‘The Merges’ of Ethereum is just around the corner and we could not miss the opportunity to interview a person who knows very well from the inside everything that this change in the most important blockchain network implies by marketcap after Bitcoin.
Marco Chen, Founder of ParaState and Project Leader of the non-custodial middle layer solution for Ethereum 2.0 Staking called SafeStake (built by ParaState), is our interviewee in this post where we talk about ‘The Merge’ and all that it implies for the blockchain industry.
Daniel Jiménez (DJ): Hi Marco, what in your opinion is the most outstanding fact for the ecosystem with ‘The Merge’ of Ethereum?
Marco Chen (MC): In my opinion there are two fundamental elements for the entire crypto ecosystem with the Ethereum ‘Merger’. First of all there is the scalability, this is all it means in terms of performance improvements, low transaction costs and security for the thousands of dApps that make life on Ethereum.
On the other hand, the positive repercussion that it will have on the energy cost when moving from a PoW to a PoS scheme is another very important point to take into consideration, especially in these days when the detractors of cryptocurrencies and the blockchain look for reasons under the cost paradigm. energy and the environmental consequences to attack the ecosystem.
(DJ): Do you think that the change from PoW to PoS will benefit the different actors that make life in the crypto sector?
(MC): Undoubtedly any change in improvements for Ethereum generates a direct impact on the industry. Ethereum is currently a broader ecosystem beyond its borders. The rest of the actors who make life in the industry understood that there is no ‘killer eth’, on the contrary, as we at ParaState seek to complement and help Ethereum long before its merger was announced, providing the necessary tools to developers to generate decentralized applications with better performance under our technology compatible with ETH 2.0 inclusive.
So, if we look at everything from the outside and a broader perspective, you can see that we all benefit from an improvement in Ethereum, since that means a greater demand for use cases and therefore a broader adoption of all those who make life. in the blockchain industry.
(DJ):- Do you think an Ethereum fork will be feasible again with ‘The Merge’?
(MC): How to know, everything is possible in this industry. We’ll see what happens when the time comes to ‘The Merge‘.
(DJ): What is SafeStake and what value does it bring to Ethereum?
(MC): SafeStake is one of the options that users of the crypto ecosystem have to be able to participate in the staking of the new ETH 2.0. SafeStake is a minimized middle layer of trust that encourages the decentralization of Eth2.0 staking. It uses a non-custodial Distributed Validator Technology (DVT) architecture.
SafeStake allows validators to participate with as little as 8 ETH in ETH 2 staking.0, considerably low compared to Beacon Chain’s default threshold of 32 ETH.
What we propose aims to diversify and broaden the base of validators in the new Ethereum and avoid centralization, thus improving the security of the network and the entire ecosystem that revolves around it.
(DJ): What expectations do you have regarding ETH 2.0?
(MC): Like many other players in the industry, we have high expectations for this move from PoW to PoS. Hopefully, the final implementation of ‘The Merge‘ will enable broader adoption of the blockchain industry by allowing developers to create more interactive applications within the context of web3.
(DJ): One of the big barriers for retail investors and traditional holders of ETH is precisely the limit of 32 ETH imposed in the smart participation contract for ETH 2.0. How can an average holder generate returns on their ETH at ETH 2.0? without sacrificing custody of your assets?
(MC): One of the challenges we encountered when designing SafeStake was precisely how to combine the breadth of participation without undermining the security of the assets at stake.
The SafeStake architecture establishes a liquidity solution that allows any user with at least 0.1 ETH to stake their ETH and also obtain stETH derivatives. An initializer will then be able to create a mini pool with 8 ETH deposited, along with 24 ETH from the SafeStake staking pool to become a legitimate ETH 2.0 validator.
The research firm Arkane reported that less than 1,000 new addresses with 32 ETH or more are not on exchanges, a figure that could lead to the centralization of the “green mining” from Ethereum if it holds up, especially in the hands of larger exchanges. Today, members of the community are concerned about OFAC’s censorship of major escrow service providers.
In addition to SafeStake’s low barrier to entry feature, we agreed to design a robust architecture with a high-level language like Rust, allowing SafeStake to be a completely non-custodial option for ETH 2.0 Staking by default.
This very important point differentiates us from other low barrier to entry options available in the industry that concentrate a lot of power in a single entity, putting the operation of the Ethereum network at risk.
(DJ): There are several solutions on the market for ETH 2.0 Stake that are seeing their internal token price grow since the announcement of ‘The Merge’ date as an LDO token with more than 200% profit. Do you think this bullish sentiment will continue after The Merge?
(MC): I believe that there will be wider adoption of the various solutions offering services for ETH 2.0 staking as ETH 2.0 runs as scheduled on its roadmap. I believe that SafeStake, along with other solutions on the market, will see increased exposure and adoption as people who own ETH or entities that wish to offer these services look for decentralized, non-custodial solutions to participate in ETH 2.0 Staking.
(DJ): A strong point of criticism towards blockchain, and in particular towards Ethereum, is that the nodes of the network are mostly located on servers of a centralized company such as Amazon. In your opinion, how can this point of failure be improved?
(MC): Without a doubt, this is a point to improve for the Ethereum network since it will avoid single points of failure, such as depending on a single provider of data hosting services or virtual servers. At SafeStake, we believe that verified nodes should be spread out as much as possible in terms of geographic distribution to ensure further decentralization of the network.
There are many decentralized providers that are already solving this fundamental problem not only for Ethereum, but for the large set of nodes that support different blockchain networks.
(DJ): What are the advantages for SafeStake of using a rather particular consensus mechanism such as HotStuff instead of a more ‘conventional’ one like the rest of the protocols?
(MC): Hotstuff is a leader-based Byzantine fault-tolerant replication protocol for the partially synchronous model. DefaultHotStuff strengthens the network by leveraging the scaling technical benefits of BFT consensus mechanisms, offering optimal performance and ease of implementation for the set of validation tasks within the new ETH2.0 staking.
The consensus is used to determine the message content of the threshold signature scheme between the operator nodes.
(DJ): In your opinion, is Ethereum undervalued or overvalued?
(MC): Undervalued. There is a lot of potential yet to be developed with Ethereum and the entire blockchain industry in general. As the new ETH 2.0 comes online, it will be possible to think of a new era of dApps that were previously impossible to implement due to the problems underlying the EVM of the old Ethereum.
(DJ): Do you think that after ‘The Merge’ the BTC/ETH leadership change can take place?
(MC): I believe there will be more industry adoption of the new Ethereum, and therefore more demand for the native asset. However, it is crucial to mention that the demands for BTC and ETH are very different for the various players that make life in this industry.
(DJ):What advantages does SafeStake have over other ETH2.0 staking options available on the market like Lido or RocketPool?
(MC): As I mentioned, we offer a non-custodial low barrier to entry and are completely decentralized. Our solution is illuminated by RocketPool, but unlike RocketPool, we do not have an oracle to monitor Traders and if they try to get ahead of themselves to claim all ETH deposits when it leaves the Beacon chain.
Also, it is important to note that SafeStake is a completely non-custodial infrastructure compared to Lido. The Validator key is executed by the DKG protocol to be split into parts and distributed to different operator nodes. Therefore, there will not be a single point failure.
(DJ): What can we expect from Ethereum and the entire ecosystem that revolves around it as SafeStake for the remainder of 2022?
(MC): We should certainly expect more adoption of blockchain technology, for one thing. In parallel, it is also possible to see an influx of web2 developers migrating to web3 to generate new dApps and improve existing ones, especially in the field of finance, gaming and infrastructure.
The foregoing implies a demand for staking for those ETH holders and service providers who wish to take a part of the market share that Ethereum represents for the entire ecosystem.
If the merger is successful, we expect Ethereum’s participation rate to be on benchmark with Tezos, which is around 75%. That means a total of more than 80Mn Ether TVS MarketCap. Conservatively, if we achieve a 10% market share and assume the ETH staking reward rate is 10% (including gas fee), SafeStake will generate a total of 80,000 ETH from protocol fees from of validator returns per year.
(DJ): How has the community accepted solutions for ETH2.0 Staking like SafeStake?
(MC): There is great interest in participating in Eth2 Staking. In our case, at SafeStake AlphaTestnet Galileo more than 50 professional staking service providers joined the test, including InfStones, RockX, Stakely, etc.
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