As Ethereum gets closer to PoW deactivation, more people decide to invest in Ethereum 2.0 deposit contract
According to Glassnode on-chain analytics service, the total value of the deposit in the Ethereum 2.0 Deposit Contract has reached a new ATH of 8.8 million ETH as the main asset’s retrace down is still in progress.
As the graph suggests, the value of the assets invested in the deposit contract has increased gradually with virtually no rise or fall. In general, traders can see the correlation between the value of funds invested in the contract and the price of Ethereum.
What is Ethereum 2.0?
Ethereum 2.0 is the next version of the widely known Ethereum network. The update of the system is a crucial part of the future of the whole blockchain ecosystem. The main goal of the update is to change the proof-of-work (PoW) validation protocol to proof-of-stake (PoS). Instead of miners confirming transactions, the same role will be transferred to validators who will include transactions into the block.
Rewards that were previously received by miners will now go to Ethereum Validators. The change of system will make the network “greener” by reducing the energy required to create new parts.
Why do people invest more in deposit contracts?
As mentioned before, the increase in the number of investment funds into the contract correlates with Ethereum’s market performance. Thus, we may still see a small acceleration period whenever the asset enters a correction phase.
The increase in the investment rate during the correction of the underlying asset can be explained by the desire of investors to preserve funds and neutralize losses by earning interest (staking).
