Ether reached its highest level since Feb. 17 on Thursday, over optimism around Ethereum’s upcoming major upgrade, which will reduce environmental costs of the blockchain and lower its transaction fees.
Ether
ETHUSD,
traded as high as $3,128.7 on Thursday, according to CoinDesk data. It was most recently trading at around $3,102, up 3.9% over the past 24 hours, outperforming bitcoin
BTCUSD,
the largest cryptocurrency, which has gained 3.6% to around $34,926.
The Ethereum Foundation, a non-profit organization that supports the blockchain, said the “Merge,” an upgrade that will shift Ethereum from proof-of-work to proof-of-stake, is expected to be completed in the second quarter of 2022, while the last test went live last week.
Proof-of-work and proof-of-stake are both consensus mechanisms for blockchains to verify new transactions. To achieve the goal, the former uses mining, which demands a large amount of computing power, while for the latter, so-called validators contribute, or “stake,” their cryptocurrencies. Both bitcoin and Ethereum are currently proof-of-work blockchains.
Ethereum’s upgrade is “very exciting” as “a lot of investors have seen the roadmap,” Eliézer Ndinga, head of research at crypto asset-management company 21Shares said in a phone interview. “It has really come a long way and it’s finally getting closer to its potential success to to move away from proof of work,” Ndinga said.
The upgrade could also boost decentralized finance and non-fungible tokens, the majority of which are hosted on Ethereum, Ndinga noted.