Preface
Ethereum’s merge (formerly known as ETH 2.0) is a highly anticipated upgrade for Ethereum (ETH) network users. This upgrade promises to improve certain features of the network, such as the introduction of shard chains, a new blockchain (the beacon chain), and the Proof-of-Stake (PoS) consensus mechanism.
All of these upgrades will undergo extremely rigorous testing and planning before being deployed to the network. In fact, the merger is just the first in a series of important upgrades that Ethereum, one of the world’s most famous cryptocurrencies, will undergo.
These upgrades to Ethereum 2.0 will not only change ETH itself, but will also have a profound impact on the entire crypto industry.
Introduction to Ethereum Background
The emergence of Ethereum has had a revolutionary impact. It has facilitated the development of decentralized application (dApp) development technologies, with new blockchains continuously emerging. When discussing decentralized finance (DeFi) innovations, one cannot overlook Ethereum, as these innovations are all implemented based on Ethereum.
Over time, the Ethereum network has also exposed some issues: transaction volume is increasing daily, implementation costs are rising, and transaction fees are becoming more expensive. This necessitates proposing solutions to address these problems in Ethereum as soon as possible.
Thus, Ethereum 2.0 was born. As a major upgrade, Ethereum 2.0 includes several innovative proposals that could change the entire cryptocurrency market on a global scale. The ETH 2.0 proposal aims to address the issues faced by Ethereum itself and its ecological projects.
A brief discussion on the merge: What is Ethereum 2.0?
Source: Ethereum Foundation
Ethereum 2.0, also known as Serenity or Eth2, is a large-scale upgrade to the Ethereum network aimed at improving network scalability issues and increasing network speed and operational efficiency. These upgrades will not compromise the decentralized nature and security of the Ethereum network.
The new Ethereum has been meticulously planned for a long time before its launch to ensure everything goes smoothly. It has proven necessary to scale the blockchain in the safest and most decentralized way possible.
This will be a huge challenge. Ethereum 2.0 may become the solution to all current problems, enhancing the usability of the Ethereum ecosystem. After the upgrade, Ethereum 2.0 will have many differences that will bring great surprises to users.
The transition from PoW to PoS is the most important upgrade in Ethereum's history, and Ethereum is conducting extensive testing and bug bounties to ensure a safe transition.
Ethereum vs. Ethereum 2.0: Proof of Stake (PoS) vs. Proof of Work (PoW), Shard Chains and Beacon Chain
Ethereum and Ethereum 2.0 have inherent differences, including the transition from Proof of Work (PoW) to Proof of Stake (PoS), as well as the introduction of sharding and the beacon chain. These concepts are crucial for understanding the significance of the merge.
Proof of Work (PoW) and Proof of Stake (PoS)
Initially, Ethereum maintained network updates and security by rewarding cryptocurrency miners. However, over time, PoW has proven difficult for ETH to achieve sustainability, as the computing power required for mining continues to rise with the evolution of the Ethereum ecosystem, leading to environmental damage.
The Proof of Stake (PoS) mechanism can address these issues, which is also the direction the Ethereum Foundation is striving to develop. The PoS mechanism replaces the previous energy-intensive mining method. If you have 32 ETH in your exchange wallet, you can become a validator and earn staking rewards from each transaction.
Sharding
You need to access the Ethereum network through nodes. Nodes store a complete copy of the entire Ethereum network, downloading, calculating, processing, and storing every transaction since ETH's inception. For users, conducting transactions does not require running a node.
Shard chains are quite common. Unlike other blockchains, shard chains only store a small subset of the Ethereum network, with each node only needing to manage a portion rather than the entire network, which greatly enhances the capacity of the Ethereum network.
Beacon Chain
Shard chains work in parallel, operating simultaneously. The information of each shard must be synchronized and aware of changes on each other's chains, which is achieved by the Beacon Chain synchronizing and providing information to all shard chains.
The Beacon Chain plays an important role in Ethereum 2.0. Without the Beacon Chain, information about shards cannot be shared, and the Ethereum network cannot be scaled. Ideally, the Beacon Chain will become the first functionality of Ethereum 2.0.
From Ethereum 2.0 to the Consensus Layer - Why does this change occur?
Every major upgrade comes with significant responsibilities and gives rise to new terminology. The Ethereum Foundation's official website once published a blog post mentioning that the name Ethereum 2.0 will no longer be used. The specific renaming details are as follows:
Eth1 → Execution Layer
Eth2 → Consensus Layer
Execution Layer + Consensus Layer = Ethereum
This practice is intended to deepen users' impression of this significant upgrade. Not using the old name helps people understand the new Ethereum network. The purpose of Ethereum has changed, so the renaming is also necessary.
The impact of the Ethereum 2.0 (Consensus Layer) upgrade and changes
As mentioned earlier, the upgrade will bring some significant changes. Users must understand the differences that the entire upgrade will bring. Relevant information can be obtained by looking at some important changes.
When the upgrade is ready, the sharded Ethereum can handle more transactions per second. The blockchain will be divided into several parts that can run simultaneously through the Beacon Chain. A node will process less data at a time, speeding up transactions. Additionally, the decentralization of the Ethereum network significantly improves, greatly enhancing the security of the blockchain.
The transaction volume is expected to decline further, aiding the development of the Ethereum network. Additionally, the methods of obtaining ETH also favor environmental protection, as the need for intensive mining activities is eliminated, saving on mining machines and reducing pollution.
Conclusion
The Ethereum Foundation is highly looking forward to this transition from PoW to PoS. It is one of the main catalysts determining the future of cryptocurrency and the direction of project development.
Currently, Ethereum has undergone multiple tests to ensure the upgrade proceeds smoothly. To avoid any risks that may affect the entire cryptocurrency ecosystem, the project team has been continuously working towards the official launch of the merge. Overall, this upgrade will bring numerous benefits and may set a precedent for all cryptocurrencies. In terms of progress and innovation, Ethereum has never stopped its pace.
