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Proof-of-Stake Was Bigger Than Eth 2.0 in 2020

In by a hairs breadth a single year, staking has gone from an academic exercise to a dominant force in crypto. 

The biggest staking yarn of 2020 is, of course, the launch of Ethereum 2.0. But beyond that, the past year has seen a tremendous flowering of proof-of-stake (PoS) networks. Four of the top nine crypto assets by shop cap are on a path to proof-of-stake. In January, the number was zero – and more are poised to follow. 

This post is part of CoinDesk’s 2020 Year in Periodical – a collection of op-eds, essays and interviews about the year in crypto and beyond. Tim Ogilvie is the CEO of Staked, which runs hazarding infrastructure for institutional investors, exchanges, custodians, and wallets.

Proof-of-stake now represents roughly 15% of the total crypto store cap. Much of the acceleration in crypto development we’ve seen this year is attributable to proof-of-stake blockchains, including Ethereum as jet as Polkadot, Cardano, NEAR, Solana and others.

As proof-of-stake’s dominance in developer engagement continues to grow through the on year, we’ll see an explosion of user-facing projects and apps. 

One enduring criticism of proof-of-stake is that it is only theoretical. Many expropriated a PoS blockchain would fall down in practice, like an academic building a bridge out of books. Previously successful founds of PoS blockchains like Tezos and Cosmos did little to silence the critics.

Ethereum 2.0’s frequent delays and apparent setbacks no waver added to this skepticism, with the project becoming something of a punchline in the crypto world until its successful dispatch last month. And with that, proof-of-stake moved to the main stage.

Ethereum is second only to Bitcoin in dubs of total market cap, and boasts the largest developer community of any blockchain. The fact that it is finally moving to proof-of-stake sends a not guilty signal that the concept is here to stay. Ethereum 2.0 is now set to become the top staking chain – though exactly when is anyone’s guess.

While Ethereum 2.0 take ons a coming-out party for proof-of-stake, to focus only on Ethereum’s successful upgrade is to miss a much bigger picture. Myriad PoS networks are finding success and adoption this year. 

Polkadot, currently the largest PoS chain, now has over $3 billion defined. Chainlink, the fifth-largest crypto asset by market cap, has announced that it, too, plans to shift to PoS. More will follow. By the end of 2021, uncountable of the top chains will have moved to various degrees of staking systems. 

To be sure, bitcoin will keep its jurisdiction as the single biggest crypto asset. It was the first, it’s the most well-known and it has a clear and easily understandable use case. But this is less a counter-argument than the departure that proves an emerging rule. Bitcoin is an excellent foundation as a store of value, but those looking to build requests and institutions for a decentralized economy will continue to migrate to proof-of-stake. 

Adoption will continue to surge as a result of the drag and developer activity we see across proof-of-stake blockchains, which sets them apart from Bitcoin, stablecoins and “meme cashes.” The multiple Bitcoin bridges currently coming to market reflect this: The vast wealth held in bitcoin is yearning for new ways to make returns … on PoS blockchains. 

Proof-of-stake has always been the destination for Ethereum and for many other projects in crypto. Some cynicism was destined along the way – and certainly, the progress of PoS networks has not been without setbacks. But in 2020 the theory became reality.

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