fork

3 key Ethereum price metrics cast doubt on the strength of ETH’s recent rally

ETH’s price is showing strength, but network and derivatives data suggest that ETH will struggle to hold the $1,850 price level.

Ether’s (ETH) price had been battling the $1,850 resistance level, but it broke through on April 4 when Ether rallied to a seven-month high above $1,900. Recently there has been a lot of speculation on Ether price catalysts. Let’s see if it’s possible to identify any fundamental factors behind the price movement. 

The upcoming Shanghai hard fork could be one factor in Ether’s recent bullish momentum. On April 12, the ability for validators to withdraw their deposits opens, giving staking participants freedom of movement but also creating a sell-off risk for Ether.

There are now 17.81 million ETH staked on the Beacon Chain, though some safeguards have been put in place to prevent a flood of Ether from disrupting the market. For example, because there is a daily limit of 2,200 withdrawals, the maximum daily unlocks are 70,000 ETH.

Scalability and selfish validator risks are still present

The upcoming Shanghai fork, however, does not address some of the most pressing issues currently plaguing the Ethereum network. Scalability continues to be a major issue for most users, as the average transaction fee has hovered around $5 in recent weeks, driving users away from decentralized applications (DApps).

Furthermore, the current consensus mechanism favors rogue miners who outperform other network participants, a phenomenon known as miner extractable value (MEV). They can quickly duplicate all winning deals from the mempool and execute their transactions ahead of others by ultimately deciding which transactions are completed in the block.

A recent example, highlighted on April 3 by security firm CertiK, resulted in $25 million in losses to arbitrage bots that were attempting to purchase and flip tokens in a short period of time for a profit as a selfish validator replaced the transactions.

Over the last 30 days, the top 10 DApps running on the Ethereum network saw an 18% drop in active addresses, possibly reflecting investor dissatisfaction with the ongoing issues with miners front-running and high transaction costs.

30-day Dapp activity. Source: DappRadar

Let’s look at Ether derivatives data to understand if the $1,850 level can effectively become a support according to ETH investors’ sentiment.

ETH derivatives show no improvement despite the price rally

The annualized three-month futures premium should trade between 5% and 10% in healthy markets to cover costs and associated risks. However, when the contract trades at a discount (backwardation) versus traditional spot markets, it shows a lack of confidence from traders and is deemed a bearish indicator.

Ether 3-month futures annualized premium. Source: Laevitas.ch

Despite ETH’s 35% rally in 25 days, the Ether futures premium has been unable to break above the 5% neutral threshold. However, the absence of leverage longs demand does not always imply an expectation of negative price action. As a result, traders should examine Ether’s options markets to understand how whales and market makers price the likelihood of future price movements.

The 25% delta skew is a telling sign when market makers and arbitrage desks are overcharging for upside or downside protection. For instance, in bear markets, options investors give higher odds for a price dump, causing the skew indicator to rise above 8%. On the other hand, bullish markets tend to drive the skew metric below -8%, meaning bearish put options are in less demand.

Related: Ethereum projects unite to protect users from MEV-induced high prices

Ether 60-day options 25% delta skew: Source: Laevitas.ch

Since April 1, the delta skew has been close to zero, indicating a similar demand for protective put options and neutral-to-bearish call instruments. Since March 22, when Ether options last showed extreme optimism, this has been the norm.

Even after adjusting for the additional negative pressure from the Shanghai hard fork token unlock, Ether faces serious problems due to scalability and transaction front-runs. As a result, derivatives and on-chain DApp metrics increase the likelihood of ETH falling below $1,850.

Magazine: ‘Account abstraction’ supercharges Ethereum wallets: Dummies guide

The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

Ethereum bulls ignore regulatory action against exchanges by preparing for the Shapella hard fork

ETH investors appear unconcerned about the regulatory challenges facing the crypto market and are instead selecting to focus on the network’s next upgrade.

For the past twelve days, the price of Ether (ETH) has been trading in a narrow descending range. Surprisingly, not even the news of Binance and Changpeng “CZ” Zhao being sued by the Commodity Futures Trading Commission (CFTC) was enough to break the support level. 

Ether (ETH) price index in USD, 12-hour. Source: TradingView

The lawsuit, filed on March 27, claimed that Binance provided derivatives trading services to United States-based customers without first obtaining a derivatives license. Additionally, the U.S. Securities and Exchange Commission served Coinbase with a Wells notice on March 22.

Even if traders saw no reason to reduce their Ether positions due to increased regulatory risk, Binance holds 35% of the open interest in Ether futures. Therefore, if traders are suddenly compelled to liquidate their positions or if there is a sudden reduction in liquidity after U.S. entities are effectively barred from Binance’s markets, one should anticipate a significant impact on Ether derivatives markets.

One could point to the market’s resiliency after BitMEX derivatives exchange lost its longtime market share advantage following a 30-minute outage in March 2020 during a Bitcoin crash. However, there is no way to predict the outcome of the regulators’ case against Binance, so it would be naive to assume that there is a zero percent chance of a service interruption — even if it means clients can close positions and withdraw assets.

Instead of focusing solely on the ETH price, it is essential to closely monitor Ether derivatives to understand how professional traders will react.

ETH derivatives show increased demand for longs

In healthy markets, the annualized two-month futures premium should trade between 5% and 10% to cover associated costs and risks. However, when the contract trades at a discount (backwardation) relative to traditional spot markets, it indicates traders’ lack of confidence and is regarded as a bearish indicator.

Ether 2-month futures annualized premium. Source: Laevitas

On March 29, derivatives traders using futures contracts became slightly more bullish as the indicator moved to 4%. The futures premium reached its highest level in four weeks, despite remaining below the 5% neutral threshold. Those traders became even more confident that the market structure would remain stable.

Still, the increasing demand for leverage longs (bulls) does not necessarily translate to an expectation of positive price action. Consequently, traders should analyze Ether’s options markets to understand how whales and market makers are pricing the odds of future price movements.

Related: SEC chief Gary Gensler to face Congress grilling over crypto policy

Option traders are unfazed by regulators’ actions

The 25% delta skew is a telling sign when market makers and arbitrage desks are overcharging for upside or downside protection.

In bear markets, options investors give higher odds for a price dump, causing the skew indicator to rise above 8%. On the other hand, bullish markets tend to drive the skew metric below -8%, meaning the bearish put options are in less demand.

Ether 60-day options 25% delta skew: Source: Laevitas

The delta skew indicator has been neutral since March 22, indicating similar pricing for upside and downside options. However, given that Ether’s price is nearing its highest level in seven months, at $1,800, one would expect the protective put options to trade at a premium — which is not the case.

Given the increased regulatory pressure on Coinbase and Binance, it is clear that the derivatives markets are signaling confidence. The bullish momentum for Ether could also be linked to the Shapella fork being confirmed for April 12. Validators will be able to withdraw their ETH coins from the Beacon Chain once the Ethereum Improvement Proposal EIP-4895 becomes active.

Options and futures markets indicate that professional traders are unconcerned about regulators’ actions against Binance and Coinbase. Those who believe the descending channel pattern will break to the upside have a solid claim.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

DefiLlama forked as internal dispute unfolds

A disagreement over the launch of a LLAMA token led core employees to fork DefiLlama blockchain on March 19.

A dispute has taken place within the decentralized finance analytics dashboard DefiLlama, leading the platform to be forked by one of its employees over the weekend. 

The dispute centers on the company’s plans to launch a token. On March 19, a pseudonymous developer at DefiLlama, 0xngmi, announced the firm’s team was forking the platform. 0xngmi said that DefiLlama was “undergoing a hostile takeover,” and accused DefiLlama’s founders of launching a token without employee support.

According to 0xngmi, a person controlling both DefiLlama’s Twitter account and website domain decided to launch a token “despite everybody in the team not wanting it.” The developer added that “the DefiLlama team who have built the site […] for the past three years have decided to fork Defillama and start fresh on llama.fi.”

“Long story short, there was someone planning to launch a LLAMA token without approval of a single person on the defillama team,” tweeted pseudonymous user Tendeeno, claiming to be a contributor on several projects of Llama Corp., the parent company of DefiLlama.

Cointelegraph reached out to 0xngmi and Llama Corp., but did not receive immediate responses. In a Telegram channel, Llama Corp. said:

“0xngmi and a few team members have gone rogue, they are actively looking to seize DefiLlama IP and community while inaccurately claiming the rightful owner to be doing a hostile takeover.”

Some Twitter users were showing support for DefiLlama co-founders Charlie Watkins and Ben Hauser. DeFi architect and Yearn.finance founder Andre Cronje said: 

“Easy to be ideological when you aren’t paying the bills. Charlie has been out of pocket funding all of defillamas expenses for years, it isn’t cheap. Watching everyone turn on everything he has done is disgusting. Him trying to stop the bleeding isn’t greed, it’s sustainability. Let’s see how long they last without his ‘free money’. They’ll be raising or adding ads or a token soon enough.”

Solana faces slowdown in block production, network restarted

The issue is linked to the recent network upgrade from 1.13 to 1.14, which slowed block finalization.

Solana network faced a slowdown in block production on Feb. 25 following an upgrade in the validator software. The incident resulted in disruptions to transactions and led validators to downgrade the software in an attempt to restore network performance. 

The technical issue started around 6:00 am UTC, leading validators to downgrade to version 1.13 to restore transactions in the network. The downgrade, however, was not enough to restore Solana to normal operations, forcing the decision to restart the network on v1.13.6.

“The network experienced a significant slowdown in block production that coincided with an upgrade to validator software. Engineers are still conducting a root cause analysis,” noted Solana’s compass website.

Related: The state of Solana: Will the layer-1 protocol rise again in 2023?

The issue is linked to the upgrade from 1.13 to 1.14, which slowed block finalization. The Solana network is currently restarting, with 80% of active validators online necessary to resume operations:

“As more validators complete their restart this number will rise in line with the amount of stake they have delegated: this means larger validators such as CEX have an outsized impact on restart times.“

Solana’s validators discussed a solution to the incident in the hours following the issue. Infrastructure provider Chorus One noted on Twitter that the incident “demonstrated how genuinely decentralized the network is.“ It said:

“Without all these debates, we would be back up in an hour. But, every decision along the way – whether to downgrade, whether to restart, when to switch from downgrade approach to restart approach – is debated. Voting happens. We end up taking 8-10 hours to recovery, instead of 1.”

Solana is an open-source layer-1 blockchain. Its third-generation network architecture is designed to facilitate smart contracts and decentralized application creation. The Solana blockchain was launched during the crypto boom of 2017. The internal testnet of the project was released in 2018, followed by several testnet phases before the main network was officially launched in 2020.

Ethereum’s Shapella transition is “on the horizon”

The milestone is another step on the road to the Shanghai upgrade, which remains scheduled for March.

The Ethereum Foundation team announced another milestone on the road to the Shanghai upgrade, with the Shapella fork on the Zhejiang testnet moving into the final pre-launch sequence, according to a blog post on Feb 10.

The Shapella transition includes “many features,” and “most importantly to stakers and the consensus-layer, is the enabling of withdrawals,” notes the post, adding that:

“Full withdrawals will be available for exited validators, whereas partial withdrawals will be available for active validator balances in excess of 32 ETH.” 

As per the announcement, validators to participate in withdrawals must have a 0x01 execution-layer withdrawal credential. “If a validator currently has a 0x00 BLS withdrawal credential, they must sign a change operation to 0x01 to enable withdrawals,” notes the Ethereum team. 

Shapella refers to two Ethereum’ upgrades — “Shanghai” and “Capella” — allowing withdrawals on the execution layer, as well as the enhancement of the Beacon chain consensus layer. The move is especially helpful for ETH (ETH) stakers interested in understanding how withdrawals will work, since full withdrawals on the consensus layer require interaction.

Related: Ethereum’s Shanghai fork is coming — but it doesn’t mean investors should dump ETH

The Zhejiang test network, which launched on Feb. 1, is the first of three testnets that simulate Shanghai, which is expected to be live in March, although a specific date has not been released. The Sepolia testnet is scheduled to go through the upgrade on Feb. 28, followed by the Goerli testnet. The Ethereum team noted:

“If you are an Ethereum staker, node operator, infrastructure provider, or otherwise, now is the time to get up to speed on the coming Shapella upgrade, test your software, and pay attention. From here, each public testnet will be upgraded, and if all goes according to plan, mainnet will soon follow.”

Ethereum’s roadmap has several updates coming after Shanghai, known as the “Surge,” “Verge,” “Purge” and “Splurge”. Ethereum switched to proof-of-stake (PoS) consensus in September 2022, following by the United States Securities and Exchange Commission (SEC) Chairman Gary Gensler suggested that the blockchain’s transition to PoS might have brought ETH under the regulators’ radar.

Recently, Ethereum co-founder and crypto entrepreneur Joseph Lubin claimed to be confident that Ether won’t be classified as a security in the United States. “I think it’s as likely, and would have the same impact, as if Uber was made illegal,” Lubin said.

Ethereum’s Shapella transition is “on the horizon”

The milestone is another step on the road to the Shanghai upgrade, which remains scheduled for March.

The Ethereum Foundation team announced another milestone on the road to the Shanghai upgrade, with the Shapella fork on the Zhejiang testnet moving into the final pre-launch sequence, according to a blog post on Feb 10.

The Shapella transition includes “many features,” and “most importantly to stakers and the consensus-layer, is the enabling of withdrawals,” notes the post, adding that:

“Full withdrawals will be available for exited validators, whereas partial withdrawals will be available for active validator balances in excess of 32 ETH.“ 

As per the announcement, validators must have a 0x01 execution-layer withdrawal credential to participate in withdrawals. “If a validator currently has a 0x00 BLS withdrawal credential, they must sign a change operation to 0x01 to enable withdrawals,” notes the Ethereum team. 

Shapella refers to two Ethereum upgrades — “Shanghai” and “Capella” — allowing withdrawals on the execution layer and enhancing the Beacon Chain consensus layer. The move is especially helpful for ETH (ETH) stakers interested in understanding how withdrawals will work since full withdrawals on the consensus layer require interaction.

Related: Ethereum’s Shanghai fork is coming — but it doesn’t mean investors should dump ETH

The Zhejiang test network, launched on Feb. 1, is the first of three testnets that simulate Shanghai, which is expected to be live in March, although a specific date has not been released. The Sepolia testnet is scheduled to go through the upgrade on Feb. 28, followed by the Goerli testnet. The Ethereum team noted:

“If you are an Ethereum staker, node operator, infrastructure provider, or otherwise, now is the time to get up to speed on the coming Shapella upgrade, test your software, and pay attention. From here, each public testnet will be upgraded, and if all goes according to plan, mainnet will soon follow.“

Ethereum’s roadmap has several updates coming after Shanghai, known as the “Surge,” “Verge,” “Purge” and “Splurge.” Ethereum switched to proof-of-stake (PoS) consensus in September 2022, after which the United States Securities and Exchange Commission Chairman Gary Gensler suggested that the blockchain’s transition to PoS might have brought ETH under the regulators’ radar.

Recently, Ethereum co-founder and crypto entrepreneur Joseph Lubin claimed to be confident that Ether won’t be classified as a security in the United States. “I think it’s as likely, and would have the same impact, as if Uber was made illegal,” Lubin said.

Rewind 2022: A crypto roundup of the year and stepping into 2023

While 2022 proved catastrophic for investors across traditional and crypto markets, the crypto ecosystem’s potential has shined through the cracks of inflation and centralized custody of assets.

Stepping into the year 2023, it’s time to pause and reflect on the accomplishments and struggles the global crypto community witnessed over the last 365 days. Starting from the very beginning of 2022, no investment strategy could help recover the falling portfolios across traditional and crypto ecosystems. January 2022 inherited a slightly collapsing market, wherein investments made on 2021 all-time high prices resulted in immediate losses. 

For many, especially the new entrants, falling crypto prices were perceived as an end game. But what went widely unnoticed was the community’s resilience and accomplishments against a global recession, orchestrated attacks and scams and an unforgiving bear market.

As a result of falling prices, 2022 also inherited the 2021 hype around nonfungible tokens (NFTs), the Metaverse, iconic all-time highs for Bitcoin (BTC) and other cryptocurrencies.

Economies worldwide suffered massive inflation as the most influential fiat currencies succumbed to the ongoing geopolitical pressures. The fall of investor confidence in traditional markets seeped into crypto and the fall of ecosystems only aided the sour sentiments.

A year full of disruption

Amid poor market performance, the crypto community focused on strengthening its core. This meant releasing blockchain upgrades and introducing faster, cheaper and more secure features and capabilities — all driven by the consensus of the respective communities. As a result, 2022 was a milestone year for leading crypto ecosystems.

Bitcoin received a highly requested improvement for its layer-2 protocol Lightning Network (LN) protocol. The LN got improved privacy and efficiency thanks to a November 2021 upgrade called Taproot. Bitcoin’s Taproot upgrade saw various protocol-level implementations for improved privacy and efficiency. It also helped lower the database sizes, an essential factor in slowing down the exploding Bitcoin ledger size.

By May 2022, Bitcoin was already halfway to the next halving, an event that reduces the mining rewards by half, the only way new Bitcoin gets released into supply. The reward for confirming Bitcoin transactions gets slashed by half every 210,00 blocks. The last Bitcoin halving event occurred on May 11, 2020, back when it traded at the $9,200 mark.

The total supply of Bitcoin is limited to 21 million by design. Therefore, a halving event further reduces the amount of Bitcoin that gets released into the market. A resultant scarcity due to the halving event historical worked in favor of Bitcoin price.

Adhering to the expectations of industry experts, Bitcoin rallied for several months to mark its all-time high by Nov 2021 and was able to retain its value well above $15,000 until the end of 2022, confirms data from Cointelegraph Markets Pro.

Bitcoin price during the last halving event. Source: CoinMarketCap

The Ethereum community welcomed the highly anticipated Merge upgrade, which saw the Ethereum blockchain’s transition from proof-of-work (PoW) to a proof-of-stake (PoS) consensus mechanism. The upgrade’s most significant impact was a drastic energy consumption reduction. The wider crypto community counts on this lower energy usage to reignite the interest in Ether-power sub-ecosystems, such as NFTs.

Crypto resilience vs. traditional markets

History proves that two factors play a crucial role in crypto market performance — the price of Bitcoin and investor sentiment. Both factors seemed to lack throughout the year.

Crypto events timeline against market capitalization. Source: CoinGecko

The crypto ecosystem was plagued with a series of attacks, unprecedented sanctions and bankruptcy filings, which multiplied the impact of the global recession on the market. In addition to poor price performance, some of the most prominent scars for 2022 investors include the fall of FTX, 3AC, Voyager, BlockFi and Terraform Labs, wherein investors lost access to all their funds overnight.

Amid this commotion, entrepreneurs once loved by the masses ended up breaking the trust of millions, namely former FTX CEO Sam Bankman-Fried and Terra co-founder and CEO Do Kwon.

Despite the added hurdles, the Bitcoin and crypto ecosystem not only survived but also displayed a never-seen-before resilience. Traditional store-of-value investments such as gold and stocks too suffered a similar fate. Between January-December 2022, gold investors realized a net loss of 0.3%.

Major company stocks also performed poorly this year, which includes Apple (-25%), Microsoft (-29%), Google (-38%), Amazon (-49%), Netflix (-51%), Meta (-65%) and Tesla (-65%).

Yearly performance of traditional market goliaths. Source: LinkedIn

Bitcoin started strong with a $47,680 price point in Jan. 2022, but dwindling investor sentiment — driven by year-long rising inflation, energy prices and market uncertainties — managed to bring the prices down by over 60% by December.

Setting the stage for a stronger foundation

Time after time, bear markets have taken the responsibility of weeding out bad actors and offering a chance for promising crypto projects to display their true value to investors beyond the price point.

The noise around price fluctuations could not stop the Bitcoin network from strengthening its core against double-spending attempts, i.e., 51% attacks. Thanks to the widespread mining community, hash rate and network difficulty — two important computational power-based security metrics — reassured Bitcoiners that the blockchain network was well-protected. Throughout the year, the Bitcoin network consistently recorded new hash rate all-time highs and ended the year between the 250-300 Exahashes per second (EH/s) range.

Click “Collect” below the illustration at the top of the page or follow this link.

Other prominent players in the crypto ecosystem also released the system and feature upgrades as they gear up for 2023. For Polygon Technology, an Ethereum-based Web3 infrastructure, it was the launch of zkEVM or zero-knowledge Ethereum Virtual Machine, a layer-2 scaling solution aimed at reducing transaction costs and improving scalability. Decentralized finance (DeFi) aggregator 1inch Network launched the Fusion upgrade for delivering cost-efficient, secure and profitable swaps for crypto investors.

El Salvador’s legalization of Bitcoin did not go unnoticed, especially considering that the country’s Bitcoin procurement from 2021 shared the same fate as other crypto investors. Regardless, El Salvador President Nayib Bukele doubled down on this decision as the country announced purchasing BTC on a daily basis from Nov.17.

One of the immediate impacts of this move is a reduction in El Salvador’s average buying price. A planned purchase of Bitcoin dips combined with a subsequent market recovery makes the country well-positioned to offset the unrealized losses.

In countries with high inflation, Bitcoin helped numerous individuals retain their purchasing power.

Expect a return of the hype

While 2023 will not be fortunate enough to witness the upcoming Bitcoin halving, it will play a crucial role in the crypto ecosystem’s comeback. With aggressive blockchain upgrades, updated business strategies and investors’ attentiveness back on the menu, the ecosystem is now gearing up for the next wave of disruption.

For investors, 2023 will be a year of recovery — from losses and mistrust to self-custody and informed investments. “Making it” in crypto is no longer just about becoming an overnight millionaire; it is about creating, supporting and preaching a fresh take on the future of money.

Liquidity hub Serum forked by developers after FTX hack

SRM and MSRM tokens and fees discounts were not changed and were working as before, said developers.

Solana’s developers forked the widely used token liquidity hub Serum after being compromised by a hack on the bankruptcy exchange FTX on Nov. 11 that led to a series of unauthorized transactions. 

According to pseudonymous developer Mango Max on Twitter, a “verified build of the same version has been made and deployed” on Nov 12. Additionally, the upgrade authority and fee revenues “have been changed and are now managed by a multi-sig controlled by a team of trusted developers.” Serum (SRM) and MegaSerum (MSRM) tokens, as well as fee discounts, were not changed and were working as before.

The development took place on the weekend. Solana co-founder Anatoly Yakovenko tweeted that developers depending on serum were forking the code after the upgraded key was compromised, adding that many “protocols depend on serum markets for liquidity and liquidations.”

In a Twitter thread, Mango Max said that the Serum update key was not controlled by the Serum decentralized autonomous organization (DAO) but by a private key connected to FTX and no one could confirm who controlled the keys. The private key was necessary to update the original version of Serum, leading the developers to fork the code, as the private key is under FTX control. 

Mango Max also noted that:

“When I reached out to a couple of people previously involved with Serum, I got answers like: ‘I wish I had more info to help you, but I really don’t.’”

Liquidity providers such as Jupiter, the most popular aggregator on Solana, confirmed turning off Serum as a liquidity source “due to security concerns about upgrade authorities, and we also encouraged all our integrators to do the same.” Other projects such as Mango Markets and SolBlaze also announced integration with the new fork.

As reported by Cointelegraph, an attack led to $659 million in outflows from FTX and FTX US on Nov 11. FTX US general counsel Ryne Miller confirmed later that the transactions were unauthorized and that FTX US had moved all remaining crypto into cold storage as a precaution.

A blog post from blockchain forensics firm Elliptic suggests that the drain has seen various tokens on Ethereum, BNB Smart Chain and Avalanche removed. Of the $663 million drained, around $477 million is suspected of having been stolen, while the remainder is believed to have been moved into secure storage by FTX.

What Cardano’s Vasil hard fork means for the blockchain

Cardano’s Vasil hard fork seeks to enhance the platform’s transaction throughput speeds, DApp development capacity, security and general usability.

After several delays and some setbacks, Cardano’s long-awaited Vasil upgrade finally went live on Sept. 22. From the outside looking in, the hard fork is designed to help improve the ecosystem’s scalability and general transaction throughput capacity as well as advance Cardano’s decentralized applications (DApps) development capacity. 

To commemorate the event, an announcement was made by blockchain firm Input Output Hong Kong (IOHK) — which currently oversees the design, building and maintenance of the Cardano platform — just minutes after the development.

To obtain a more holistic overview of what the upgrade represents and its potential impact on Cardano (as well as the crypto ecosystem at large), Cointelegraph reached out to Shahaf Bar-Geffen, CEO of COTI, a protocol for creating decentralized payment networks and stablecoins. In his view:

“The Vasil Upgrade heralds the dawn of a new era for the Cardano ecosystem and the decentralized finance space at large. The upgrade aims to improve the network’s scalability and enhance Cardano’s smart contract capabilities.”

Bar-Geffen further noted that the hard fork will significantly improve the efficiency of Djed, an algorithmic stablecoin developed jointly by IOHK and the COTI Group, increasing the number of transactions carried out on the Djed platform and thus helping position Cardano as a prime contender for stablecoin transactions.

A closer look at what Vasil has to offer

Before looking at the functional and operational benefits afforded by the Vasil hard fork, it would be best to understand what exactly a hard fork is. In its most basic sense, a hard fork is a network upgrade set in motion when those governing a blockchain platform decide to add or fix certain features to the ecosystem. 

In other words, when a hard fork takes place, the network splits into two versions that run separately, where one version follows existing features and rules while the other continues as an upgraded version of the network. 

Expounding her view on the technical aspects of the upgrade, Charmyn Ho, head of crypto insights for cryptocurrency exchange Bybit, told Cointelegraph that at the application layer, Cardano’s Vasil hard fork aims to bolster the network’s current smart contracts to curate a better experience for both users and developers alike, adding:

“This will simultaneously lead to a more efficient building process with regard to applications on the chain. At the infrastructure level, the many upgrades that come with the Vasil hard fork will allow Cardano to increase its block size and TPS whilst maintaining its POS mechanism.”

Ho further highlighted that the Vasil hard fork is aimed not just at improving the scalability of the chain and optimizing its existing features but also at bolstering the network’s stability and connectivity. “This is a huge and prominent step forward for Cardano as the upgrade is expected to reduce the network’s transaction costs while increasing transaction speeds,” she added. 

Recent: Ethereum post-Merge hard forks are here — Now what?

Lastly, it is worth noting that Vasil is not Cardano’s first major network upgrade because a year or so ago, the project witnessed the launch of another hard fork called Alonzo, which was designed to allow users to devise DApps using smart contracts. The Alonzo upgrade, alongside many other developments, was Cardano’s way of providing users with an attractive alternative to Ethereum, another platform that allows for the seamless development of novel applications using smart contracts.

Why is Vasil so important?

Named after a prominent member of the Cardano community who passed away in 2021, Vasil St. Dabov, the upgrade will enhance the ecosystem’s transaction throughput, efficiency and block latency speeds. Furthermore, the hard fork will see the implementation of a technique called diffusion pipelining, which seeks to improve block propagation times while increasing the network’s transaction processing capabilities.

The Vasil hard fork will introduce three key Cardano Improvement Proposals (CIPs), namely CIP-31, CIP-32 and CIP-33. In this regard, CIP-31 will spur the introduction of a new reference input mechanism that will allow DApps to access transactional output data without having to recreate it as before, making the entire process extremely streamlined and time-saving. At the same time, CIP-32 is designed to enhance Cardano’s native decentralization levels by introducing an on-chain data storage feature for network participants.

CIP-33 will make transactions lighter by making changes to the system’s native programming script, allowing for faster processing as well as reduced fees. Lastly, another improvement called CIP-40 will be introduced as part of Vasil. It will introduce a new output transaction mechanism to help improve block transmission without full validation.

Other updates include an enhancement of Cardano’s native smart contract programming language Plutus, which will now be more functionally advanced than its previous iteration. Not only that, Vasil will also improve the platform’s security by making it easier to interface with Cardano’s UTXO model (which has been built to resemble that of Bitcoin) while keeping its transaction load off-chain.

Potential effects on ADA

While the first round of the hard fork started on Sept. 22, the remaining upgrades are set to take effect on Sept 27. To this point, the second phase of the hard fork will look to redefine Plutus’ cost model, which has a direct effect on the processing power and memory fees required to govern Cardano’s native smart contracts.

In addition to the Vasil upgrade, the Cardano team revealed that it has been working tirelessly on the development of its layer-2 scaling solution — the Hydra head protocol — which is capable of processing transactions from the Cardano blockchain while still making use of it as its core security and settlement layer.

To this point, a recent update by the Cardano team revealed it had successfully addressed a known issue with Hydra’s node framework. As things stand, the protocol does not have a fixed release date. However, the IOHK team has hinted that the offering could make its way into the market sometime in late 2022 or the first quarter of 2023.

Recent: El Salvador’s Bitcoin decision: Tracking adoption a year later

Vasil was originally slated to go live earlier this year but faced numerous setbacks. Even though the upgrade is live now, the ecosystem continues to reel in from the impact of these delays. For example, since the start of 2020, Cardano’s native cryptocurrency, ADA, has continued to witness a dip in its transaction volume. Not only that, but from a purely price-performance standpoint, the upgrade has not been able to do much in terms of spurring ADA’s value, with the currency trading down less than 1% on the week.

Despite ADA’s price action continuing to remain quite lackluster, the fact that the Cardano ecosystem has made such tremendous strides over the past year shows that the project seems to be primed for big things in the near to mid-term.

F2Pool, Poolin to start Ethereum PoW mining after ETHW mainnet launch

Together, ETHW mining pools already make up more mining capacity in terms of block share than Ethermine, which opted to shut down mining operations.

Despite Ethereum’s historic transition to a proof-of-stake (PoS) consensus mechanism, mining pools are increasingly signing up for mining on the upcoming proof-of-work (PoW) version of Ethereum.

EthereumPoW, the community advocating for ETHPoW, or the PoW Ethereum version, has released a list of mining pools that are going to continue mining after the ETHW mainnet launch.

According to EthereumPoW, some major Ethereum mining pools are going to continue mining despite Ethereum’s switch to the eco-friendly PoS consensus mechanism.

At the time of writing, the list of ETHW mining pools composes a total of 19 various mining pools, including F2Pool, Poolin, AntPool, Nanopool, 2miners and EthwMine.

Interestingly, the list includes some Russia-linked pools, including Pool Moscow and BaikalMine, as well as Ukrainian ones, such as UA Pool. EthereumPoW noted that the list is growing as more pools are joining after the mainnet launch.

The mentioned ETHW mining pools apparently make up significant mining capacity. According to data from ETH.BTC.com, F2Pool is the second-largest Ethereum mining pool by blocks after Ethermine, with the year-to-date block share amounting to 15.7%.

Poolin is also a significant contributor, as several Poolin mining pools have a total block share of 8.7%. According to the data, 2miners, Nanopool and AntPool are also notable mining pools, with the annual block share standing at 5%, 3% and 1.5%, respectively.

Together, ETHW mining pools apparently make up more mining capacity in terms of block share than Ethermine, the world’s largest Ethereum mining pool, which mined more than 28% of all Ethereum blocks over the past year.

Unlike F2Pool and Poolin, Ethermine opted to terminate its Ethereum mining pool services due to Ethereum switching on PoS, officially announcing a withdrawal-only mode on Wednesday. Instead, the company has launched a new Ethereum staking service in line with the PoS Ethereum vision of the Ethereum Foundation.

F2Pool did not immediately respond to Cointelegraph’s request for comment. This article will be updated pending new information.

As previously reported by Cointelegraph, Ethereum’s PoS transition became a major issue for Ethereum mining firms as the Ethereum Merge was originally designed to eliminate PoW mining.

Related: ETHW Core to push on with Ethereum PoW fork 24 hours after Merge

The Merge is positioned as a major Ethereum upgrade, aiming to make the cryptocurrency greener and more eco-friendly. According to Ethereum researcher Justin Drake, the Ethereum Merge will reduce worldwide electricity consumption by 0.2%.

Due to Ethereum switching to PoS, Ethereum mining-related firms have been actively searching for solutions to continue mining. For example, cryptocurrency miner Hive Blockchain has been working to replace the mining of Ether (ETH) with other coins.