What is Ethereum 2.0 and why does it matter?

The Ethereum blockchain is considered by many to be the next step in the evolution of the internet. And for good reason. Consider that Ether has become the second largest cryptocurrency (after bitcoin) on the strength of the Ethereum platform. Developers like Ethereum for its broad set of development tools, smart contracts, and large community of experienced programmers.

It is, in fact, Ethereum’s general programmability and smart contract technology that has driven the rise of decentralized finance (DeFi)—a global, open alternative to traditional financial services including savings, loans, trading and more. In 2020 and 2021 alone, DeFi experienced exponential growth.

https://www.coingecko.com/en/categories/decentralized-finance-defi

It is also worth noting that Ether, the native coin of Ethereum, has increased more than 1000% in value over the past year.

https://ethereumprice.org

Room to grow

Of course, even with these outstanding results, the world’s most popular blockchain has room for improvement. Considering Ethereum’s popularity, it has become a bit backed up with traffic. As a result:

• The system can only process 13 transactions per second
• The cost of each transaction is higher than on some other blockchains
• Using a Proof-of-Work (PoW) consensus to validate transactions not only takes time, but a significant amount of energy.

Enter Ethereum 2.0

Ethereum is moving from a Proof-of-Work consensus to a Proof-of-Stake (PoS) one. Put simply, with PoW, miners compete to solve extremely sophisticated math problems in order to add blocks to the blockchain in exchange for rewards (coins or pieces of coins). With PoS, on the other hand, long-term asset holders are able to “stake” their coins in order to potentially become validators who can add blocks to the blockchain. This change brings the potential for a number of advantages, including:

• The ability for coin-holders to earn “income” on their digital assets
• Exponentially increased efficiency—once Ethereum 2.0 is fully integrated, the blockchain may be able to process as many as 100,000 transactions per second (that’s 7600x the current speed)*
• Significantly lower transaction costs and a greener world as less energy will be used for validation.

As usage of what is already the most actively used blockchain in the world increases, demand for Ether should continue to grow. In fact, some experts suggest that Ethereum 2.0 could help Ether overtake bitcoin. Whether or not that is true remains to be seen, but given the performance Ether has seen before the full integration of Ethereum 2.0, we expect the future will be a bright one for this cryptocurrency.

Investing in Ether

Investing in Ether is easier said than done, as it can be complicated and expensive for individuals to access. CI Galaxy Ethereum ETF (ETHX) and CI Ethereum Fund make it easy for all investors to access Ether. Our Ether solutions are:

*https://www.thestreet.com/crypto/ethereum/ethereum-2-upgrade-what-you-need-to-know

IMPORTANT DISCLAIMERS

CI Ethereum Fund and CI Galaxy Ethereum ETF (the “CI Cryptocurrency Funds”) are mutual funds and exchange-traded funds that invest in the digital cryptocurrencies. Given the speculative nature of cryptocurrency and the volatility of the cryptocurrency markets, there is no assurance that the CI Cryptocurrency Funds will be able to meet their investment objectives. An investment in the CI Cryptocurrency Funds is not intended as a complete investment program and is appropriate only for investors who have the capacity to absorb a loss of some or all of their investment. An investment in the CI Cryptocurrency Funds is considered high risk.

The CI Galaxy Ethereum ETF is an alternative mutual fund and has the ability to invest in asset classes and use investment strategies that are not permitted for conventional mutual funds. Galaxy Digital Capital Management LP is the Ether sub-advisor for the Fund. CI Investments Inc. is the manager, trustee and promoter of the Fund.

Commissions, trailing commissions, management fees and expenses all may be associated with an investment in mutual funds and exchange-traded funds (ETFs). Please read the prospectus before investing. Important information about mutual funds and ETFs is contained in their respective prospectus. Mutual funds and ETFs are not guaranteed; their values change frequently, and past performance may not be repeated. You will usually pay brokerage fees to your dealer if you purchase or sell units of an ETF on recognized Canadian exchanges. If the units are purchased or sold on these Canadian exchanges, investors may pay more than the current net asset value when buying units of the ETF and may receive less than the current net asset value when selling them.

This document is provided as a general source of information and should not be considered personal, legal, accounting, tax, or investment advice, or construed as an endorsement or recommendation of any entity or security discussed. Every effort has been made to ensure that the material contained in this document is accurate at the time of publication. Market conditions may change which may impact the information contained in this document. All charts and illustrations in this document are for illustrative purposes only. They are not intended to predict or project investment results. Individuals should seek the advice of professionals, as appropriate, regarding any particular investment. Investors should consult their professional advisors prior to implementing any changes to their investment strategies.

Certain statements contained in this communication are based in whole or in part on information provided by third parties and CI Global Asset Management has taken reasonable steps to ensure their accuracy. Market conditions may change which may impact the information contained in this document.

CI Cryptocurrency Funds are alternative mutual funds and have the ability to invest in asset classes and use investment strategies that are not permitted for conventional mutual funds. Galaxy Digital Capital Management LP is the subadvisor for the CI Cryptocurrency Funds. CI Investments Inc. is the manager, trustee, and promoter of CI Cryptocurrency Funds.

CI Global Asset Management is a registered business name of CI Investments Inc.

©CI Investments Inc. 2021.  All rights reserved.

Published November 10, 2021