The cryptocurrency exchange Coinbase added a mirrored version of Ethereum’s native blockchain token Ether (ETH) to its cryptocurrency price index shortly before an important network update on December 10th.
The symbol labeled “ETH2” appears to be tracking the original Ether market data in a synchronized manner. For example, it turned out that the cost of buying ETH2 was the same as it was for ETH. Meanwhile, market capitalization, volume, circulating supply and price changes were also the same.
Coinbase is already promoting eth2 as a new coin? pic.twitter.com/C67UxooLU0
to???? Nuno (@nvcoelho) December 6, 2021
Is Coinbase already promoting Eth2 as the new currency?
Unlike the original, however, the ETH2 token had no trading activity, popularity factor or typical waiting time, which underscores that its role – for now – is simply to keep track of ETH market data until at least mid-September 2022.
This is likely because ETH2 has apparently passed itself off as the native token for the rolling upgrade from Ethereum, which is known as Ethereum 2.0 and is expected to be fully functional in June 2022, which would give developers more time to prepare for Ethereum 2.0.
Before Ethereum 2.0
The Arrow Glacier Update aims to delay what is known as the “difficulty bomb,” an incentive that has been encoded on the Ethereum blockchain since its introduction in 2015 and that would make it difficult to mine ether. Thus, if activated, the PUMP would slow down the Ethereum network as long as it remains a proof of work.
Tim Beiko, one of the lead developers working on the Ethereum update, pointed out that Arrow Glacier could be the last update before Ethereum 2.0 goes live next year. In the meantime, Coinbase appears to be treating the Arrow Glacier Fork as confirmation that a new token called ETH2 would exist after the Ethereum 2.0 update.
More specifically, Ethereum 2.0, also known as “Serenity”, would allow significant changes to its design, including a large-scale transition from Proof-of-Work (PoW), which uses a lot of electricity and also uses Bitcoin (BTC.), To Proof-of-Stake (PoS).
In the current version, nodes have to validate every transaction in order to manage the Ethereum ledger. But the Ethereum 2.0 update would trigger “sharding”, which would split the network into several segments (so-called shards) and randomly assign nodes to each shard.
This would eliminate the need for each node to scan the entire chain, which in theory would improve the speed and cost required to maintain the network. In the meantime, the individual shards would share the details of the transactions with the so-called beacon chain, which serves as the backbone of Ethereum 2.0.
ETH2 is not a new cryptocurrency
Beacon Chain, which launched in December 2020, would validate transactions on every shard, thus helping the entire Ethereum 2.0 network to reach consensus. It would also detect fraudulent validators and initiate penalties by withdrawing part of the validator’s share.
The core of the PoS design of Ethereum 2.0 would be the ETH (or ETH2), which primarily serves as a staking token for validators to participate in the network consensus and receive block rewards for it.
The Beacon Chain Deposit Agreement has received more than 8.42 million ETH tokens from 55,300 unique depositors (validators) since its launch in December 2020.
That being said, ETH2 isn’t a new currency and wouldn’t change the amount of ETH one owns. Instead, as the Coinbase index list suggests, ETH2 could become a renamed version of the original Ethers without the need for holders to swap one version for another.
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