The first stage of the highly anticipated upgrade to the Ethereum blockchain, Ethereum 2.0, is expected to launch by the end of this year. Promising to increase the throughput and lower the latency of the Ethereum mainnet, these steps are likely to bring wider adoption in business and commerce.
Ben Edgington, product owner for Teku — an Ethereum 2.0 client designed for enterprise and institutional stakers — told Cointelegraph that Ethereum 2.0 will indeed resolve key barriers for enterprises looking to deploy use cases on the Ethereum mainnet. “We expect it will accelerate the convergence of private chains with the public mainnet whilst enabling new use cases with the improved capacity,” he said.
Of course, a mix of technologies will be applied to Ethereum 2.0 to address the current challenges of high gas fees, performance, privacy and permissioning. In terms of enterprises incorporating the public Ethereum mainnet into their IT stacks, Baseline Protocol will play a major role in this development.
Announced in March, the Baseline Protocol initiative was officially launched as an OASIS open-source project. The OASIS open-source initiative enables open-source efforts to advance interoperability for blockchain applications. Baseline Protocol started with support from 14 founding companies. Today, 700 members and eight sponsor organizations make up the Baseline Protocol community.
Accenture adds support for Baseline Protocol
It’s especially notable that global professional services company Accenture has added support for Baseline Protocol by becoming one of the eight sponsor organizations. The announcement was made in a recent tweet.
Michael Klein, director of blockchain technology at Accenture, told Cointelegraph that the firm sees tremendous potential in Baseline Protocol. In particular, Klien mentioned its ability to provide confidentiality and double-spend protection in permissionless networks like Ethereum, as well as in permissioned public and private networks:
“Enterprises have been consistent in their significant operational demands of multiparty systems, and we continue to see innovations in and around blockchain technologies that are rising to meet those demands.”
As such, Klein is hopeful that other key organizations will see the potential in Baseline Protocol and the goals of the Ethereum OASIS project. This is crucial, as Klien noted that enterprise sponsorship of open standards and source code is essential to the widespread adoption of the technology across industries.
Still in the early stages
While other key organizations are likely to become new sponsors of the Baseline Protocol initiative, the project is still in its infancy. However, Klien mentioned that Baseline Protocol is already showing the potential to transform the current notion of public state machines:
“Instead of focusing on the persistence of state in a distributed network, the Baseline Protocol seeks only to prove the consistency of states held by business counterparties. In doing so, it treats the blockchain network more as a middleware between businesses, and less of a public state machine.”
Interestingly, the idea of a blockchain network functioning as a middleware seems to appeal to enterprises that have started experimenting with the technology.
Paul Brody, blockchain lead for Ernst & Young — the Big Four accounting firm and a founder of Baseline Protocol — told Cointelegraph that with Baseline Protocol, enterprises are using Ethereum in a way that resembles middleware to facilitate complex multiparty transactions. In these particular cases, different parties that already know and trust each other to some degree can cooperate:
“Most companies and their suppliers are engaged in repeat transactions: cheat me today and you’ll lose my business tomorrow. Because of that, even a minor flaw in Ethereum isn’t going to take down a grouping where the participants working with each other have decades of experience and trust.”
Brody further commented that client interest is very strong for Baseline Protocol, even in its infancy and in the early stages of Ethereum 2.0 development: “I see enterprise adoption of the Ethereum mainnet accelerating very significantly, with no slow down for the Eth 2.0 transition.“ He went on to add: “The Baseline Protocol packages together the tools needed for companies to transact with each other without having to build a private blockchain.”
EY to eventually migrate to Ethereum 2.0
Given the level of interest that enterprises are showing for Baseline Protocol, it may not come as a surprise that major organizations will eventually migrate to Ethereum 2.0. Although this is expected to take a few years, Brody said that EY plans to fully support and migrate to Ethereum 2.0 when the time comes.
Brody also noted that because Ethereum 2.0 is focused heavily on scalability, he expects many of the gas costs and capacity issues to be resolved. Additionally, he explained that EY has its own set of solutions for keeping gas costs down, primarily by batching in zero-knowledge proofs:
“Last year, we implemented batches of 20 private transactions rolled up together. We have a technical and mathematical roadmap to support up to around 2,000 transactions per batch, which we can deploy. My goal is, overall, to keep the cost of a private transaction under US$1.0 in gas costs, though I think it will usually be much lower.”
Moreover, Brody shared that once enterprises become comfortable with using the Ethereum network, the eventual adoption of decentralized finance by large organizations will be seen. While DeFi has taken the cryptocurrency space by storm recently, its use within the enterprise space remains questionable.
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Although it has been mentioned that organizations will eventually be able to stake Ether (ETH) with the implementation of Ethereum 2.0, Brody believes that enterprises will take advantage of DeFi by behaving more like consumers, “selling financial assets like receivables to third parties in bidding models at arms-length.”
While this may be, Brody pointed out that due to the risk-averse nature of enterprises, DeFi adoption will take place further down the road, well beyond the early days of the Ethereum 2.0 transition.