Ether holds above $4,000 as Ethereum’s Altair upgrade approaches

Ethereum's Altair upgrade approaches
“Tunnel Light” by ERAKU is licensed under CC BY-NC-SA 2.0

Key Takeaways:

  • The largest smart contract platform faces several problems, like high gas fees and congestion.
  • Altair upgrade will ease Ethereum’s transition to proof-of-stake (PoS) consensus mechanism.
  • Ethereum’s native token Ether confidently holds above the $4,000 line.

YEREVAN (CoinChapter.com) – Ether gained 10% in a week, stealing the spotlight from Bitcoin, which consolidated and lost 2.3%. The Ethereum price stood at $4,216 in the New York session Tuesday, while the largest smart contract platform Ethereum prepared for a key upgrade launch, dubbed ‘Altair.’ What will it improve?

Problems plagueing Ethereum

In hindsight, the DeFi platform is responsible for 66.6% of the sector’s TVL (total value locked). Yet Ethereum suffers from notoriously high gas fees and heavy congestion.

Thus, the platform implemented scalability solutions like EIP-1559. The latter was an Ethereum Improvement Protocol, aimed at making transactions more efficient and using a hybrid system of base fees and tips, among other improvements.

The shift from proof-of-work (PoW) consensus mechanism to PoS is among Ethereum’s larger goals. In a nutshell, the transition will allow the platform to save up to 99% of proof-of-work-consumed power and increase processing ability from 30 TPS (transactions per second) to potentially 100,000.

Also read: ETH jumps 11% as Ethereum miners continue accumulating despite EIP-1559 activation.

Altair and Ethereum 2.0

Fast forward to the Altair upgrade, which promises to enhance the Beacon Chain. The latter is a PoS chain that has run parallel to the PoW mainnet since Dec 2020. Altair will be the first of preparatory moves before the final merge and PoS shift in 2022.

Altair is an upgrade to the Beacon Chain that brings light client support, minor patches to incentives, per-validator inactivity leak accounting, an increase in slashing severity, and cleanups to validator rewards accounting for simplified state management.

specified the announcement.

Ethereum team scheduled the Altair launch for Oct 27 and listed instructions for users and validators. Du Jun, the co-founder of crypto exchange Huobi Global, commented on Altair benefits for validators and the current ‘inactivity leaks.’

Pre-Altair, if a chain stops finalizing for two weeks, fully inactive validators lose ~11.8% of their balance and validators active 75% of the time lose ~3.1%. Post-Altair, the fully inactive validator’s loss would be ~15.4% but the 75% active validator’s loss would only be ~0.3%.

asserted the official.

Also read: Ethereum (ETH) breaks above $4K in the wake of Bitcoin’s record rally.

The nearing upgrade stirred Ethereum’s price action and could have contributed to the bullish incentive.

ETH daily chart

The digital asset traded in a Rounding Bottom for nearly two months. The pattern is an arch-shaped formation that indicates a bullish continuation after an asset bottoms out in its middle. Moreover, the subsequent gains could be equal to the arch depth.

The four-hour chart below indicates that ETH price action left the formation in an uptrend in mid-October. Thus, the token could continue the ascend and break above $5,000 if the Ethereum price prediction has merit.

ETH in a Rounded Bottom formation. Source: ETHUSD on TradingView.com
ETH in a Rounded Bottom formation. Source: ETHUSD on TradingView.com

Also read: Ethereum (ETH) retests previous ATH as analysts predict $40K price by Q2 2022.

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