Ethereum's Changing Hands: Who's in Control of the Future?Ethereum's transition from Proof-of-Work (POW) to Proof-of-Stake (POS) is not just a technical upgrade; it signifies a reshuffling of market forces, a "changing hands" game impacting Ethereum's future.The Ethereum Foundation is Not the "Operator"Many mistakenly believe the Ethereum Foundation is the dominant player manipulating the Ethereum market
Ethereum's Changing Hands: Who's in Control of the Future?
Ethereum's transition from Proof-of-Work (POW) to Proof-of-Stake (POS) is not just a technical upgrade; it signifies a reshuffling of market forces, a "changing hands" game impacting Ethereum's future.
The Ethereum Foundation is Not the "Operator"
Many mistakenly believe the Ethereum Foundation is the dominant player manipulating the Ethereum market. This is not the case. The Foundation, led by Vitalik Buterin, primarily focuses on Ethereum development. According to public data, as of August, the Foundation held 273,000 ETH, representing just 0.25% of the total supply. Even if the Foundation were to sell all its ETH, it would hardly have a substantial impact on the market.
Mining Pools in the POW Era
In the POW era, mining pools were a significant market force. Miners had to join pools to participate in mining, and the pools would collect a percentage of the earnings. Thus, these pools accumulated substantial ETH holdings.
New Emerging Pools in the POS Era
With Ethereum shifting to POS, the advantage of POW pools is no longer relevant. Miners no longer mine by consuming computational power but through staking ETH for validation. New POS pools, such as platforms like Lido, are emerging as market forces.
Protests from POW Miners
The transition to POS has undoubtedly been a huge blow to traditional POW miners. They have lost their means of earning through mining, leading them to express dissatisfaction with the POS mechanism.
Comparing POW and POS
Essentially, the core difference between POW and POS lies in participation methods. In the POW era, individuals had to purchase GPUs, pay electricity bills to mine, while mining pools provided concentrated computing power and mining procedures. In the POS era, individuals simply need to stake ETH, and pools concentrate ETH and provide validator node services.
Challenges During the Transition
Currently, Ethereum is still in transition. The lack of POW cost support and a lack of widespread participation narratives like that of ERC-20 DeFi have led to a decrease in ETH production costs, but demand has yet to significantly increase. This could be attributed to the "changing hands" process not being complete.
The Logic Behind "Changing Hands"
"Changing hands" implies a shift in market forces, with new powerhouses emerging. POW pools may have already sold off some ETH before the POS transition, but they are likely not fully liquidated yet. They are probably waiting for ETH to rise before unloading their holdings. This explains why ETH's recent gains have been sluggish.
Impact of Ethereum ETFs
The launch of Ethereum ETFs will inject fresh capital into the market. ETF institutions are massive in scale, and once they enter the Ethereum market, they will become another dominant force.
Future Outlook
The Ethereum market needs to wait for the "changing hands" process to complete. New powerhouses need to accumulate enough holdings before they can kickstart the market. Once this happens, ETH prices could see a substantial surge.
Conclusion
Ethereum's "changing hands" is a complex and lengthy process that will impact the future of the entire Ethereum ecosystem. As the POS mechanism is fully implemented, new powerhouses will emerge, shaping a new market landscape.
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