Valid Points: What Coinbases Public Listing Means for Eth 2.0

Wednesday 03 March 2021, 11:50 PM AEST - 1 month ago

Theres a lot riding on the success of Ethereum 2.0, including the crypto-industrys largest U.S.-based exchange going public.

Last week, Coinbase released its S-1 filed with the U.S. Securities and Exchange Commission (SEC). In it, the exchange listed potential adverse factors against its business, such as the doxxing of pseudonymous Bitcoin creator Satoshi Nakamoto, negative perceptions of cryptocurrencies and the growth of cryto-native finance platforms generally referred to as decentralized finance (DeFi).

A failure or slowdown in the development and launch timeline of Ethereum 2.0, including the potential migration of Ethereum to a proof-of-stake model was also listed as a possible negative factor for the exchange going forward.

Data may make the point even better: Ether (ETH, +2.72%) (ETH) made up 15% of volume on Coinbase in 2020, compared to bitcoins (BTC (+5.25%)) 44%. Additionally, 13% of all assets stored on Coinbase are ether. By trading and storing ether, you necessarily take on exposure to the Eth 2.0 project in its entirety.

New stakeholders in governance of Eth 2.0

Governance structures for the two largest cryptos by market cap is also a concern to weigh, Coinbase said.

Informal governance led by Bitcoin and Ethereums core [blockchain] developers that lead to revisions to the underlying source code or inactions that prevent network scaling, and which evolve over time largely based on self-determined participation … may result in new changes or updates that affect their speed, security, usability or value, the S-1 states.

Its well known that Ethereum has a more flexible governance structure than Bitcoin. Being more flexible has some benefits, too, including the ability to respond to threats to the network such as high gas fees.

With Coinbases direct listing, its necessary to ask where that social pressure will push the Eth 2.0 project. Eth 2.0s roadmap has adjusted to investor and devel ...

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