Ethereum 2.0 recently started its beacon chain, completing phase 0 of a scaling effort that has been in the works for years. Despite expressing his confidence in Eth2, Celsius CEO and Founder Alex Mashinsky believes the network could lose its limelight if it doesn’t scale quickly and significantly.
“Ethereum has to prove that it can scale its transactions 100x without compromising security or decentralization,” Mashinsky told Cointelegraph when asked about Eth2’s next hurdle after the start of the Beacon Chain. “If it doesn’t scale, Cardano and Polkadot will take over.”
According to data from Blockchair, Ethereum’s network is hosting about 13 transactions per second on Thursday. A 100-fold increase would now be around 1,300 TPS.
Ethereum has been the main network for building decentralized applications in recent years. In 2020, the boom in decentralized financing (DeFi) also largely took place at Ethereum. This surge in activity has resulted in high network traffic, which has at times led to increased charges – a scaling problem that has also occurred on previous occasions.
With the switch from Ethereum 2.0 to a proof-of-stake mining algorithm, progress in scaling should soon be in sight. Ethereum co-founder Vitalik Buterin previously said that he believes the network can be scaled to 100,000 transactions per second.
However, upgrading the network had months of delays before reaching Phase 0 earlier this week. The founder of MyEtherWallet said he anticipates the next phases of Eth2 will take years to complete. Mashinsky didn’t provide a specific time estimate, but he did give his vote of confidence on the network upgrade as a whole.
“I firmly believe in ETH 2.0, even if it will take longer than expected to scale and fix all bugs,” he said.
At around $ 590 apiece at the time of publication, Ethereum’s native token, Ether (ETH), also plays a role. In phase 0, interested parties had to lock up at least 32 ETH each, whereby a total of 524,288 ETH were required for the start of the beacon chain. Since the ETH has to remain locked until the arrival of phase 2, which could take years, one might wonder how the ETH price could contribute to the further development of Eth2.
Mashinsky sees higher prices for ETH as a result. He realized:
“Since more and more ETH is blocked for ETH 2.0 or used on various DeFi and CeFi platforms, the scarcity effect in connection with the need to join these platforms increases the price. Almost all DEX exchanges are denominated in ETH, which is a huge advantage for Ethereum. “
Eth2 also completed Phase 0 amid a rising crypto bull market, where Bitcoin (BTC) recently broke its all-time high.