The European Commission is interested in Ethereum!


Recently, the Ethereum blockchain network successfully adopted a new consensus protocol called “Proof-of-Stake” or POS. Since then, many people have been closely following the Ethereum crypto! The cryptosphere welcomes such a step and all eyes are now on the activity of the web. To our surprise, the European Commission is also one of the strange people…

Ethereum, a crypto that just took a big step

Less known than Bitcoin, Ethereum nevertheless plays a major role in crypto. Back to the importance of Ethereum in the crypto landscape.

Ethereum, the pioneer of DeFi

Ethereum is the second largest cryptocurrency in the world behind Bitcoin. However, Bitcoin and Ethereum are not competitors per se. Why? In fact, these two cryptos are following different goals. So Bitcoin is intended to be a new payment method.

The crypto Ethereum, on the other hand, is emerging in the sector of decentralized applications or dApps. Most of these apps are related to finance. Since these applications are decentralized, we logically speak in this case of “decentralized” finance or DeFi.

A pioneer in this field, the Ethereum blockchain is the one that brings together (by far!) the largest DeFi applications. According to theData from the Defipulse sitethe sector manages almost $27 billion ! If much, it is nothing compared to the levels reached during the crypto boom in 2021. For example, in November 2021, the DeFi sector was managing close to $100 billion! In other words, the DeFi sector is just an exoplanet!

Ethereum goes green

But until recently, there was still one important aspect in common between Bitcoin and Ethereum. In fact, these two coins used the same consensus protocol called “Proof-of-Work” or POW. A consensus protocol determines how transactions are controlled and validated. The POW method is the oldest in crypto. But not the most energy efficient!

This is why the Ethereum network has been working on a protocol change for several months. The goal was to take a a newer protocol called “proof of stake” (POS). Such a change required many efforts and developments.

After several months of waiting, the change has finally arrived! On September 15, 2022, the “merge” (The Merge) took place on the Ethereum blockchain. Since then, Ethereum has been operating on a much more ecologically sound POS model. The developers estimate that the environmental cost is reduced by 99% with POS.

The European Commission is very interested in Ethereum data

The European Commission has just launched a project on DeFi data. A good thing? Yes and no…

The project was launched by the European Commission

This adoption is expected to further boost Ethereum blockchain business. As explained above, Ethereum is the most used blockchain in DeFi. In other words, the activity on the Ethereum blockchain is the same as DeFi activity. This is exactly why the European Commission wants to take a close look at Ethereum activity!

Last week, the European Commission drew up a project that aims to “develop, deploy and test a technological solution for oversight of decentralized financial activity (Challenge). The description of the project proposed by the European Commission continues as follows:

“The project will try to take advantage of the open nature of transaction data on the Ethereum blockchain, which is the largest settlement platform for DeFi protocols. Its main focus is the automated collection of monitoring data directly from the blockchain to test technology capabilities to monitor DeFi activity in real time. »

The IS project sheet shows a budget of €250,000 (excluding VAT) as well as a Duration 15 months. In concrete terms, the project consists of sending a call for tenders from professionals in the sector. The objective is to design a tool that will enable the Commission track and analyze data from the Ethereum blockchain. In accordance with European directives on competition, a call for tenders will be implemented on the basis of specifications. All tenders will be opened at the same time and will then be studied to select the candidate.

What do you think about this project?

Launching such a formal project with such a budget raises a few questions. In fact, the goal is to develop a tool to exploit data on the Ethereum blockchain. However, in accordance with the very principle of the blockchain, Ethereum data is public! There are several tools including etherscan which is already accessible on the internet and allows you to consult the activity of the Ethereum blockchain. If the Commission does not have a specific tool in mind that does not already exist?

Anyway, that’s the good news The European Commission is now taking the DeFi sector seriously. On the other hand, the negative aspect is asking yourself why such a project exists. Is it to better understand an area that many politicians still cannot? Or the first step towards control and regulation of the deFi sector ?

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