The founder and CEO of Ethereum, Vitalik Buterin suggests that he is considering to increase rewards for validators who would secure the functions of the next stage of world’s second-largest blockchain.
According to the data, Ethereum 2.0 is the biggest upgrade on the ethereum’s blockchain history and it is valued at $17.5 billion currently. The long time goal of ethereum is to eradicate the entire ongoing bottlenecks throughput and to reduce the costs on the network.
Ethereum 2.0 will depend on a proof-of-stake consensus protocol in which validators stake their funds and attest to transactions and blocks that is developed on the network. According to the reports, rather than depending upon massive amounts of computational energy, ethereum 2.0 network’s security is depended upon massive amount of stalked wealth.
Fredrik Harryson, CTO of ethereum software client Parity explained, “In a proof-of-stake system, your cost of attack is just buying tokens. You basically want it to be unreasonable that anyone would be able to buy so much tokens that they’re able to attack the network.”
In the recent days the ethereum Foundation researcher Justin Drake proposed that the targeted amount of staked wealth on the network is around 32 million ethereum [ETH] valued at over $500 million based on today’s estimates. And, approximately $160 million- based on that amount targeted staked wealth- could be earned annually by the entities that would, as planned, replace the network’s current ecosystem of transaction miners.
A protocol engineer at ConsenSys, Jonny Rhea explained to sources,
“They have to find a number that is appropriate. You don’t want to overpay to secure the chain and you don’t want to overpay, so, the idea was they did some back of the envelope kind of math to figure out what’s it going to be worth and what should we pay to secure the chain which we pay the validators.”
Originally, this “back of the envelope math” advised the interest rate should be approximately 2.20 percent given total amount of 30 million ETH staked on the ethereum network.
As Harrysson explained,
“There’s a sliding scale of rewards that depends on how much ETH is locked up in stake. In a system where you have very small amounts of stake locked up, you want to encourage more people to stake and lock up more ETH to increase the security of the chain.”
This week Vitalik Buterin, the founder of ethereum submitted a proposal which suggests raising the rate of return to 3.30 percent given total amount of 30 million ETH staked on the network. This indicates that ethereum 2.0 validators would receive a maximum annual reward issuance of close to 100,000 ETH collectively. Based on today’s estimate it would be worth around $160 million.