Ethereum price uptrends against bitcoin while 100x scaling solution is already around the corner ahead of ETH 2.0
According to Vitalik Buterin, the solution to scale Ethereum 100-fold is imminent and will be a stopgap until the full launch of ETH 2.0. At the same time, ETH is clearly trending upwards against Bitcoin (BTC). Is Ethereum yet to reach its heyday?
The author of the Ethereum whitepaper, Vitalik Buterin, believes that rollups will solve Ethereum’s scaling problems until ETH 2.0 sharding is introduced. He is convinced that this will enable the network to scale by a factor of 100. Furthermore, Vitalik predicts that a Crypto Profit solution for Ethereum’s sharding will be released in the coming weeks.
In this article, we take a closer look at what this means for the Ethereum price in its valuation against Bitcoin (BTC) in the medium term.
Ethereum already expects 100-fold scaling before sharding
In the Tim Ferriss podcast, Vitalik said that ETH 2.0 developers are currently focusing on the big update. At the same time, they are confident that Layer 2 solutions will support the network until Sharding is implemented. He explained:
Rollups will come very soon. We are fully confident that by the time we need further scaling, sharding will be ready by then.
Rollups, for example, are those Layer 2 solutions that process and store transaction data on a specific sidechain before posting this resulting bundle of transactions back to Ethereum’s mainnet. Thus, instead of processing all transactions individually on Ethereum’s blockchain, several are bundled together, drastically reducing the actual number of transactions that take place on the first layer. Hence the name Layer 2 solution, i.e. second-tier solutions.
Such solutions are meant to dampen Ethereum’s current scaling problems, which has led to a drastic increase in fees due to fierce competition for bandwidth on the Ethereum mainnet.
While ETH 2.0 will use sharding to ensure scalability, Vitalik believes rollups will suffice in the medium term. He highlighted in the podcast that rollups could improve Ethereum’s transaction throughput by 100x:
The thing to remember is that if you have rollups but you don’t have sharding, you still have 100x scaling, right? You still have the ability to run the blockchain at somewhere between 1,000 and 4,000 transactions per second, depending on how complex those transactions are.
Uniswap V3 could be the first to go
Buterin went on to predict that Optimism will launch their rollups fully compatible with the Ethereum Virtual Machine (EVM) “in about a month or so”. Optimism’s rollups are widely expected to be adopted by some of the DeFi industry leaders, with commentators speculating that Uniswap’s upcoming V3 update will use them. However, this could also mean that this means the Uniswap share price is currently heavily overbought. This is also supported by a recent UNI price forecast by the trading blog Bitcoin-Bude. Many investors are already speculating that the V3 update could come at any moment. However, the findings from Vitalik’s comments currently tend to suggest that it may not be expected in March. The crypto market is impatient by nature, but Uniswap may still be in for a surprise.
It is also expected that Aave and Synthetix will be among the first projects to use the technology. Vitalik also emphasised that rollups are not just a wild yet untested theory. He explained:
‘There have actually been simpler rollups that are only capable of processing simple transactions exchanged between assets, such as Loopring and zkSync. These rollups have been running stably for about a year – so rollups are not even theory. They have been a practical part of [Ethereum’s] scalability for a few users for almost a year now.
But in order to prevent silos of sorts from forming everywhere due to different Layer 2 solutions from individual projects, Buterin wrote a proposal for a system that would allow smart contract protocols to communicate directly with each other across different Layer 2 scaling solutions.
Ethereum price on the rise against BTC
While much ado has been made recently about the scaling issues on Ethereum and more and more market participants have been looking over to other smart contracts chains such as the Binance Smart Chain (BSC), this news shows that Ethereum is by no means old news.
At the same time, the weekly chart shows the long-term performance of Ethereum (ETH) against Bitcoin (BTC). ETH has been in a clear uptrend against BTC since the beginning of January 2020.