Summary
Ethereum 2.0 is the long-awaited upgrade of the Ethereum (ETH) network, aiming to significantly improve the functionality and experience of the entire network. Additionally, noteworthy upgrades include the move to proof-of-stake (PoS), sharded chains, and a new blockchain core called the âbeacon chain.â These and many more upgrades will be implemented in phases through a carefully curated roadmap.
Of course, these are just the tip of the iceberg. Ethereum is becoming the most popular cryptocurrency in the world. The concept of Ethereum 2.0 and its impact on the entire cryptocurrency industry are important details worth exploring.
Introduction
Since the advent of Ethereum, new technological forms such as decentralized applications (DApps) and other blockchains have gained tremendous popularity. Whatâs more, many of these technologies are built on the Ethereum network. The vast majority of major innovations in the decentralized finance (DeFi) space run on Ethereum.
However, issues such as scalability gradually surfaced. As transaction volume on the Ethereum network continues to increase, so does the cost of executing transactions, known as gas fees. To become a platform that leads the development of the new generation of the Internet, Ethereum must comply with economic principles, otherwise it will have no practical significance.
Ethereum 2.0 came into being as a result. The Ethereum Network 2.0 upgrade proposal focuses on solving scalability issues. These improvements will contrast with existing Ethereum versions and will be deployed according to a carefully curated roadmap.
What is Ethereum 2.0?
Ethereum 2.0 (also known as "Eth2" or "Serenity") is a long-awaited upgrade to the Ethereum network that is dedicated to improving the scalability of the network. By implementing various technical upgrades while ensuring security and decentralization, the speed, efficiency and scalability of the Ethereum network will be significantly improved.
The prototype of this new version of Ethereum has emerged, but it will take several years to be officially launched. Scaling blockchain in a secure, decentralized way is extremely difficult, which is why it is time-consuming and labor-intensive.
Thankfully, Ethereum 2.0 hopes to solve this conundrum by implementing some important features. These new features are the key differences between the existing Ethereum and the new upgraded version.
The difference between Ethereum and Ethereum 2.0
The biggest difference between the two involves the proof-of-stake (PoS) consensus mechanism, the use of shard chains and beacon chains. Letâs unpack these differences in detail.
Proof of Stake
Proof of Work (PoW) is used in Ethereum and many other blockchains. This mechanism is used to reward miners who create and verify blocks in the blockchain, thereby maintaining network security and continuous updates. However, as blockchains continue to grow, the demand for computing power has also increased accordingly, resulting in the inability of Proof of Work (PoW) to scale.
Proof of Stake (PoS) solves this problem by replacing computing power with "shared risk". In other words, as long as you own 32 Ethereum coins, you can invest (ie pledge), become a verifier, and earn rewards by confirming transactions. For an in-depth study of how Proof of Stake (PoS) and staking work, please read "Proof of Stake Explained".
Fragmentation
Everyone accessing the Ethereum network must go through a node. Nodes store a copy of the entire network, which means that nodes must download, calculate, store, and process all transactions since the inception of Ethereum. Although users do not have to run a node to participate in transactions, this will slow down Ethereum.
A sharded chain is basically like any other blockchain, the only difference being that it only contains a specific subset of a complete blockchain. This way, nodes only need to manage one segment or shard of the Ethereum network, thereby increasing transaction throughput and Ethereumâs overall capacity.
beacon chain
Shard chains operate in parallel with each other and must be kept in sync in some way. The beacon chain provides consensus and ensures that all shard chains operate in parallel, successfully solving this problem.
As a brand new blockchain, the beacon chain plays a core role in Ethereum 2.0. Without the beacon chain, shards cannot share information and scalability is difficult to achieve. Therefore, some people believe that the beacon chain is an innovative feature towards Ethereum 2.0.
The path to advancement in Ethereum 2.0
The launch of Ethereum 2.0 will not happen overnight, but will be released in three stages. Each stage has unique characteristics to ensure the success of the new Ethereum upgrade.
Stage 0
The first phase, or phase 0, focuses on launching the beacon chain, which is the core functionality of the shard chain. There is no shard chain at this stage, but the beacon chain will accept validators (i.e. stakers) through the one-way recharge contract.
Please note that until the shard chain is fully implemented, all ether staked by registered validators may not be "unstaking". Therefore, validatorsâ ether will continue to be locked up until the next phase.
The beacon chain was launched on December 1, 2020 and runs in parallel with the main network. After going live, the Beacon Chain did not process mainnet transactions, but ran in parallel with the mainnet, reaching consensus by agreeing on active validators and their account balances.â
Stage 1/1.5
The next phase is divided into two steps: Phase 1 and Phase 1.5. Phase 1 introduces sharded chains, which allow validators to create blocks in the blockchain through Proof of Stake (PoS). After entering stage 1.5, the Ethereum mainnet officially introduced the shard chain and began the transition from Proof of Work (PoW) to Proof of Stake (PoS).
Phase 1/1.5 starts in 2021.
merge
The merger will be an important step towards Ethereum 2.0 and a sign of completing the proof-of-work (PoW) transition. The Ethereum blockchain merger is the process of transition from Proof of Work (PoW) to Proof of Stake (PoS) mechanism.â
The merger involves transitioning the current Ethereum mainnet protocol to the Beacon Chain. This is a major change that means current Ethereum transactions will be conducted on a new proof-of-stake (PoS) network. New Ethereum coins are minted by nodes in the network, and a large number of Ethereum coins are pledged into the pool, ensuring the security of the network and transaction verification.
A merge, unlike a hard fork, does not produce two different versions of the blockchain. Ethereum will remain a single blockchain, and all usersâ transaction histories will be merged. All transaction history currently stored on the main network will not be lost, so users do not need to take any measures to protect the security of their assets.
Stage 2
Phase 2 is the final phase, when Ethereum 2.0 supports fully formed sharding and becomes the official Ethereum network. Sharded chains can run in conjunction with smart contracts, allowing DApp developers and other technologies to seamlessly integrate with Ethereum 2.0.
Phase 2 is expected to launch after the merger or at a later date.
Summarize
Driven by many reasons, Ethereum 2.0 has become an important upgrade of the Ethereum network, and the industry regards it as the key to solving the scalability problem. Without the support of new features such as Proof of Stake (PoS), shard chains, and beacon chains, Ethereum will eventually be unable to sustain itself and lose its leading position as a smart contract platform in the cryptocurrency ecosystem.
The launch of Ethereum 2.0 still takes time and may exceed expectations. What is gratifying is that everything is progressing in an orderly manner. Ethereum developers are working hard to make it perfect day by day.
