Ethereum and Chainlink are continuing to build and develop in this bear market. The Ethereum Mainnet Merge and Chainlink’s expected launch of LINK staking and Cross-Chain Interoperability Protocol (CCIP) bring monumental upgrades for crypto. The second half of the year, heading into 2023, is going to be eventful.
Less than two weeks until The Merge. The Goerli testnet merge was executed successfully on Aug 10, and now all eyes are on the Ethereum Mainnet Merge. The transition to Proof of Stake (PoS) will be one of the most monumental events in the history of crypto, and it’s right around the corner.
The Merge is the merging of the Ethereum Mainnet execution layer and the Beacon Chain, the Proof of Stake consensus layer. Both of those coming together as one. The Beacon Chain originally launched Dec 1, 2020 as Ethereum’s first move toward the transition which originally introduced the new consensus layer.
In Proof of Stake to become a validator in the network users are required to stake ETH, therefore putting skin in the game to secure/validate the network. Proof of Stake replaces miners with validators. Validators are responsible for the same thing as miners in proof-of-work.
Proof of Stake comes with many benefits and improvements. It is more energy efficient than Proof of Work (by approximately 99.95%), lower barrier to entry via reduced hardware requirements, more secure, and improved scalability for future upgrades for things like sharding. In summary, it aims to solve the trilemma most blockchains struggle with: security, scalability, and decentralization.
Prior to The Merge are the Bellatrix and Paris upgrades. Bellatrix is expected to take place at epoch 144896, on Sept 6 at 11:34:47am UTC. The Bellatrix upgrade brings the Beacon Chain into a “ready state” for The Merge.
The Paris upgrade executes the PoW to PoS transition a determined Terminal Total Difficulty (58750000000000000000000). The current estimation for the merge to take effect is between 9/13 and 9/17, expectation is Thursday, September 15.
You can check the link above as it updates the estimated date every 4 hours.
“The merge is not fully priced, not just in market terms but also in psychological narrative terms.”Vitalik Buterin
The next upgrade after The Merge is sharding which is expected to occur in 2023.
Sharding is the splitting of the Ethereum infrastructure into smaller pieces. This enables more data to be stored on the network, increasing the number of users, and ultimately changing the architecture of the Ethereum blockchain. Sharding provides the opportunity for more validators to join the network.
Cross-Chain Interoperability Protocol (CCIP)
Chainlink is a platform that brings real world data onto blockchain networks through it’s decentralized oracle networks (DONs) and hybrid smart contracts. It is crucial infrastructure for oracle networks and smart contracts to interoperate. Oracles are the way to connect blockchains to the real world. They are what enable hybrid smart contracts and expand the on-chain capability of collaboration that smart contracts can provide.
Chainlink is used by smart contract applications to retrieve data and off-chain computation. Data providers can now monetize their hard earned data by releasing their API and selling it to applications.
Two large Chainlink network upgrades Cross-Chain Interoperability Protocol (CCIP) and LINK staking are expected to launch in the second half of this year. CCIP was originally announced on Aug 6, 2021 at the Smart Contract Summit, and LINK staking roadmap was published just 3 months ago in June.
Sergey Nazarov and team have been working on CCIP for years. CCIP reinforces a productive and dynamic aspect to multi-chain and cross-chain functionality and brings more capabilities to applications and services. The simplest way to describe this is CCIP brings the ability for other blockchains to communicate with one another, and provides interoperability to applications to collaborate with each other.
CCIP allows smart contracts from other blockchains to work together creating vastly more functions and innovation, which is a massive win for crypto. It enables developers to contribute easily and bring more functionality and development for dApps. CCIP is set to create what Sergey calls “the internet of blockchains.”
CCIP reduces gas costs for users, validates cross-chain transactions, allows for tokens to interoperate with each other form other chains, and enable what Sergey deems a “true cross-chain system”. CCIP was announced at a time where an upgrade like this is becoming most necessary in a multi-chain world. Providing possibilities kinds of avenues for DeFi for new kinds of applications to be built.
LINK staking is something that many have been waiting on. As it is already understood, stakers will be able to stake LINK to help secure the Chainlink network and earn rewards. Chainlink, being an oracle network, means they’re not creating blocks, it achieves consensus on things like price data, or weather data.
Sergey prepares moving forward to bring on many more institutions and help them ramp up via Oracles.
“Enterprises don’t want to make tokens…They want to make derivatives contracts, insurance contracts, supply chain contracts—and without oracles, you can’t do that.”Sergey Nazarov
LINK staking brings many opportunities and necessary developments to the ecosystem. An increased level of security, and will enable participation from the “Link Marines.” Node operators will be able to further contribute to the network.
The staking implementation at the beginning will not the be same as Chainlink continues to grow and develop. Changes over time will be upgraded as staking continues to evolve.
Truly exciting times ahead for crypto. Even as the bear market has lost the attention of the “crypto tourists”, those searching and looking for the big developments in the space, see nothing but a bright future ahead.