Disclaimer: This article aims to convey more market information and does not constitute any investment advice. The article only represents the author's viewpoint and does not represent the official stance of Mars Finance
Disclaimer: This article aims to convey more market information and does not constitute any investment advice. The article only represents the author's viewpoint and does not represent the official stance of Mars Finance.
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Source: Blue Fox Notes
Original Title: Science Popularization | Understanding ETH1 and ETH2 in ETH: Do you need to worry about ETH asset issues?
Phase 0 of ETH2.0 is planned to be launched in the summer of 2020. Phase 0 focuses on beacon chain. Ethereum users can deposit 32 ETH tokens into the pledge storage contract on the current ETH1.0 network and become the verifier of beacon chain. Ethereum is currently a PoW chain and will gradually transition to a PoS chain in the future.
Before ETH2.0, ETH tokens can be called ETH1, while tokens after ETH2.0 can be called ETH2. Of course, in the long run, there will only be one type of asset, whether it is ETH1 or ETH2, which will eventually run on the ETH2.0 network.
So, for ordinary users, how do you understand ETH's so-called two types of tokens? What are the differences between them, and what do ordinary users need to do after the new token is generated?
Firstly, ETH1 and ETH2 tokens are not hard forked tokens. ETH1.0 and ETH2.0 will eventually merge. After the launch of the beacon chain, there will be a transition period. After ETH2.0 is stable, convergence will occur, which is also expected by the Ethereum community. This is not a hard fork. Firstly, users deposit ETH into the pledge contract of the ETH1.0 main network. With the launch of Phase0, participants who deposit ETH become validators and receive new token rewards through the ETH2.0 network. With the stability of the ETH2.0 network, ETH1.0 will gradually become a shard of ETH2.0.
This means that the current ETH (ETH1) token holders will not receive two assets. In the chain fork of the crypto world, if you own the crypto asset 1 of a chain at a certain time and the chain generates crypto asset 2 through the fork, then you have both crypto asset 1 and crypto asset 2. For example, after the bch hard fork in the history of History of bitcoin, users who owned Bitcoin at that time also acquired new asset bch.
In addition, ETH2 tokens are not air dropped tokens, as they do not give you a certain proportion of ETH2 tokens to air drop just because you have ETH1 tokens at a certain time period.
That is to say, the ETH1 token comes from the current Ethereum PoW chain, while the ETH2 token is generated through the PoS mechanism after the ETH2.0 network is online. When ETH2 tokens are generated, for ordinary users, they can choose to keep ETH1 tokens or convert ETH1 to ETH2 tokens. Generally speaking, exchanges or wallets will assist users in completing this conversion.
If ETH launches a two-way exchange between ETH1 and ETH2 in the future, not only can ETH1 be exchanged for ETH2, but ETH2 can also be exchanged for ETH1. This way, even if the prices of ETH1 and ETH2 are different, they will be smoothed out through arbitrage, meaning that the prices of the two will eventually converge.
Furthermore, if it is a futures contract, such as an ETH/DAI contract, what should be done after ETH2 is released? The exchange may convert ETH/DAI contract positions into ETH1/DAI positions. If ETH2 is generated on the ETH2.0 chain in the future, the Spot market will also support ETH2, and futures contracts will also have ETH2/DAI contracts.
In the end, the exchange has the following options:
*Only supports ETH2, requires users to convert their ETH to ETH2, and refuses users to deposit in ETH1, does not support transactions between ETH1 and ETH2;
*Simultaneously supporting ETH2 and ETH1, allowing users to recharge ETH1 and ETH2, converting ETH1 to ETH2, and allowing transactions between ETH1 and ETH2.
epilogue
Regardless of the situation, for ordinary users, after ETH2.0 is launched, there is no need to worry about their ETH assets. That is to say, the existing ETH will become ETH1, while the ETH generated after ETH2.0 goes live will be ETH2. For ETH1 and ETH2, there may be two-way exchanges in the future, and for users, there will be no major issues in the user experience.
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