Ethereum

Ethereum Beacon Chain experiences 7 block reorg: What’s going on?

“This reorg is not an indicator of a flawed fork choice, but a non-trivial segmentation of updated vs out of date client software” suggested Core Ethereum developer Preston Van Loon.

Ahead of the Merge tentatively penciled in for August, Ethereum’s Beacon Chain experienced a seven-block reorganization (reorg) yesterday.

According to data from Beacon Scan, on May 25 seven blocks from number 3,887,075 to 3,887,081 were knocked out of the Beacon Chain between 08:55:23 to 08:56:35 AM UTC.

The term reorg refers to an event in which a block that was part of the canonical chain, such as the Beacon Chain, gets knocked off the chain due to a competing block beating it out.

It can be the result of a malicious attack from a miner with high resources or a bug. Such incidents see the chain unintentionally fork or duplicate.

On this occasion, developers believe that the issue is due to circumstance rather than something serious such as a security issue or fundamental flaw, with a “proposer boost fork” being highlighted in particular. This term refers to a method in which specific proposers are given priority for selecting the next block in the blockchain.

Core Ethereum developer Preston Van Loon suggested the reorg was due to a “non-trivial segmentation” of new and old client node software, and was not necessarily anything malicious. Ethereum co-founder Vitalik Buterin labeling the theory a “good hypothesis.”

Block reorg: Beacon Scan

Martin Köppelmann, the co-founder of EVM compatible Gnosis chain was one of the first to highlight the occurrence via Twitter yesterday morning, noting that it “shows that the current attestation strategy of nodes should be reconsidered to hopefully result in a more stable chain! (proposals already exist).”

In response to Köppelmann, Van Loon tentatively attributed the reorg to the proposer boost fork which hadn’t fully been implemented yet:

“We suspect this is caused by the implementation of Proposer Boost fork choice has not fully rolled out to the network. This reorg is not an indicator of a flawed fork choice, but a non-trivial segmentation of updated vs out of date client software.”

“All of the details will be made public once we have a high degree of confidence regarding the root cause. Expect a post-mortem from the client development community!” he added.

Earlier today, another developer Terence Tsao echoed this hypothesis to his 11,900 Twitter followers, noting that the reorg seemed to be caused by “boosted vs. non boosted nodes in the network and the timing of a really late arriving block.”

“Given that the proposer boost is a non-consensus-breaking change. With the asynchronicity of the client release schedule, the roll-out happened gradually. Not all nodes updated the proposer boost simultaneously.”

Related: OpenEthereum support ends with the Merge fast approaching

Van Loon spoke at the Permissionless conference last week and said that the Merge and switch to Proof-of-Stake (PoS) could come in August “if everything goes to plan.”

While the reorg is sure to raise questions of this potential timeline, Van Loon and the other developers have not yet outlined whether it will have any impact at all.

Ethereum Beacon Chain experiences 7 block reorg: What’s going on?

“This reorg is not an indicator of a flawed fork choice, but a non-trivial segmentation of updated vs out of date client software” suggested Core Ethereum developer Preston Van Loon.

Ahead of the Merge tentatively penciled in for August, Ethereum’s Beacon Chain experienced a seven-block reorganization, or reorg, on Wednesday.

According to data from Beacon Scan, on Wednesday, seven blocks from number 3,887,075 to 3,887,081 were knocked out of the Beacon Chain between 08:55:23 to 08:56:35 am UTC.

The term reorg refers to an event in which a block that was part of the canonical chain, such as the Beacon Chain, gets knocked off the chain due to a competing block beating it out.

It can be the result of a malicious attack from a miner with high resources or a bug. Such incidents see the chain unintentionally fork or duplicate.

On this occasion, developers believe that the issue is due to circumstance rather than something serious such as a security issue or fundamental flaw, with a “proposer boost fork” being highlighted in particular. This term refers to a method in which specific proposers are given priority for selecting the next block in the blockchain.

Core Ethereum developer Preston Van Loon suggested the reorg was due to a “non-trivial segmentation” of new and old client node software and was not necessarily anything malicious. Ethereum co-founder Vitalik Buterin labeled the theory a “good hypothesis.”

Block reorg: Beacon Scan

Martin Köppelmann, the co-founder of Ethereum Virtual Machine- (EVM)-compatible Gnosis chain, was one of the first to highlight the occurrence via Twitter on Wednesday morning, noting that it “shows that the current attestation strategy of nodes should be reconsidered to hopefully result in a more stable chain! (proposals already exist).”

In response to Köppelmann, Van Loon tentatively attributed the reorg to the proposer boost fork which hadn’t fully been implemented yet:

“We suspect this is caused by the implementation of Proposer Boost fork choice has not fully rolled out to the network. This reorg is not an indicator of a flawed fork choice, but a non-trivial segmentation of updated vs out of date client software.”

“All of the details will be made public once we have a high degree of confidence regarding the root cause. Expect a post-mortem from the client development community!” he added.

Earlier on Thursday, another developer, Terence Tsao, echoed this hypothesis to his 11,900 Twitter followers, noting that the reorg seemed to be caused by “boosted vs. non boosted nodes in the network and the timing of a really late arriving block:”

“Given that the proposer boost is a non-consensus-breaking change. With the asynchronicity of the client release schedule, the roll-out happened gradually. Not all nodes updated the proposer boost simultaneously.”

Related: OpenEthereum support ends with the Merge fast approaching

Van Loon spoke at the Permissionless conference last week and said that the Merge and switch to proof-of-stake (PoS) could come in August “if everything goes to plan.”

While the reorg is sure to raise questions about this potential timeline, Van Loon and the other developers have not yet outlined whether it will have any impact at all.

Price analysis 5/25: BTC, ETH, BNB, XRP, ADA, SOL, DOGE, DOT, AVAX, SHIB

Bitcoin and the major altcoins remain stuck in a range as traders search for the next factor that will start a directional move.

Bitcoin (BTC) has been struggling to sustain above $30,800 since May 16, suggesting that demand dries up at higher levels. Similarly, U.S. equity markets have not ceased to decline due to uncertainty regarding the number of rate hikes that will be needed to bring inflation under control

As the crypto bear market deepens, analysts are becoming extra bearish on their projections for the extent of the fall. Trader and analyst Rekt Capital said that Bitcoin could be at risk of falling to $19,000 to $15,500 before a bottom is formed.

Daily cryptocurrency market performance. Source: Coin360

However, Arcane Research recently pointed out that buying when Bitcoin’s Fear and Greed Index reaches a score of 8 had resulted in an average median 30-day return of 28.72%. Interestingly, the index hit 8 on May 17.

Could Bitcoin slide further and pull altcoins lower or is it time for a recovery? Let’s study the charts of the top-10 cryptocurrencies to find out.

BTC/USDT

Bitcoin rose above the downtrend line on May 23 but the bulls could not sustain the higher levels. The price turned down and dipped to the strong support at $28,630 on May 24 but a minor positive is that the bulls successfully defended this level.

BTC/USDT daily chart. Source: TradingView

The bulls are again attempting to push and sustain the price above the downtrend line. If they succeed, the BTC/USDT pair could rally to the 20-day exponential moving average (EMA) ($31,286).

In downtrends, the bears tend to sell the rallies to the 20-day EMA. Hence, this level may act as a stiff resistance. The bulls will have to clear this hurdle to suggest that a bottom may be in place.

On the downside, $28,630 is the important support to keep an eye on because a break below it could result in a drop to the May 12 intraday low at $26,700.

ETH/USDT

Ether (ETH) dipped below the uptrend line on May 24 but the bulls bought at lower levels and pushed the price back above the uptrend line. This suggests that bulls are trying to defend the uptrend line with vigor.

ETH/USDT daily chart. Source: TradingView

However, the bears have not given up and they are again attempting to pull the price below the uptrend line on May 25. If bulls thwart this attempt, the ETH/USDT could rise to the overhead resistance at $2,159.

Contrary to this assumption, if the price breaks and sustains below the uptrend line, it will suggest advantage to bears. The pair could then decline to $1,903. A break and close below this support could pull the pair to the May 12 intraday low at $1,800.

BNB/USDT

BNB climbed above the 20-day EMA ($323) on May 24 but the long wick on the May 25 candlestick suggests that the bears are attempting to defend the overhead resistance at $350.

BNB/USDT daily chart. Source: TradingView

The flattish 20-day EMA and the relative strength index (RSI) near the midpoint do not give a clear advantage either to the bulls or the bears.

If bulls push the price above $350, the advantage could tilt in favor of the buyers. Such a move could clear the path for a potential rally to the 50-day simple moving average (SMA) ($368) and later to $413.

Conversely, if the price turns down and breaks below $320, it will suggest that bears are aggressively selling at higher levels. The BNB/USDT pair could then slide to $286.

XRP/USDT

The bulls are defending the immediate support at $0.38. Although Ripple (XRP) bounced off $0.39 on May 24, the bulls could not sustain the higher levels.

XRP/USDT daily chart. Source: TradingView

The bears are again attempting to sink the price below the support at $0.38 but the long tail on the candlestick suggests strong buying at lower levels. If the demand sustains at higher levels, the bulls will attempt to push the price above the downtrend line and challenge the 20-day EMA ($0.46).

On the contrary, if the price turns down from the current level or the downtrend line, the bears may again try to sink the XRP/USDT pair below $0.38. If they can pull it off, the pair could drop to the vital support at $0.33.

ADA/USDT

Cardano (ADA) has been trading in a tight range between $0.49 and $0.56 since May 19. This suggests that bulls are attempting to form a higher low but are facing stiff resistance from the bears at higher levels.

ADA/USDT daily chart. Source: TradingView

If the price rebounds off the support at $0.49, the ADA/USDT pair may remain stuck in the range for a few more days. The bulls will have to push and sustain the price above the 20-day EMA ($0.58) to indicate the start of a strong relief rally that may reach the breakdown level of $0.74.

Instead, if bears sink the price below the strong support at $0.49, the selling may intensify and the pair could slide toward the May 12 intraday low at $0.40.

SOL/USDT

Solana’s (SOL) attempt to rally on May 23 fizzled out at $54. The failure of the bulls to push the price to the 20-day EMA ($58) indicates that demand dries up at higher levels.

SOL/USDT daily chart. Source: TradingView

The bears are trying to sink the price below the immediate support at $47. If they manage to do that, the SOL/USDT pair could drop to $43 and thereafter to the critical support at $37. The downsloping moving averages and the RSI near the oversold territory indicate advantage to sellers.

Contrary to this assumption, if the price rebounds off $47, the bulls will try to propel the pair above the 20-day EMA and challenge the breakdown level at $75.

DOGE/USDT

Dogecoin (DOGE) has been stuck inside a tight range between $0.08 and $0.09 for the past few days. The bulls tried to push the price above $0.09 on May 23 but failed. This may have attracted selling by the bears who are trying to sink the price below the immediate support at $0.08.

DOGE/USDT daily chart. Source: TradingView

If they succeed, the DOGE/USDT pair could slide to the crucial support at $0.06. This is an important level for the bulls to defend because a break and close below it could resume the downtrend. The pair could then drop to $0.04.

On the contrary, if the price rebounds off $0.08, the pair may continue to trade inside the range for a few more days. The bulls will have to push and sustain the price above the psychological level of $0.10 to indicate that the downtrend may be weakening.

Related: Singapore venture firm launches $100M Web3 and metaverse fund

DOT/USDT

Polkadot (DOT) has been clinging to the $10.37 level for the past few days. The bulls pushed the price above $10.37 on May 23 but could not sustain the higher levels. This suggests that bears are selling on rallies to the 20-day EMA ($11.23).

DOT/USDT daily chart. Source: TradingView

The bears may try to pull the price to the immediate support at $9.22. If this support cracks, the DOT/USDT pair could drop to $8 and thereafter to $7.30. The bulls are expected to defend the zone between $8 and $7.30 aggressively.

On the upside, the buyers will have to push and sustain the price above the 20-day EMA to indicate that the sellers may be losing their grip. The pair could then rally to the breakdown level at $14 where the bears may again mount a strong defense.

AVAX/USDT

Avalanche (AVAX) broke below the pennant formation on May 24 but the long tail on the day’s candlestick shows that bulls bought the dip. They tried to push the price back into the pennant but failed.

AVAX/USDT daily chart. Source: TradingView

The bears are trying to build upon their advantage and pull the price below the immediate support at $26.87. If they do that, the AVAX/USDT pair could slide to the crucial support at $23.51. This is an important level for the bulls to defend because if they fail to do that, the downtrend could resume. The next support on the downside is $20.

To invalidate this bearish view in the short term, the bulls will have to push the price above the pennant and the 20-day EMA ($37.23).

SHIB/USDT

Shiba Inu (SHIB) attempted to break above the immediate resistance at $0.000013 on May 23 but the long wick on the day’s candlestick shows that bears continue to sell at higher levels.

SHIB/USDT daily chart. Source: TradingView

The failure of the bulls to push the price higher could attract selling by aggressive bears who will try to pull the SHIB/USDT pair below the immediate support at $0.000010. If they manage to do that, the pair could slide to the May 12 intraday low at $0.000009.

Alternatively, if the price rebounds off the support at $0.000010, it will suggest that bulls are buying on dips. That could keep the pair stuck inside the $0.000010 to $0.000014 range for a few more days.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.

Market data is provided by HitBTC exchange.

Price analysis 5/23: BTC, ETH, BNB, XRP, ADA, SOL, DOGE, DOT, AVAX, SHIB

Bitcoin and the major altcoins have bounced off their immediate support levels, paving the way for a possible relief rally in the short term.

The United States equity markets are attempting a recovery after weeks of relentless selling. Along similar lines, on-chain monitoring resource Material Indicators expects the crypto market to recover, but they anticipate Bitcoin (BTC) to spend some time in a range before “a real breakout.”

The seven-day moving average of the on-chain transaction volume tracked by Glassnode hit a nine-month low on May 23. This suggests that Bitcoin’s lackluster price action in 2022 has led to reduced participation from traders.

Daily cryptocurrency market performance. Source: Coin360

While signs of a short-term recovery are visible, a sustained recovery could be difficult because the macro conditions remain challenging. International Monetary Fund managing director Kristalina Georgieva wrote in a blog post that the global economy is witnessing its “biggest test since the Second World War.”

Could Bitcoin and altcoins overcome their immediate resistance levels and start a relief rally? Let’s study the charts of the top-10 cryptocurrencies to find out.

BTC/USDT

Bitcoin held the $28,630 support on May 20, indicating that bulls are buying at lower levels. The buyers have pushed the price above the downtrend line, which is the first sign of a recovery.

BTC/USDT daily chart. Source: TradingView

If buyers sustain the price above the downtrend line, the BTC/USDT pair could rally to the 20-day exponential moving average (EMA) ($31,758). The bears are likely to defend the 20-day EMA aggressively because a break and close above it could clear the path for a possible rally to the 61.8% Fibonacci retracement level at $34,823.

Alternatively, if the price turns down from the current level or the 20-day EMA, it will suggest that the sentiment remains negative and traders are selling on rallies. The bears will have to sink the price below $28,630 to clear the path for a possible retest of the crucial support at $26,700.

ETH/USDT

Ether (ETH) bounced off the uptrend line on May 21, indicating that bulls are buying the dips to this level. The buyers will now try to push the price to the overhead resistance at $2,159 where the bears may pose a strong challenge.

ETH/USDT daily chart. Source: TradingView

If the price turns down from the overhead resistance, it could drop to the uptrend line. This is an important level to keep an eye on in the short term. If the price rebounds off the uptrend line, it could enhance the prospects of a break above $2,159. If that happens, the ETH/USDT pair could attempt a rally to $2,500.

On the other hand, if the price turns down from the current level or the overhead resistance and breaks below the uptrend line, it will suggest that the pair may remain stuck between $2,159 and $1,700 for a few days.

BNB/USDT

The bulls have pushed BNB above the 20-day EMA ($324), which is the first sign that the downtrend may have ended.

BNB/USDT daily chart. Source: TradingView

If buyers sustain the price above the 20-day EMA, the BNB/USDT pair could rally to $350 and later to the 50-day simple moving average (SMA) ($374). The bears may again attempt to stall the up-move in this zone. If the price turns down from this zone but rebounds off the 20-day EMA, it will increase the possibility of a break above the 50-day SMA.

This bullish view will be invalidated in the short term if the price turns down and breaks below $320. That would indicate selling by the bears at higher levels. The pair could then gradually drop to $286.

XRP/USDT

Ripple (XRP) is attempting a recovery after the bulls successfully defended the immediate support at $0.38 on May 19. The buyers will now try to push the price to the 20-day EMA ($0.47).

XRP/USDT daily chart. Source: TradingView

The downsloping moving averages and the RSI in the negative territory indicate that bears have the upper hand. The sellers will attempt to defend the 20-day EMA with vigor. If that happens, the XRP/USDT pair could turn down from the overhead resistance and drop to the strong support at $0.38.

Conversely, if bulls push the price above the 20-day EMA, it could suggest a possible change in the short-term trend. The pair could then rise to the overhead zone between $0.50 and $0.55, which may act as a major obstacle.

On the downside, the bears will have to sink and sustain the price below $0.38 to open the doors for a possible retest of the May 12 intraday low at $0.33.

ADA/USDT

The bulls successfully defended the psychological level at $0.50 in the past few days, indicating demand at lower levels. The buyers will now try to push Cardano (ADA) above the 20-day EMA ($0.60).

ADA/USDT daily chart. Source: TradingView

If they succeed, the ADA/USDT pair could attempt a rally to the breakdown level of $0.74. The bears are likely to pose a stiff challenge at this level. If bulls arrest the subsequent decline at the 20-day EMA, it will suggest a change in sentiment from selling on rallies to buying on dips.

Contrary to this assumption, if the price turns down from the 20-day EMA, it will indicate that bears continue to sell on rallies. The bears will then try to pull the price below $0.50 and retest the crucial support at $0.40.

SOL/USDT

The bulls purchased the dip to $47 on May 20 and are attempting to push Solana (SOL) toward the 20-day EMA ($61). The bears are expected to defend this level aggressively.

SOL/USDT daily chart. Source: TradingView

If the price turns down from the 20-day EMA, the SOL/USDT pair could drop to $47 where the bulls will attempt to stall the decline. If that happens, the pair may trade between $47 and $60 for a few days.

A break and close above the 20-day EMA will be the first indication that the bulls are back in the game. The pair could then rally to the breakdown level at $75. Alternatively, if the price turns down and breaks below $47, the pair could slide to the strong support at $37.

DOGE/USDT

Dogecoin (DOGE) is consolidating in a downtrend. The bulls defended the $0.08 support in the past few days and are attempting to push the price to the overhead resistance at $0.10.

DOGE/USDT daily chart. Source: TradingView

If the price turns down from $0.10, it will suggest that bears are trying to flip this level into resistance. If they succeed, the DOGE/USDT pair could continue its range-bound action for a few more days.

The buyers will have to propel the price above $0.10 to suggest that the downtrend may be weakening. The pair could then rally to $0.12.

Alternatively, if the price turns down from the current level and breaks below $0.08, the pair could retest the critical support at $0.06.

Related: Monero enters ‘overbought’ danger zone after XMR price gains 75% in two weeks

DOT/USDT

The bulls are attempting to push and sustain Polkadot (DOT) above the overhead resistance at $10.37. If they succeed, the price could rally to the 20-day EMA ($11.57).

DOT/USDT daily chart. Source: TradingView

The buyers will have to push the price above the 20-day EMA to indicate a potential change in the short-term trend. The DOT/USDT pair could then rally to the overhead resistance zone between $14 and $16 where the bears may mount a strong defense.

Contrary to this assumption, if the price turns down from the 20-day EMA, it will suggest that the trend remains negative and traders are selling on rallies. The bears will then try to pull the pair below $9.22 and retest the crucial support at $7.30.

AVAX/USDT

Avalanche (AVAX) rebounded off the support line of the pennant, indicating that bulls are defending this level aggressively. The buyers will now try to push the price above the pennant.

AVAX/USDT daily chart. Source: TradingView

If they manage to do that, the AVAX/USDT pair could rally to the 20-day EMA ($39). This is an important level to watch out for because the bears are expected to defend it with vigor.

If the price turns down from the 20-day EMA but does not re-enter the pennant, it will suggest a possible change in trend. The buyers will then again attempt to clear the overhead hurdle at the 20-day EMA and push the pair toward $51.

On the contrary, if the price turns down from the current level or the 20-day EMA and breaks below the support line, it will suggest that bears are active at higher levels. The pair could then slide to $23.

SHIB/USDT

Shiba Inu (SHIB) is attempting to rise above the immediate resistance at $0.000013 but the long wick on the day’s candlestick suggests that bears are attempting to stall the rally.

SHIB/USDT daily chart. Source: TradingView

If the price turns down from the current level, the SHIB/USDT pair could spend some more time inside the range between $0.000010 and $0.000014. The next trending move could start after the price breaks above or below the range.

If buyers propel the price above the 20-day EMA ($0.000014), the pair could attempt a rally to $0.000017. This level could again act as a stiff resistance.

Alternatively, if the price turns down and breaks below $0.000010, the pair could slide to $0.000009. This is an important level to keep an eye on because if it cracks, the next stop could be $0.000005.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.

Market data is provided by HitBTC exchange.

Why is Ethereum used for NFTs?

Read this guide to understand the relationship between Ethereum and NFTs, and explore why Ethereum is used for NFTs.

Which blockchain is best for NFTs?

When choosing any blockchain for minting NFTs, such as Ethereum for NFT development, ensure the robustness of its smart contracts, check the blockchain’s fee structure, security measures and transaction speed, and assess the possibility of forking.

In the cryptocurrency market, NFTs are a significant niche. They provide further exposure to cryptocurrencies for people who might not otherwise have come into contact with these assets. In addition, they actively contribute to the mass adoption of blockchain technology because they are so closely linked to digital art and gaming.

However, the resilience of a blockchain’s smart contracts is a major component of the overall security of distributed ledger technology. Smart contracts must go through extensive testing to provide the highest level of reliability and efficiency, ensuring minimal risk of downtime, breaches and hacks.

Additionally, cost-effective solutions are required for NFT-based transactions, which is critical for using and adopting nonfungible assets. As a result, the cost structure for NFTs on the blockchain is an important factor to consider, with feeless being the ideal option.

Hard forks can jeopardize nonfungible features, as duplicating NFTs calls their integrity into question. Therefore, it is critical to design NFTs and their marketplaces on fork-resistant blockchains.

Similarly, as blockchains are immutable by design, faster finality means attackers have fewer time frames in which to compromise the digital ledgers. Therefore, any platform that achieves faster transaction finality while maintaining decentralization is ideal for creating NFT marketplaces.

Other than these considerations, the final selection of blockchain for NFT development depends on your goals, like why you want to own NFTs, your budget and your investment objectives. If you are clear on the questions, you need to do your research and compare various NFT blockchains before spending your hard-earned money.

Why do NFTs use Ethereum and not Bitcoin?

The fundamental goal of Ether is to make the Ethereum smart contract and decentralized applications (DApps) platform operations easier to use and monetize, rather than to establish itself as a new monetary system. However, Satoshi Nakamoto called Bitcoin a peer-to-peer electronic cash system.

Smart contracts that assign ownership and govern the transferability of NFTs are used to create nonfungible tokens, which the Bitcoin blockchain doesn’t support. NFTs are not fungible since they are not interchangeable. While each Bitcoin will have the same value, each NFT could represent a different underlying asset and hence, have a distinct value.

Related: Fungible vs nonfungible tokens: What is the difference?

For example, when someone generates or mints an NFT, they are executing code that is stored in smart contracts that follow various standards, such as ERC-721. This data is stored on the blockchain, which is where the NFT is managed.

In addition to the above, each token has a distinct identity that is tied to a single Ethereum address. That said, each token has a unique owner who can be easily identified as they are Ethereum-based and can be purchased and traded on any Ethereum-based NFT exchange or market.

Why are most NFTs on Ethereum?

Ethereum is the leader among other blockchain networks and NFTs were born on the Ethereum blockchain. As a result, NFTs sell for a substantially higher price on average, so creators prefer them over other platforms.

Because of its highly-secure network and data architecture, the Ethereum blockchain leads the decentralized finance (DeFi) market, with the bulk of NFT projects running on it as ERC-721 coins. In addition, the blockchain provides NFTs with extensive exposure to a large and growing market. Moreover, NFT systems should continue to be Ethereum virtual machine compatible so that Ethereum wallets like Metamask can support them.

However, the high volume of network traffic causes a significant transaction backlog, leading to a substantial increase in transaction fees. Rarible, OpenSea and Nifty Gateway are three popular Ethereum-based NFT marketplaces. Nonetheless, because of the Ethereum blockchain’s limitations, NFT creators have turned to other solutions, such as the Solana blockchain, to overcome these difficulties.

Ethereum NFTs vs. Solana NFTs

The consensus process used by Solana and Ethereum is different. Proof-of-work is used by Ethereum, which results in a more decentralized network with less scalability. The ETH 2.0 is designed to address the dreaded scalability issue that has threatened its NFT and DeFi market shares. As a result, the blockchain leader may lose its status unless the 2.0 upgrade is implemented quickly. 

In contrast, Solana uses a combination of proof-of-stake and proof-of-history, a less secure but more efficient method that allows for fast and low-cost transactions using its native currency called SOL. However, Ethereum is a mature project with a significant market position, increasing creators’ confidence in minting NFTs on the Ethereum blockchain.

SolSea is Solana’s open NFT marketplace. When minting NFTs, it allows creators to choose and incorporate licenses. That said, collectors know what they’re buying and creators know what they’re selling. Solanart, a prominent NFT marketplace that launched before SolSea, is another popular NFT marketplace on Solana.

Are NFTs based on Ethereum?

Nonfungible tokens (NFTs) are compatible with any Ethereum-based project. You could, for example, trade a piece of a portrait for a ticket!

Most NFTs are part of the Ethereum blockchain at a high level. Ether (ETH), like Dogecoin (DOGE), is a cryptocurrency, but the Ethereum blockchain also enables these NFTs, which store additional information that allows them to function differently from digital currencies.

Related: What are NFTs, and why are they revolutionizing the art world?

NFTs have incredible potential, and the ERC-721 was created to address the need for unique tokens. Moreover, due to its rarity or age, the ERC-721 standard is distinct and can have a different value than another token from the same smart contract. The Etherscan NFT Tracker ranks the top NFTs on Ethereum by volume of transfers. 

But do you need Ethereum to make an NFT? The answer is no. Ethereum is not a prerequisite to creating NFTs. Other blockchains like Solana (SOL), Cardano (ADA), Tezos (XTZ), BNB Chain (BNB) and Tron (TRX) are alternative platforms for minting or creating NFTs.

So, if you want an answer to, “Is ETH the only way to buy NFT?” The answer, again, is no. Each platform requires the transaction fee to be paid in its native token. For instance, 2 ADA (Cardano blockchain’s native token) is the cost for the NFT-MAKER PRO platform, which is paid to the customers’ wallet together with the minted NFT (a requirement from Cardano).

Price analysis 5/20: BTC, ETH, BNB, XRP, ADA, SOL, DOGE, DOT, AVAX, SHIB

BTC and altcoins produced the occasional relief rally, but technical analysis suggests that the prevailing trend will remain bearish for some time to come.

Bitcoin’s (BTC) tight correlation with the legacy markets continues to be a drag, especially as the United States equity markets remain in a firm bear trend. The Dow Jones Industrial Average is on track for its eighth consecutive negative week and the S&P 500 is close to plunging into the bear market territory.

Celsius (CEL) CEO Alex Mashinsky believes that the short sellers on Wall Street are looking for any weakness in crypto companies to “short and destroy.” Mashinsky blamed “the Sharks of Wall Street” for bringing down Terra (LUNA) and trying to destabilize Tether (USDT) and Maker (MKR) and “many other companies,” including Celsius.

Daily cryptocurrency market performance. Source: Coin360

Bear markets, though painful in the short term, tend to be good buying opportunities for long-term investors. However, it’s important to remember thatwhen the next bull phase starts, not all coins will return to their former glory.

Every bull market generally has a new set of leaders; hence, traders should try to identify the cryptocurrencies that are leading the market rather than buying the laggards. Nic Carter put it nicely when he said that everything will not make a comeback and “some things die permanently.”

Could Bitcoin and altcoins break below their recent lows or will bulls defend the supports successfully? Let’s study the charts of the top-10 cryptocurrencies to find out.

BTC/USDT

Bitcoin rebounded off the strong support at $28,630 on May 19 but the bulls could not push the price above the downtrend line. This suggests that bears have not yet given up and they continue to sell on rallies.

BTC/USDT daily chart. Source: TradingView

The bears will try to pull the price below $28,630. If they manage to do that, the BTC/USDT pair could drop to the May 20 intraday low at $26,700. This is an important support for the bulls to defend because if they fail to do that, the pair could resume its downtrend. The next support on the downside is $25,000 and then $21,800.

Contrary to this assumption, if the price rebounds off $28,630 and rises above the downtrend line, it will suggest strong accumulation at lower levels. The buyers will then try to push the price to the 20-day exponential moving average (EMA) ($32,332). If bulls clear this hurdle, the pair could rise toward the 61.8% Fibonacci retracement level at $34,823.

ETH/USDT

The bears pulled Ether (ETH) below the immediate support at $1,940 on May 18 and 19 but they could not capitalize on this move. The bulls bought the dip but could not push the price to the overhead resistance at $2,159.

ETH/USDT daily chart. Source: TradingView

Strong selling at higher levels has pulled the price to the uptrend line on May 20. If the ETH/USDT pair breaks below the uptrend line, the decline could extend to the crucial support at $1,700. The bears will have to sink the pair below this level to suggest the start of the next leg of the downtrend.

Contrary to this assumption, if the price turns up from the current level or $1,700, it will suggest buying on dips. The pair will then make one more attempt to clear the overhead hurdle at $2,159. If they manage to do that, it will suggest that the pair may have bottomed out.

BNB/USDT

BNB has been consolidating near the overhead resistance at $320 for the past few days. A tight consolidation near a stiff resistance indicates that bulls are not dumping their positions as they expect the recovery to continue.

BNB/USDT daily chart. Source: TradingView

If bulls thrust the price above the overhead resistance zone between $320 and the 20-day EMA ($326), it will suggest that the BNB/USDT pair may have bottomed out. The pair could then start its northward journey toward the 50-day simple moving average (SMA) ($381).

Conversely, if the price turns down from the overhead resistance and breaks below $285, it will suggest that the bulls have given up and may be closing their positions. That could pull the pair to $265 and thereafter to the critical support at $211.

XRP/USDT

Ripple (XRP) bounced off the $0.40 to $0.38 support zone on May 19 but the bulls could not clear the overhead resistance at $0.45. This suggests that while bulls are buying on dips, the bears have maintained their selling pressure near overhead resistance levels.

XRP/USDT daily chart. Source: TradingView

If the price continues lower and breaks below $0.38, the XRP/USDT pair could drop to $0.33. This is an important level to keep an eye on because a break below it could resume the downtrend. The pair could then drop to $0.24.

Contrary to this assumption, if the price rebounds off the support zone once again, the buyers will try to push the pair to $0.50. A break and close above this level will be the first indication that the pair may be bottoming out. The next stop on the upside could be the 50-day SMA ($0.64).

ADA/USDT

The bulls are attempting to defend the $0.50 support in Cardano (ADA) but the bears are in no mood to let go of their advantage and they continue to sell on every minor rally.

ADA/USDT daily chart. Source: TradingView

If the price slips and sustains below $0.50, the ADA/USDT pair could retest the critical support at $0.40. This is an important level for the bulls to defend because a break below it could signal the resumption of the downtrend. The pair could then drop to $0.33 and thereafter to $0.28.

Contrary to this assumption, if the price turns up from the current level, the buyers will attempt to push the pair above the 20-day EMA ($0.63). If they manage to do that, it will suggest that the selling pressure could be reducing. The pair could then rise to the breakdown level at $0.74.

SOL/USDT

Solana (SOL) is in a strong downtrend. Attempts by the bulls to start a recovery on May 19 failed as bears continue to sell at higher levels. The bears pulled the price back below the psychological level at $50 on May 20.

SOL/USDT daily chart. Source: TradingView

If the price continues lower, the SOL/USDT pair could drop to $43. This level may act as a strong support but if bears pull the price below it, the next stop could be $37. If this level also cracks, the decline could extend to $32.

On the contrary, if the price turns up sharply from the current level or the support, it will suggest accumulation by the bulls. The buyers will then attempt to push the pair to the 20-day EMA ($64). A break and close above this level could open the doors for a possible rally to $75.

DOGE/USDT

Dogecoin (DOGE) bounced off the immediate support at $0.08 on May 18 but the recovery continues to face selling at higher levels. This suggests that the sentiment remains negative and traders are selling on every minor rise.

DOGE/USDT daily chart. Source: TradingView

If the price continues lower and breaks below $0.08, the bears will fancy their chances and try to pull the DOGE/USDT pair below the May 12 intraday low at $0.06. If they manage to do that, the next leg of the downtrend could begin and the pair may drop to $0.04.

This negative view could invalidate in the short term if the price turns up from the current level or the support beneath and rises above the psychological resistance at $10. Such a move could open the doors for a recovery to the 50-day SMA ($0.12).

Related: Ethereum preparing a ‘bear trap’ ahead of the Merge — ETH price to $4K next?

DOT/USDT

Polkadot (DOT) slipped below $10.37 on May 18 but the bulls purchased this dip and tried to push the price back above the level on May 19. However, the bears stood their ground and are attempting to flip $10.37 into resistance.

DOT/USDT daily chart. Source: TradingView

If the price slips below $9.22, the DOT/USDT pair could retest the support zone between $8 and $7.30. The bears will have to sink and sustain the price below this zone to indicate the resumption of the downtrend. The next support on the downside is $5.

Conversely, if the price rebounds off the support levels, the bulls will attempt to push the price to the 20-day EMA ($12). This level may act as a strong resistance but if bulls overcome this barrier, it will suggest that the sellers may be losing their grip. The pair could then attempt a rally to the 50-day SMA ($16).

AVAX/USDT

Avalanche (AVAX) is in a downtrend. The price action of the past few days has formed a pennant, which usually acts as a continuation pattern.

AVAX/USDT daily chart. Source: TradingView

If the price breaks below the support line of the pennant, the AVAX/USDT pair could retest the critical support at $23.51. A break and close below this level could signal the resumption of the downtrend. The pair could drop to $20 and thereafter to $18.

Alternatively, if the price rises from the current level, the buyers will try to push the pair above the pennant. If they manage to do that, the pair could pick up momentum and rise to the 20-day EMA ($42.35). The bulls will have to clear this barrier to challenge the breakdown level at $51.

SHIB/USDT

Shiba Inu (SHIB) has been stuck between $0.000010 and $0.000014 for the past few days, indicating indecision among the bulls and the bears. This indicates that bulls are attempting to form a bottom but the bears are not allowing the rebound to sustain.

SHIB/USDT daily chart. Source: TradingView

If the price rises above $0.000014, it will suggest that bulls have absorbed the supply. That could clear the path for a possible rally to $0.000017 where the bears may again pose a strong challenge. The bulls will have to clear this resistance to indicate a potential trend change.

Contrary to this assumption, if the price slips below $0.000010, the pair could drop to the May 12 intraday low at $0.000009. If this support cracks, the decline could extend to $0.000007 and then to $0.000005.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.

Market data is provided by HitBTC exchange.

Ethereum preparing a ‘bear trap’ ahead of the Merge — ETH price to $4K next?

An ascending triangle setup promises major price rebound in the Ethereum price in 2022.

Ethereum’s native token, Ether (ETH), continues to face downside risks in a higher interest rate environment. But one analyst believes that the token’s next selloff move could turn into a bear trap as the market factors in the possible release of the Merge this coming August.

ETH to $4K?

Ether’s price could reach $4,000 by 2022’s end, according to a technical setup shared on May 20 by Wolf, an independent market analyst.

The analyst envisioned ETH moving inside a multi-month ascending triangle pattern, which comprises a horizontal trendline resistance and rising trendline support.

Notably, ETH’s latest retest of the structure’s lower trendline could initiate a big rebound toward its upper trendline, which sits around the $4,000-level, as shown below. 

ETH/USD three-day price chart featuring ascending triangle setups. Source: Wolf/TradingView

Wolf took his bullish cues from a similar triangle setup from 2016, whose formation preceded a major bull run from $1 to $27. Similarly, another ascending triangle occurrence in 2017 coincided with a bullish follow-up, wherein ETH/USD rose 270% to over $1,500.

The Merge vs. low liquidity “death spiral”

Wolf’s fractal-based analysis came as Preston Van Loon, one of the Ethereum core developers, confirmed that the blockchain project’s much-anticipated upgrade to a proof-of-stake consensus mechanism would occur sometime in August.

Wolf noted that Ethereum was setting up a “bear trap,” which would make sense prior to the upgrade, complimenting his technical setup, as discussed above.

The pending upgrade was one of the key catalysts behind Ether’s price rally in 2021, as many investors believed it would improve the long-standing scalability problem in the Ethereum blockchain while cutting transaction and gas costs. Nonetheless, Ethereum Foundation kept delaying the launch.

“Undoubtedly, this lack of progress has played a major role in Ethereum’s recent price decline,”  Bitfreedom Research, a tech-stock and crypto research entity, noted while predicting ETH’s price to decline toward $950–$1,900 by October 2022.

Related: Analysts note parallels with March 2020: Will this time be different?

The firm cited higher interest rates as the core reason behind its bearish outlook for Ethereum, noting:

“The crypto market moves extraordinarily fast, which means crypto companies need LOTS of cash to power rapid growth. With no cash available, this can lead Ethereum’s ERC20-token economy to move in a death spiral.”

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

Cosmos price rebounds 45% in one week despite Terra’s debacle — What’s next for ATOM?

ATOM’s ascending triangle setup opens up the possibility for another major crash by June 2022.

Cosmos (ATOM) emerges as the biggest gainer among the top cryptocurrencies this May 20, brushing aside the fears about its association with Terra (LUNA), an algorithmic stablecoin project whose market valuation fell by 99% last week.

Cosmos TVL down from $10M to $155K

ATOM’s price increased by over 10% intraday to almost $12. The gains appeared as a part of a broader upside retracement that started on May 12 when it had fallen to its eleven-month low near $8. That marked around a 45% price recovery in almost a week.

ATOM/USD daily price chart. Source: TradingView

The ATOM price rebound occurred despite its parent chain, Cosmos Hub, witnessing massive capital outflows from its liquidity pools. Notably, the total value locked (TVL) with Cosmos dropped to around $155,000 on May 20, compared to its year-to-date high of over $10 million, according to Defi Llama. 

Terra emerged as one of the primary reasons behind the drop since its liquidity pools made up 92% of the overall Cosmos TVL as of May 9. But on May 20, the project’s stake in the Cosmos ecosystem was just around 17%.

Cosmos TVL distribution. Source: Defi Llama

Meanwhile, a hawkish Federal Reserve had also contributed to the selloff across riskier assets last week, hurting cryptos like Bitcoin (BTC), Ether (ETH), and ATOM in tandem, as Cointelegraph covered.

ATOM price rebound sustainable?

From a technical perspective, ATOM remains at the risk of continuing its decline in Q2/2022.

First, the Cosmos token’s 45% rebound accompanies a drop in its trading volumes, suggesting a low trader turnout behind the rally that, in turn, could lead to a price reversal. Second, the price appears to have formed an ascending triangle, a trend continuation indicator, as shown in the chart below.

ATOM/USD four-hour price chart featuring ascending triangle setup. Source: TradingView

As a rule of technical analysis, ascending triangles formed during a downtrend resolve after the price breaks below their lower trendline and continue falling until it reaches the level at length equal to the triangle’s maximum height.

Applying the same theory on Cosmos shifts ATOM’s downside target to $7.50 with the breakdown point around $10.35.

Bullish reversal scenario

In some cases, however, ascending triangles in a downtrend could lead to a trend reversal instead of continuation. Therefore, the bulls could attempt a breakout with a run-up to the triangle’s upper trendline near $12.50.

Related: Contrarian Bitcoin investors identify buy zones even as extreme fear grips the market

ATOM’s likelihood of continuing its recovery is high if this occurs particularly with increasing trading volume. In doing so, the upside target for ATOM/USD could again be at the length equal to the maximum distance between the triangle’s upper and lower trendline, as shown below.

ATOM/USD four-hour price chart featuring ascending triangle’s reversal setup. Source: TradingView

In other words, the bullish scenario puts ATOM’s price en route to $17.25 by June, up around 45% from May 20’s price.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

Price analysis 5/18: BTC, ETH, BNB, XRP, ADA, SOL, DOGE, DOT, AVAX, SHIB

Ailing stock markets continue to impact crypto prices and technical analysis suggests BTC is at risk of falling below its recent $25,500 low.

On May 17, United States Federal Reserve Chairman Jerome Powell told the Wall Street Journal that the 50-basis-point rate hikes would continue until inflation is under control. Powell’s emphasis on a hawkish policy suggests that monetary conditions are likely to remain tight in 2022, which could limit the upside in risky assets.

On-chain market intelligence firm Glassnode said that historically, Bitcoin (BTC) has bottomed out when the price breaks below the realized price. However, barring the 2019 to 2020 bear market, during previous bear cycles, Bitcoin’s price stayed below the realized price for anywhere between 114 to 299 days. This suggests that if macro situations are not favorable, a quick recovery is unlikely.

Daily cryptocurrency market performance. Source: Coin360

While the current decline in U.S. equity markets and Bitcoin has similarities with the crash in March 2020, the recovery may not follow the same trajectory because market conditions are different. In 2020, the Fed supported the markets with an unprecedented stimulus, but in 2022 the focus will remain on reducing inflation and monetary tightening.

Could Bitcoin and altcoins resume their downtrend or will lower levels attract buying? Let’s study the charts of the top-10 cryptocurrencies to find out.

BTC/USDT

Bitcoin’s recovery failed to rise above the 38.2% Fibonacci retracement level at $31,721 suggesting that the trend remains negative and traders are selling on minor rallies.

BTC/USDT daily chart. Source: TradingView

The BTC/USDT pair could drop to the immediate support at $28,630. If the price rebounds off this level, the pair could consolidate between $28,630 and $31,721 for some time.

A break and close above the 20-day exponential moving average (EMA) ($32,979) will be the first sign of a potential change in trend. The pair could then rally to the 61.8% retracement level at $34,823.

On the other hand, if the price slips below $28,630, the bears will try to cement their position by pulling the pair below $26,700. If that happens, the negative momentum could pick up and the pair may slide to $25,000 and thereafter to $21,800.

ETH/USDT

Ether’s (ETH) failure to rise above the overhead resistance at $2,159 may have tempted short-term traders to book profits. That pulled the price below $1,940 but the bulls are attempting to defend the level.

ETH/USDT daily chart. Source: TradingView

If the price rebounds off $1,940 with strength, the ETH/USDT pair could again rise to $2,159. The bulls will have to push and sustain the price above $2,159 to clear the path for a rally to the 20-day EMA ($2,353). A break and close above this resistance will suggest that the markets have rejected the lower levels.

Conversely, if bears sustain the price below $1,940, the pair could decline to the crucial support at $1,700. This is an important level to keep an eye on because a break below it could result in panic selling. The pair could then slump to $1,500 and later to $1,300.

BNB/USDT

The bulls have not been able to push BNB above the overhead resistance at $320. This suggests that bears have not given up and they continue to sell at higher levels.

BNB/USDT daily chart. Source: TradingView

If the price slips below $290, the BNB/USDT pair could drop to $265. This level is likely to act as a strong support but if bears pull the price below it, the next stop could be the critical level at $211. The bears will have to break this level to signal the start of the next leg of the downtrend.

Alternatively, if the price rebounds off $265, it will suggest that bulls are attempting to form a bottom. That could keep the pair stuck between $320 and $265 for a few days. A break and close above $320 could suggest that the pair may have bottomed out.

XRP/USDT

Ripple’s (XRP) recovery failed to sustain above $0.45, indicating a lack of demand at higher levels. The bears will now attempt to pull the price below the immediate support zone at $0.40 to $0.38.

XRP/USDT daily chart. Source: TradingView

If they do that, the XRP/USDT pair could drop to $0.33. This is an important level to keep an eye on because a break and close below it could signal the resumption of the downtrend. The XRP/UDST pair could then plunge to the next support at $0.24.

On the other hand, if the price rises from $0.38 or $0.33, the bulls will again try to push the pair above $0.45. If they succeed, the pair could rise to the stiff overhead resistance zone at $0.50 to $0.55. The bulls will have to clear this hurdle to suggest that the downtrend may be over.

ADA/USDT

Cardano (ADA) has been stuck in a tight range between $0.61 and $0.51 for the past few days. This suggests a tough battle between the bulls and the bears.

ADA/USDT daily chart. Source: TradingView

If the price slips below $0.51, the ADA/USDT pair could slide to the support zone between $0.46 and $0.40. The bulls may mount a strong defense in this zone. If the price rebounds off this zone, the buyers will again try to push the pair above the 20-day EMA. If they succeed, the pair could rise to $0.74.

Conversely, if the price breaks below $0.40, the selling could pick up momentum and the pair may extend its decline to $0.33 and then to $0.28.

SOL/USDT

Solana (SOL) is facing strong resistance near the 38.2% Fibonacci retracement level at $59, suggesting that the sentiment remains negative and bears are selling on minor rallies.

SOL/USDT daily chart. Source: TradingView

If the price breaks below the psychological level at $50, the pair could slip to $43 and thereafter to $37. The bulls are likely to defend this level with all their might because if the support gives way, the downtrend could resume. The next stop on the downside may be $32.

Alternatively, if the price turns up from the current level and rises above $59, the SOL/USDT pair could rally to the overhead resistance zone between the 20-day EMA ($67) and $75. A break and close above this zone could suggest that the downtrend may be over.

DOGE/USDT

Dogecoin (DOGE) continues to trade below the breakdown level of $0.10. This suggests a lack of urgency to buy at higher levels. Generally, sharp declines are followed by consolidations as bulls and bears battle it out for supremacy.

DOGE/USDT daily chart. Source: TradingView

The failure of the bulls to push the price above $0.10 may attract another round of selling by the bears who will attempt to resume the downtrend. If the price dips below $0.08, the DOGE/USDT pair could drop to $0.06. If this support cracks, the decline could extend to the next support at $0.04.

On the contrary, if the price rebounds off $0.08, the pair may rise to $0.10 and remain stuck inside this range for a few days. The bulls will have to push and sustain the price above the 20-day EMA ($0.10) to suggest that the downward momentum may be weakening.

Related: Aave price risks a 25% plunge as a classic bearish reversal pattern emerges

DOT/USDT

The bulls defended the $10.37 support on May 17 but the shallow rebound suggested a lack of demand at higher levels. The bears resumed their selling on May 18 and pulled the price below $10.37. Polkadot (DOT) could now drop to $8.

DOT/USDT daily chart. Source: TradingView

The buyers are expected to aggressively defend the zone between $8 and $7.30. If the price rebounds off this zone, the DOT/USDT pair could again attempt a relief rally. The recovery could pick up momentum on a break above the 20-day EMA ($12.53).

Alternatively, if bears sink the price below $7.30, the selling could accelerate and the pair may signal the resumption of the downtrend. The pair could then plummet toward psychological support at $5.

AVAX/USDT

The buyers could not push Avalanche (AVAX) above the immediate resistance at $38. This suggests that demand dries up at higher levels.

AVAX/USDT daily chart. Source: TradingView

The bears will now fancy their chances and attempt to pull the price below the critical support at $29. If they succeed, the AVAX/USDT pair could retest the May 12 intraday low at $23.51. A break and close below this level could open the doors for a further decline to $20 and later to $18.

Contrary to this assumption, if the price rebounds off $29, the bulls will again try to push the pair above $38. If that happens, the relief rally could reach the 20-day EMA ($45). The bears may again pose a strong challenge at this level.

SHIB/USDT

Shiba Inu (SHIB) has been consolidating inside the tight range between $0.000011 and $0.000014 for the past four days. Usually, such tight ranges resolve in a strong trending move.

SHIB/USDT daily chart. Source: TradingView

If the price breaks below $0.000011, the bears will try to pull the SHIB/USDT pair to $0.000009. This is an important level for the bulls to defend because a break below it could signal the resumption of the downtrend. The pair could then decline to $0.000007 and later to $0.000005.

Contrary to this assumption, if the price turns up and breaks above the 38.2% Fibonacci retracement level at $0.000014, the bulls will attempt to push the pair to the breakdown level at $0.000017.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.

Market data is provided by HitBTC exchange.

Cloudflare to run Ethereum node experiment to help ‘build a better internet’

“Cloudflare is going to participate in the research and development of the core infrastructure that helps keep Ethereum secure, fast, as well as energy-efficient for everyone,” the firm stated.

Ahead of Ethereum’s highly anticipated switch to proof-of-stake (PoS), cybersecurity firm Cloudflare is set to launch and fully stake Ethereum validator nodes over the next few months.

It aims to study energy efficiency, consistency management and network speed of the PoS network as part of its commitment to environmental sustainability and to help “build a better internet.”

Cloudflare was founded in 2010 and provides web security services such as distributed denial-of-service (DDoS) mitigation to protect clients from DDoS attacks.

Cloudflare said it was experimenting with the “next generation of Web3 networks that are embracing proof of stake,” with Ethereum being the first in line for the company.

At this stage, it appears the Merge and transition to a PoS consensus mechanism is slated to go live by Q3 or early Q4, barring any further delays, with Cloudflare noting that this will lead to “significant energy efficiency improvements” for the network.

According to a Monday blog post, the firm will launch and fully stake Ethereum validator nodes — 32 Ether (ETH) required per node — over the next few months. It did not specify how many nodes, or any specific start date:

“Cloudflare is going to participate in the research and development of the core infrastructure that helps keep Ethereum secure, fast, as well as energy-efficient for everyone.”

“These nodes will serve as a testing ground for research on energy efficiency, consistency management, and network speed,” the blog post added.

Related: Polkadot vs. Ethereum: Two equal chances to dominate the Web3 world

The firm said the tests relate to its commitment to the environment and helping pave a path “that balances the clear need to drastically reduce the energy consumption of Web3 technologies and the capability to scale the Web3 networks by orders of magnitude.”

Cloudflare noted that Ethereum’s upcoming upgrades will significantly reduce its energy consumption as it shifts away from the environmentally “challenging” proof-of-work (PoW) model, which has been at the forefront of Web3 adoption but does “not scale well with the usage rates we see today:”

“The energy required to operate a Proof of Stake validator node is magnitudes less than a Proof of Work miner. Early estimates from the Ethereum Foundation estimate that the entire Ethereum network could use as little as 2.6 megawatts of power. Put another way, Ethereum will use 99.5% less energy post-merge than today.”

While the firm did not outline which project it will focus on next, it teased that it will be working with partners across “cryptography, Web3, and infrastructure communities” moving forward.