’s first block after genesis did not appear to have larger cultural significance. The message of the first block in eth2’s first slot: “Mr. F was here.” The signer’s full username is Mr. Fahrenheit, a reference to the Queen song, and he is an enthusiast who once received Vitalik’s autograph. There’s something beautiful about this because graffiti permeates history and simple messages left by explorers are forever enshrined on historical landmarks like pyramids or tombs. Mr. F, and many like him, who helped launch eth2, are pioneers and will forever be part of this historic moment.
2. Genesis occurred 23 seconds past noon because of a quirk arising from a technical requirement. The selection of the exact genesis timing is based on two considerations: meeting the minimum threshold and min-genesis-time. The algorithm builds a sample eth2 genesis state at each eth1 block by taking the deposit threshold and adding the genesis-delay to the eth1 timestamp. The first eth1 block that builds a valid genesis state is the trigger. Timing genesis for noon precisely may have been preferable, but would have required a more complex algorithm on what proved to be a somewhat brittle process during testnets and was considered to be not worth the effort. H/t to Danny Ryan for this fascinating tidbit.
3. Eth2 launched with 21,063 validators (representing 674,016 ETH or ~$400m), significantly more than the minimum 16,384 validators (524,288 ETH) required by the deposit contract’s threshold. However, the deposits have not abated and are continuing to increase. At this time, there is 926k ETH in the deposit contract and roughly 6,000 validators are waiting to join the network. Only 4 validators can be added or removed per epoch (900 validators per day) so it will take almost a week for those currently in the activation queue to begin participating.
4. The participation rate was of particular interest at launch as the network needed 66% of validators to be online and attesting to be able to finalize. At Epoch 0, 82% of validators were online allowing finalization. The number then quickly rose to 85% and then 88% as people completed their troubleshooting and brought their validators online. The participation rate is currently sitting at around 96%, which is good, but still short of the desired 100%. A rate of 96% means that almost 1,000 validators are currently offline and not participating in eth2, meaning they are losing ETH to penalties!
5. The initial network participation is still fairly centralized among a small number of large depositors. Elias Simos, Protocol Specialist at Bison Trails (now Coinbase Cloud), analyzed the distribution: as of Tuesday morning there was 855k ETH deposited by 2632 eth1 deposit addresses, with a Gini coefficient (a measure of inequality) at over 86%. To illustrate the relative concentration, the top-10 depositors are responsible for 43% of ETH deposited, while the top 10% of depositors are responsible for 83% or so of the total deposits! This uneven distribution is totally normal for a young protocol and as Vitalik points out, eth2’s metrics are already starting to improve, including the coveted Nakamoto Coefficient (a measure of decentralization).
Having been through many protocol launches at this point, I believe the best thing now is a well-deserved break. Researchers, client teams, stakers, and many other people in the Ethereum ecosystem worked for years to launch eth2 and grinded especially hard in recent months. Now is a time to rest, recover, and regroup, before beginning the next tracks of work.
From our vantage point, the eth2 network is functioning well and we do not expect to see turbulence in the near future. We also do not expect significant releases from client teams (beyond patches) or other Beacon Chain initiatives to emerge in the final days of 2020 as we head into the holiday season.
Those who didn’t make it in time for genesis (as individuals or enterprises) are still working hard in the rush to join. Based on recent announcements, such as the one from Coinbase, it is safe to predict that an enormous amount of ETH will be joining the network in the near future. Our expectation is for 10m ETH to be staked in coming months, bringing the reward rate to 5.72%. A key driver we’re keeping an eye on are liquidity solutions that may push this rate much higher as they help mitigate some risks of participation.
Looking ahead to 2021, we expect the eth2 Phase 0 excitement to fade and for efforts to refocus on Phases 1, 1.5, and 2. There are two important items to note here. First, the research and development work to enable these phases is happening concurrently, meaning the phases may arrive out of order. Second, these phases are still in R&D. There is a good chance the scope and implementation of each phase will change significantly by the time it arrives (and some, like Phase 2, may never be needed). If you’ve followed eth2’s Phase 0 effort closely, this insight may not be surprising. Vitalik’s post on a rollup-centric Ethereum roadmap is a must-read: it covers the community’s considerations and discussion of tradeoffs.
Additionally, we expect an eth2 hard fork in mid 2021 that will raise the slashing penalties back to their full values, enable light clients, and enable several other improvements. Justin Drake casually referred to this as Phase 0.5, so, while it is not yet set in stone, it’s a good thing to look forward to.
Lastly, I hope these updates have been helpful for you to navigate eth2’s launch. Thank you for reading, and I look forward to delivering more great news to you soon.
008: December 2020
The network has continued to operate smoothly, but there’s definitely room for improvement.
While the participation rate is generally high (98-99%), there are times when it jumps by 3% or more. The current theory is that this is related to one of the clients sometimes having a slow epoch transition which needs to be further optimized. This is normal for a newly launched network and our expectation is that this and other bugs will be ironed out in the coming months.
Barnabé Monnot of the Robust Incentives Group (Ethereum Foundation) explored the first 1,000 epochs of eth2. While the entire post is great, I want to call special attention to the significant improvements client teams have made to their attestation aggregation performance. This was a particularly worrisome metric on the Medalla testnet that unnecessarily bloated the network, so it's great to see these improvements.
Eth2 is continuing to see slashings, bringing the total slashed validator count to 14. Although it’s impossible to know the exact cause of each issue without speaking to the operators directly, it is safe to assume that all were the result of improper infrastructure setup, as the eth2 network itself has been incredibly stable. Typically this setup issue involves running two nodes with the same validator keys on them without proper safety checks for node uptime or existing validator actions (e.g. checking for an existing block proposal before making a new one).
This week we saw our first big batch of attester slashings as Stkr, the Ankr eth2 staking offering, had 10 of their validators slashed for surround voting.
Attester slashings can be the result of double attestation votes or surround votes. Double attestation votes are rare if the network is stable because even if two validators are online and signing with the same keys, they likely have the same view of the network and thus sign the same exact attestation. Surround votes are proving to be much more common and occur when validators with the same keys are out of sync with each other. Note — the validators need to be very out of sync (by at least 2 epochs / 12.8 minutes) for this to happen, which is hard to do without turning a machine off, being eclipsed or simply not connected, or having a misconfigured or attacked local time.
As a reminder, over-optimizing for liveness is the primary reason node operators get slashed! One of the beautiful things about eth2’s design is that it is extremely forgiving of downtime. Both enthusiasts and professional node operators should review their setups in light of recent slashings to ensure they do not get slashed.
Support eth2 development on Gitcoin
Eth2 required an enormous amount of open source work and was made possible largely through grants and community efforts. There are still several years of work ahead to bring the full eth2 vision to life and I believe it’s important that we as a community continue to support these efforts.
Gitcoin’s 8th round of grants is now live and Protolambda was kind enough to create a collection of eth2 grants to make it incredibly easy to donate to eth2 development. Most donations qualify for CLR matching. Because of the CLR matching bonus, a single dollar donated can be matched by an additional $100 or more.
Eth2 is continuing to grow as there is almost 2.3m ETH deposited (a full million more since our last update!), which is more than $2.5bn USD and about 2% of the total supply of ETH. The queue has grown from two to three weeks since our last update, and has stayed at that length since late December. These are positive signs that there is still immense interest in staking on eth2 as major exchanges and institutions are gearing up to enter the game.
Network performance has improved since our last update. The participation rate continues to hover around 99%, but the frequency of larger jumps (3% or more) has decreased. I expect the participation rate to rise in the coming months to 99.5%+, but doubt that it will ever consistently stay at 100% as folks continue to optimize for downtime rather than risk slashing.
Unfortunately, slashings are continuing to occur with both enthusiasts and professional validators impacted, bringing the total count to 30+ validators. Ben Edgington has begun tracking slashings and sharing his findings. He covered the largest slashing to date in his excellent What’s New in Eth2, excerpted below: The most severe event was the slashing of 16 validators, accounting for fully half of the validators slashed so far, apparently belonging to the same owner. They are all in the range 38058 to 38148, and were created in a single batch of 100 stakes by a 3200 ETH deposit to this bulk-deposit contract. Etherscan tags the contract as “Staked.us: Eth2 Depositor” with a link out to the staked.us website, and comments in the contract code confirm that it was authored by staked.us. But the contract is open and anyone can use it. No one has come forward publicly to claim responsibility for these slashed validators. The website of staked.us says that they “have never been slashed.” — Ben Edgington
The eth2 community has been exemplary at quickly identifying root causes of slashings, sharing findings, and disseminating that knowledge to help others avoid similar fates.
Upcoming phases R&D
The eth2 research team is hard at work designing the upcoming eth2 phases. Chief among them is Phase 1 — Sharding — for which a data availability sampling proposal was released with an accompanying (much appreciated) explanation post from Vitalik.
In brief, this proposal pushes forward on the rollup-centric roadmap by introducing a limited form of sharding called “data sharding.” This allows the network to store and use a large amount of data without any individual node having to store the entirety of it.
This is useful because rollups are expected to significantly increase Ethereum throughput, but they still need to store data on the Ethereum blockchain. Prior “full” sharding proposals intended to have each shard have full EVM support (or something like eWASM). This is very difficult to implement well, so this newer and more limited proposal creates a path forward that still enables sharding, but uses those shards to enable scaling via rollups, not to serve as the scaling mechanism on their own right.
This doesn’t mean execution shards with EVM/eWASM are off the table. According to Vitalik, “the data-blob-only sharding design is forward-compatible with many approaches for adding execution in shards if this is later desired.”
010: February 2021
Eth2 is continuing to grow! There is now:
3m ETH deposited, equivalent to $5.4bn USD — roughly 2.6% of all ETH
93k validators, of which 84k are active and 9k are pending
A 10 day wait time in the activation queue
The activation queue has continued to shrink from its peak of about a peak of three weeks to just over one week now. The beacon chain adds 900 validators to the active set per day, requiring deposits of 28,800 ETH to maintain the queue. As the chart below shows, the deposit contract has not met this threshold in weeks, leading to a shortening queue. With ETH’s recent meteoric rise, token holders seem to prefer to keep their ETH liquid or find higher yield opportunities in DeFi. This balance between ETH staked in eth2 vs ETH locked in DeFi will be important for chain security once eth1 and eth2 merge.
eth2 Slashings Continue
Slashings are continuing to occur on eth2. In our last update we covered the largest slashing to date (of 16 validators), which Ben Edgington highlighted in his excellent What’s New in Eth2, excerpted below. Today we will examine two even larger slashing events, the largest of which comprised more than half of total slashings on eth2! Here’s a look at these three slashing incidents.
Incident 1 on December 20th: 16 validators
The most severe event was the slashing of 16 validators, accounting for fully half of the validators slashed so far, apparently belonging to the same owner. They are all in the range 38058 to 38148, and were created in a single batch of 100 stakes by a 3200 ETH deposit to this bulk-deposit contract. Etherscan tags the contract as “Staked.us: Eth2 Depositor” with a link out to the staked.us website, and comments in the contract code confirm that it was authored by staked.us. But the contract is open and anyone can use it. No one has come forward publicly to claim responsibility for these slashed validators. The website of staked.us says that they “have never been slashed.” — Ben Edgington
Incident 2 on February 2nd: 75 validators
The second mass-slashing incident took place between epochs [14277, 14299]. During the incident, 75 validators were slashed over roughly 1.5 hours, suggesting it was a broader issue with the operator’s infrastructure rather than an isolated incident.
All the violations recorded were attester violations of the double vote type, where most followed the s1>s2>t2=t1 pattern — meaning that the misbehaving validators attested to two conflicting source epoch boundaries while agreeing on the target epoch boundary.
18 epochs after slashing (~2 hours), we saw the participation temporarily drop from 96% to 88%, a decrease of 8%; this is a little bit less than our estimate for the total share of the network run by Staked.us, who have claimed responsibility for this event and published a post-mortem.
Incident 3 on February 4th: 17 validators
The most recent mass-slashing incident shares characteristics with the first two.
All 17 validators were funded from 7 unique eth1 accounts, all of which are linked to Staked.us on Nansen
All 17 validators were slashed for attestation violations in the same s1>s2>t2=t1 pattern as the 2nd incident
No one has come forward publicly to claim responsibility for these slashed validators.
The three largest incidents now account for 81% of all slashings on eth2 and roughly estimated total losses of $600k between slashing penalties and missed rewards. The network is currently operating with reduced slashing and penalty parameters. If full slashing penalties were enabled, estimated losses would have totaled roughly $750k.
Eth2 is designed with the decentralized retail staker in mind — it is forgiving of downtime, but harshly penalizes more elaborate setups and large operations. Issues at the infrastructure level exponentially increase losses and must be carefully managed.
Secret Shared Validators
Lastly, I’m proud to share that Mara Schmiedt, business development manager at Bison Trails (now Coinbase Cloud), along with a team from across the ecosystem, received a grant from the Ethereum Foundation for an audited implementation of a secret-shared validator configuration. This tooling will be a critical piece of eth2 for improved validator resilience and diversification on the network.
011: February 2021
eth2 is continuing to grow! There is now:
3.2m ETH deposited, equivalent to $5.2bn USD — roughly 2.8% of all ETH.
100k validators, of which 97.4k are active and 2.8k are pending.
A three day wait time in the activation queue.
The activation queue has continued to shrink from its peak of about three weeks, to just over three days now. The beacon chain adds 900 validators to the active set per day, requiring deposits of 28,800 ETH to maintain the queue. As the chart below shows, the deposit contract has not consistently met this threshold in weeks, leading to a shortening queue.
Fun fact — with 100k validators, there are on average 250 validator signatures attesting each second of every epoch. This is several orders of magnitude more than most protocols and is made possible by the BLS signature scheme.
Thankfully, there is no slashing update! After 130+ slashings in the first few months of operation, we’ve now gone almost three weeks without any new slashings. Prior slashings were mostly due to redundant setups for enthusiasts, or incorrect setups for professionals.
eth1 withdrawal credentials
Eth2-spec PR 2149 was merged! This is a huge change, so let’s unwrap it together.
When you make a deposit onto eth2 you need to have your eth2 withdrawal credential available, which is a hash of your withdrawal public keys with the first two bytes zero’d out (0x00). PR 2149 adds eth1 withdrawal credentials by specifying a new withdrawal prefix version (0x01) whose content is a 20-byte eth1 address. Put simply:
0x00 —y ou can specify where your withdrawals go with a BLS key
0x01 — your withdrawals will go where this eth1 address says
What this means for existing validators/depositors
Any existing depositors to the Beacon Chain already have their existing BLS withdrawal credentials. At some point in the future (prior to the merge of eth1 and eth2) they will also need to sign a message specifying the eth1 address that their funds will be withdrawn to.
What this means for future validators/depositors
Any new depositors can bypass the BLS key signing step above, and can instead just set the eth1 address at the time of deposit. By using the 0x01 withdrawal prefix, instead of 0x00, it is signaled to the protocol that this is an eth1 address.
What this means for staking pools
This update is a particularly exciting development for staking pools. Today, staking pools are taking custody of user funds because the pool must control the withdrawal address. This address’ keypair can be generated using a distributed key generation technique, like Shamir Secret Sharing, but once the key shares are put together, the withdrawal key has total control over user funds with no safeguards.
PR 2149 makes it possible for staking pools to set a smart contract as the address to which they withdraw user funds. This smart contract can specify the exact logic and conditions that would enable users to claim their own funds (their initial deposit plus accumulated rewards), so that the staking pool operator does not take custody of these funds.
Staking pools can deploy these smart contracts soon and use the smart contract’s pubkey as the eth2 deposit’s withdrawal address. For validators that have already been deployed, staking pools (and everyone else) can specify the eth1 address at the time of the withdrawal.
eth1 + eth2 merge spec
As the eth2 R&D team stressed in prior months, the “phased” approach is no longer the best way of reasoning about the eth2 roadmap. Sharding, the merge, and executable shards are all separate tracks of ongoing work, and will not necessarily happen sequentially.
Because of this, while most folks are focused on rolling out sharding, the first draft of the eth1+eth2 merge spec is now live. This is a very early draft with no proposed implementation date, but a version of this doc will soon be ported into the spec repo. Keep an eye out, but try not to get too excited—there remains a lot of work to be done.
eth2 quick update no. 22 has great updates on recent eth2 research team workshops about the eth1+eth2 merge and sharding
February 13th edition of What’s new in eth2 covers eth2 scalability, Beacon Chain performance, and the coming hard fork
012: March 2021
eth2 is continuing to grow! There is now:
3.5m ETH deposited, equivalent to $6.4bn USD — roughly 3.1% of all ETH
110k validators, all of which are active
An empty activation queue!
Last slashing: February 5th, 2021
The activation queue has been empty for a little less than two weeks now, but don’t let that mislead you. First, just because it is empty does not mean that no new validators are being added. Since the last update we provided, when the queue was nearing zero, 10k new validators have been added (representing 320k ETH) — a growth of 10%.
Second, there is roughly 13k new ETH being created each day through PoW mining. On most days, 50-100% of that ETH is deposited into the eth2 chain, creating a liquidity vortex and showing huge continued demand for deploying ETH to earn staking rewards. Third, there are still several major players gearing up to offer eth2 staking, which will likely make the queue long again soon.
There are not one, but TWO, proposals to merge eth1 and eth2 early. There has long been a desire to bring about full PoS as soon as possible, but this movement was accelerated recently as PoW miners have threatened to perform a show of force in opposition to EIP-1559.
Mikhail Kalinin of PegaSys published the first proposal based on his research published in late 2020. This proposal works by “embedding eth1 data (transactions, state root, etc) into beacon blocks and obligating beacon proposers to produce executable eth1 data. This enshrines eth1 execution and validity as a first class citizen at the core of the consensus.” James Beck expertly expands on this proposal here.
Vitalik published the second proposal as a quick-and-dirty method to get the merge done on a short timeline with minimal modifications to eth1 and eth2 clients. The primary changes required to implement the proposal are for the eth1 clients to change their fork choice rule, establish a secure communication channel with a trusted beacon node, and disable certain PoW checks (such as the difficulty update formula checks).
One important bit to note is that these are not conflicting proposals. Vitalik’s minimum viable merge could be executed first, and a subsequent hard fork could make the interaction between the beacon chain and the application state more native (which is what Mikhail’s proposal achieves).
First eth2 hard fork – Altair
Eth2 devs have been planning for the first eth2 hard fork practically since the day eth2 launched! Danny Ryan just pushed Stargazer, the first pre-release for the first eth2 hard fork, called Altair. Altair has a a number of improvements, but its primary features are:
Sync committees to support light clients
Incentive accounting reform to reduce spec complexity
Modified attestation rewards to increase incentive compatibility
Per validator inactivity leak
Penalty parameter updates toward maximally punitive parameters
Let’s dive into each of these.
1. Sync committees to support light clients
Protolambda, Hsiao-Wei Wang, and Danny Ryan published the minimal light client design spec, which states: “Ethereum 2.0 is designed to be light client friendly. This allows low-resource clients such as mobile phones to access Ethereum 2.0 with reasonable safety and liveness. It also facilitates the development of ‘bridges’ to external blockchains.” Sync committees are a crucial component of supporting light clients on eth2.
2. Incentive accounting reform to reduce spec complexity
The eth2 incentive accounting previously stored “pending attestations” in state, to then do accounting at the epoch boundary against these complex objects. This will be reformed by Altair so that they store a bit field in state, per validator, that is updated when attestations come in (correct-head, correct-target, etc.), simplifying accounting and reducing spec complexity. One bit to note here is that this change does not meaningfully reduce the processing currently being done at epoch boundaries, so it will not help with the occasional drops in participation we are seeing today. However, other optimizations are being developed now to address that need.
3. Modified attestation rewards to increase incentive compatibility
On eth2 there is currently an accidental incentivization for validators to occasionally wait a long time to broadcast an attestation to ensure correctness. This delay is caused by the way in which timing and correctness of attestations are coupled. By slightly modifying the methodology by which attestation rewards are attributed, this rare, but bothersome, delay should be eliminated.
4. Per validator inactivity leak
If the inactivity leak were triggered today all validators would be penalized proportionally based on their uptime. As an example, if a validator was offline 100% of the time and lost 40% of their balance, a “good” validator with a 90% uptime would lose 4% of their balance. This is troublesome because eth2 is supposed to be very forgiving to honest, but imperfectly-run, validators (e.g., those run at home by enthusiasts).
his change will make the inactivity leak quadratic per validator. So, coming back to our previous example, a fully offline validator would still receive the maximum penalty of 40%, but a validator with a 90% uptime score would lose .4% of their balance instead of 4%. You can learn more about this feature here.
5. Penalty parameter updates toward maximally punitive parameters
Eth2 launched with reduced slashing parameters to protect stakers in the early days of the network:
Inactivity leak reduced to 1/4 of its original value
Correlated slashing reduced to 1/3 of its original value
Base slash amount reduced from 1 ETH to 0.25 ETH
This change will roughly double the parameters from their current values, bring those values closer to their original specifications, and significantly increasing the slashing and penalty parameters for future offences. Thankfully, there hasn’t been a slashing in almost 6 weeks, after the slate we saw in the first few months of network operations.
There are fairly dramatic changes coming to Ethereum’s economics, with EIP-1559 and the eth1<>eth2 merge (that not enough folks are talking about). Cumulative Ethereum transaction fees for 2020 were $276m, nearly doubling Bitcoin’s at $146m. In 2021, usage of Ethereum has exploded, with daily fees reaching a high of $50m (⅓ of the entire previous year!) and are currently averaging about $25m per day.
If we assume that better fee estimation and a burning of the BASEFEE (see EIP) reduces transaction costs by 50% to $12.5m per day, a total of $4.6bn in transaction fee revenue will go to miners per year. However, the eth1<>eth2 merge changes that dynamic, as those fees will now go to validators instead. The impact of this change cannot be overstated.
Eth2 PoS validators have skin in the game as they are ETH token holders. This means that any transaction fees generated post-merge will go straight to the Ethereum community. Additionally, PoS validation costs are significantly cheaper than PoW mining, which will also decrease the mandatory selling pressure in PoW to cover costs like electricity and replacement hardware.
Lastly, the (relatively) low bar of 32 ETH per validator, and forgiving uptime requirements, means that being a validator is accessible to many people, while those with less ETH or minimal technical acumen can still participate by using services like RocketPool or an exchange like Coinbase.
The current reward rate on eth2 is about 8.25% annually. If $4.6bn in tx fees start accruing to the $6.4bn in currently staked ETH, it may push the reward rate to about 80%, which may act as an incentive for many more folks to begin staking on eth2, drastically increasing its security properties.
Additionally, deriving the vast majority of its security from transaction fees will put Ethereum in a truly special position amongst blockchains. The long term vision for most blockchains is to have transaction fees, not inflation, provide the economic incentive to keep the chain secure. Even Bitcoin, the oldest and most secure protocol, still has questions about whether transaction fees alone will be able to provide the required security when block rewards subside.
With the coming merge Ethereum will become the first protocol (of any consensus variety) to be kept definitively secure by transaction fees alone, as they will comprise the overwhelming majority of rewards keeping the network secure.
013: April 2021
Eth2 is continuing to grow! There is now:
3.7m ETH deposited, equivalent to $7.8bn USD—roughly 3.2% of all ETH
115k validators, all of which are active
An empty activation queue!
Last slashing: April 6th, 2021, for an attestation violation
I subscribe to the theory of eth2 staking as the Internet Bond (crypto’s equivalent of the risk free rate of return), proposed by Mara Schmiedt, BD Manager at Coinbase Cloud, and Collin Myers. Only 5k ETH has been deposited to eth2 since our last update on March 18th, showing a slowing rate of deposits compared to prior months. In today’s bull market, many token holders are looking for higher risk activities, such as the 639k ETH locked up in Fei’s launch. We think there is still latent demand waiting to join eth2 and expect the staking rate to increase shortly, but anticipate that the staking rate may remain below 10% until the eth1<>eth2 merge.
eth1<>eth2 Merge Update
Progress continues to accelerate on the merge, as researchers, client teams, and community members approach the work from several directions. Due to the nature of Ethereum development, there is no top-down, command-and-control-style roadmap by which things are done. Many efforts are in flight and the community works together to reconcile differences and reach consensus on important decisions before moving forward.
The first track of work is designing how the whole system will function together, with special focus placed on how the application layer (where all the dapps reside) and the consensus layer (PoW → PoS) will interact. This design is then translated to the merge spec. Danny, Protolambda, Dmitry, Mikhail, and others recently held the first Merge Implementers’ call, which is well worth a listen.
The second track of work is the upcoming Altair hard fork, which will introduce several changes to how eth2 functions. Altair must occur before the merge is possible. One dynamic emerging as a result of this requirement is that the teams working on the merge are operating off of the Phase 0 specification (how eth2 currently works), and will need to rebase to Altair once it has shipped.
The third track of work comprises efforts to create POCs and testnets that actually bring the eth2 vision to life.
“[Last] week, protolambda and others released plans for Rayonism☀️, an ambitious month-long hack to create Merge devnets based on current specs with a stretch goal of adding sharding to these devnets along with L2 rollup integrations. The primary motivation is to unite development around a unified Merge spec to onboard all client teams firmly into the Merge design and process so that an informed decision on the Merge roadmap can be agreed upon in the coming months. That, and have a little bit of fun :)” - Danny Ryan’s Finalized no. 25
The last track of work will be for all of the eth1 and eth2 client teams to implement the spec required for the merge, conduct testnets, and otherwise prepare for the transition from PoW to PoS.
Incredibly, the initial merge spec for Rayonism is already available!
Rayonism takes place from April 16th to May 14th, which overlaps with the Scaling Ethereum hackathon (hosted by ETHGlobal) happening from April 16th to May 13th. There has never been a better time to get involved in advancing Ethereum. If you need any advice on where to start or who to talk to, slide into my DMs and I’ll be happy to help!
There are no official estimates at this time of when the merge will actually occur. Some folks are optimistic that a minimum viable merge will happen in 2021, but personally I think early- to mid-2022 is more likely. Altair happening in early summer leaves only ~5 months of the year to get everything implemented, tested, and launched.
Additionally, a lot of work will need to happen on the community governance side to make the merge possible, specifically around building consensus and queueing up support in the face of predictable FUD from folks that want Ethereum to stay on PoW as long as possible. With hundreds of billions of dollars in value on Ethereum, it’s important to get this right.
014: April 2021
Eth2 is continuing to grow! There is now:
4m ETH deposited, equivalent to $11.1bn USD—roughly 3.5% of all ETH
125k active validators, with a <1 day-long activation queue
Last slashing: April 19th, 2021, for an attestation violation
eth2's First Incident
Eth2 had its first incident on mainnet on April 24th, when a bug in the Prysm client resulted in Prysm validators (accounting for ~70% of all validators) being unable to produce blocks.
The ELI5 explanation of the incident is that roughly every 7 hours all eth2 validators agree on the latest data from the eth1 deposit contract, called a deposit tree root. A Prysm validator created an invalid tree root, and other Prysm validators agreed to use it without first verifying whether the root was valid. Because Prysm validators didn’t have the right view of the eth1 deposit contract, whenever a block on the Beacon Chain contained data about a new deposit into the deposit contract the block proposal would fail, as the validator could not reconcile this new data with what it thought the eth1 deposit contract looked like.
Prysmatic Labs’ incident report and retrospective, and Ben Edgington’s What’s New in Eth2 from April 24, 2021, do an incredible job of covering the incident and I strongly recommend reading them.
Consequences of a similar incident post merge and EIP-1559
In this piece, however, I would like to examine the possible consequences of a similar incident, in which blocks are not able to be produced, occurring post merge and EIP-1559.
The first potential consequence to note is that the lack of block production would be highly disruptive to the dapp, and specifically DeFi, ecosystem. Each block contains transactions arbitraging prices, liquidating deposits, and other means to keep the ecosystem healthy. A 70% drop in block production is bad, but the good news is that it will be less bad once the merge and EIP-1559 are live.
EIP-1559 includes a concept called elastic blocksize cap by which validators will be able to make blocks up to 200% larger than the regular cap permits, allowing the network to better react to bursts of demand. If the demand for block space remains the same, but the supply of blocks decreases, the blocks that successfully go through will quickly reach the 200% cap.
So, instead of a 70% drop in eth2’s transaction throughput, the network would likely only experience a 40% drop in throughput (albeit at much higher fees) as the 30% of remaining functional validators would create essentially 60% worth of blocks. Although obviously not ideal, this is incredibly encouraging as it shows that the network can remain robust and performant during periods of severe instability.
The other potential consequence is that the average loss per impacted validator was about $.50 throughout this incident, however, this number would be much higher post merge. Currently, validators earn about 5% of their rewards from proposals, but with the coming Altair hard fork this should increase to 12.5%, making successful block proposals more impactful for validators.
Post merge, validators will also earn transaction fees from block proposals. Justin Drake estimates that the eth2 reward rate will increase to 25% (currently at ~8%), so when you net it all out, the expected share of rewards that a validator earns as a result of proposing blocks could increase from 5% today to ~80% post merge. Given the briefness of this incident, the net losses in rewards to validators from a similar incident in the future should still be relatively small, but it’s easy to see how losses could quickly grow if the incident were to be extended or recurring.
Bison Trails (now Coinbase Cloud) has a mission to advance the crypto ecosystem with secure and reliable infrastructure. We take network security, stability, and performance extremely seriously, which is one of the reasons we are such huge fans of eth2 and its design for anti-correlation and client diversity. Our multi-cloud, multi-region infrastructure is incredibly powerful in supporting most networks, but taking it to the next level for eth2 required one more step.
Today we are excited to announce that we will launch support for Lighthouse next week in addition to our existing support for Prysm. Becoming multi-client was our goal from the beginning, and adding Lighthouse support has been in the works for months, so there is a certain amount of serendipity that we are able to announce this after an incident highlights how incredibly important client diversity is.
Sigma Prime is a tremendously talented team of security-oriented engineers and we are eager to continue to work closely with them, including on features such as remote signer support for Lighthouse (which we currently support for Prysm).
Bison Trails (now Coinbase Cloud) will continue to work hard to keep eth2 robust and performant so it can serve as neutral infrastructure for our financial future.
015: July 2021
Eth2 is continuing to grow! There is now:
6.4m ETH deposited, equivalent to $15bn USD—roughly 5.5% of all ETH
200k+ active validators
An average validator balance of 33 ETH
Fun fact: there are 4 validators that have never missed an attestation, two of which are run by Daniel Novy of MIT Media Lab
EIP-3675: Upgrade consensus to proof of stake
The latest spec for hot-swapping Ethereum’s PoW consensus to PoS was published by Mikhail, Danny, and Vitalik on July 22nd, 2021. As previously communicated by Ethereum researchers, this spec attempts to make as few changes as possible to the consensus and client software. This is in order to reduce the complexity and risk of the merge, while shortening the timeline of getting it done.
By and large, the changeover to PoS should be smooth for most users, contracts, and services (since the EVM will remain unchanged), but there are a few possible exceptions. Namely, anything that heavily relies on the PoW consensus may be impacted, such as dapps or tools that perform block validation or validate merkle proofs.
eth2 Altair upgrade
Altair, eth2’s first hard fork, is coming! There have been three relatively successful (although not perfect) devnet launches so far, and a date is being set now to deploy Altair on Pyrmont. The current projection is that Pyrmont will upgrade to Altair on August 19th, in epoch 61650 (slot 1972800).
Assuming the upgrade is successful, we are estimating that Altair may hit mainnet sometime in mid-September.
Work on the merge has been piecemeal to date with many workstreams running concurrently, but, after the London fork on eth1 and Altair fork on eth2, the streams will become a confluence. The client teams will begin working together to apply the merge strategy, including proper fork-transition logic.
One of the big strengths, but also challenges, is inclusivity. The more clients that attempt to support the merge, the more combinations will need to be attempted and tested to ensure there are no bugs or inconsistencies in results. Each eth1 client needs to work with each eth2 client!
According to Tim Beiko there are three possible merge paths, “based on the amount of non-consensus work expected on the testnets (e.g. JSON RPC APIs, infrastructure support, etc.):
Merge ASAP (unlikely unless there was a security reason to do so);
Have a network upgrade where only the difficulty bomb gets delayed and merge shortly after;
Have a network upgrade which introduces new EIPs and give the community an extended period of time to interact with the testnets.”
Although there have been calls to merge the networks in 2021, our optimistic estimate is that it will occur sometime in Q1 2022, with a possible delay into Q2.
We hope you've enjoyed this archive of our eth2 updates. To learn more about eth2, how it works, and our offerings for the network, read our guide.