About Ethereum (ETH)
Ethereum (ETH) is the second-largest cryptocurrency token in terms of market capitalization. This is due to the fact that it has brought a lot of innovation and use-cases within the industry by introducing smart contract functionality, which has paved the way for the decentralized finance industry (DeFi) and decentralized apps, or Dapps.
Ethereum allows users to build and deploy software, commonly in the form of Dapps, which are then powered by a global distributed network of computers all running Ethereum. The Ethereum network is decentralized, making it highly resistant to any form of censorship or downtime.
In addition, Ethereum is an open-source blockchain platform that runs on the usage of its native currency, called Ether or ETH. All network transaction fees, or gas fees, are paid in ETH.
Ethereum or ETH is a token that is specifically used by the Ethereum blockchain to pay for transactions. This token is responsible for powering just about everything that occurs within the network.
The Ethereum network can be used by anybody to create and run smart contracts, which are software programs that run autonomously, without user intervention. Ethereum’s growth can be attributed in part to its smart contract capability, which has enabled a growing ecosystem of DApps, non-fungible tokens (NFTs) and more.
Ethereum Shanghai Upgrade
The Shanghai upgrade brought in a range of technical enhancements to the Ethereum platform. One of the key features introduced is the ability for users to access and unstake their Ethereum tokens that were previously locked in a smart contract as validators on the Beacon Chain.
Prior to the Shanghai update, once users became validators on the Proof-of-Stake-based Ethereum blockchain, their tokens were locked in a smart contract, limiting their ability to freely access or transfer them.
Which Proof of Consensus Does Ethereum Use?
The Ethereum blockchain previously operated on the Proof-of-Work consensus mechanism, requiring significant computational efforts from all decentralized nodes within the blockchain.
In September 2022, Ethereum successfully transitioned to the Proof-of-Stake model, a significant upgrade known as "The Merge”. This transition fundamentally altered Ethereum's operation, eliminating the necessity for mining new blocks since the network is now safeguarded using staked ETH and validators. The Ethereum Foundation asserts that the shift from PoW to PoS cuts Ethereum's energy usage by a striking 99.95%.
Ethereum 2.0 Network Roadmap
The road to a complete Ethereum 2.0 consists of a number of milestones and phases, each introducing innovative features and functionalities to the network.
The roadmap consists of three main phases, namely:
Phase 0: Beacon Chain (live)
Phase 1: The Merge (live)
Phase 2: Sharding (2023-2024)
The third major upgrade phase is Sharding, which introduces horizontal database scaling. This enhancement aims to lower data storage costs by decreasing hardware necessities, thus enabling anyone to become a validator.
What’s Next For Ethereum?
In a recent post, Ethereum co-founder, Vitalik Buterin, identified three pivotal technical "transitions" vital to Ethereum's success — layer-2 scaling, wallet security, and privacy-enhancing features. He stressed that without effective scaling infrastructure to make transactions affordable, Ethereum essentially "fails". He also highlighted the complications brought about by the shift to smart contract wallets, particularly from the user experience perspective when handling multiple addresses. Lastly, Buterin underscored the necessity of improved privacy through enhanced identity, reputation, and social recovery systems. Achieving all three transitions simultaneously will prove "challenging", Buterin admits, due to the intensive coordination required among these aspects.