How Horizon and Upstream’s blockchain trading system remains carbon neutral ahead of Ethereum’s move to address its environmental impact
Ethereum’s market cap surpassed $500B¹ for the first time in May 2021, and continues to show immense growth as we approach the end of the year. This growth can be attributed to the continued emergence of DeFi ($140B² market cap) and NFTs ($7B³ market value).
As more applications are built on Ethereum, the blockchain network is facing periods of unprecedented congestion which is highlighting issues surrounding gas fees, scalability, and the increasing environmental impact.
Companies like Tesla announced they would stop accepting Bitcoin (BTC) as payment until the negative environmental impact of crypto mining is addressed to their satisfaction. Bitcoin’s CO2 footprint is reportedly more than double Ethereum’s proof-of-work (PoW) footprint. However, Ethereum’s annualized carbon footprint isn’t great either. At 45.79 metric tons, Ethereum has roughly the same carbon footprint as the entirety of Finland.⁴
Why such a big footprint?
Like Bitcoin, Ethereum currently uses a proof-of-work consensus model which requires computers to solve energy-intensive equations to verify transactions in exchange for Ether (ETH). The computers that solve each progressively more complex equation receive a reward in ETH. This is known as “mining.”
As more miners enter the network, the equations get more complex, which in turn leads to more computational power and more electricity required over time to mine at the same rate.
To address this environmental concern, Ethereum is switching from a PoW consensus model to a Proof-of-Stake (PoS) blockchain model in early 2022 which will give mining power based on the percentage of ETH a miner “stakes”.
Earning ETH will no longer be based on having the latest and greatest computers consuming electricity to compete and solve the same equation. Instead, validators are chosen at random and must have staked their own crypto to have a chance of getting to validate new transactions, and earn ETH rewards.
This planned transition to PoS could reduce Ethereum’s carbon footprint by as much as 99.95%⁵ according to the foundation. As excited as we are as an Ethereum-based technology company for this move to sustainability, we are proud to say that since 2017 we’ve made moves ahead of this announcement to address our ETH’s carbon footprint.
How Horizon stays eco-friendly on Ethereum
As a company built on Ethereum, Horizon has always been forward thinking when building out its blockchain trading technology to address scalability, gas fees, and our environmental impact.
Our recently launched flagship exchange, Upstream, is a next generation exchange and trading app for digital assets, securities, and NFTs. Upstream is powered by Horizon’s ERC-20 smart contract securities ecosystem running on an Ethereum layer-2 optimistic-rollup called Ráneum.
As a layer 2 solution, we address scalability and other Ethereum pain points by taking transactions off of the Mainnet while maintaining the decentralized security model that layer 1 provides. Layer 2 solutions also increase throughput (transaction speed) and reduce gas fees, which leads to significantly lower energy usage.
Upstream traders don’t have high gas fees to worry about. In fact, Upstream doesn’t charge traders any layer 2 gas fees. Instead, Upstream is and continues to remain carbon neutral. Our systems spend a little PoW ETH on Ethereum in order to execute our layer 2 rollup transactions, however, we only mine our ETH during the day using power supplied by our 36 solar panels. Any excess energy captured from the day is transferred to a 10kWh battery in order to continue mining our ETH as the sun goes down.
As Ethereum continues to improve, scale and complete its merge with its ultra-low carbon footprint proof-of-stake beacon chain, we will continue to do our part in remaining eco-conscious as we rollout the next generation of layer 2 NFT minting, IPOs and trading on Ethereum.
Upstream, a MERJ Exchange Market, is a fully regulated global stock exchange for digital securities. Powered by Horizon’s proprietary matching engine technology, the exchange enables investors to trade shares in IPOs, crowdfunded companies, U.S. and international dual listed equities, SPACs and celebrity ventures directly from the app https://upstream.exchange/. Interested issuers can reach the team at email@example.com.
Horizon is a fintech company that builds and powers global securities exchanges with an integrated suite of software for compliant issuance, management, and secondary trading of securities. Their in-house solutions combine Wall Street and Silicon Valley to power the next generation of securities offerings and trading in the U.S. and globally. Learn more at https://www.horizonfintex.com/.
This blog shall not constitute an offer to sell securities or the solicitation of an offer to buy securities in any jurisdiction where such offer or solicitation is not permitted. U.S. investors are not permitted to trade in Upstream listed securities. U.S. and Canadian citizens will only be able to trade in a security they currently own that has listed on upstream for liquidation only.