ALL ABOUT ETHEREUM 2.0
The long-anticipated Ethereum 2.0 upgrade is getting closer to its launch. The upgrade is also known as Eth2 or Serenity, and it has been in the works for a while. It promises to bring a big change to the Ethereum network. This upgrade aims to address the issue of Ethereum’s network scalability and security by effecting several changes to the network’s infrastructure, the most notable change being the switch from a Proof-of-Work (PoW) to Proof-of-Stake (PoS) consensus mechanism. The upgrade will accelerate the capabilities of the blockchain and encourage mass adoption.
Now let’s go over the fundamentals of Ethereum 2.0 and the changes it will introduce to the system.
WHAT IS ETHEREUM 2.0?
Ethereum 2.0 which can also be referred to as Serenity, is an upgrade to the Ethereum blockchain. It’s important to note that it isn’t a one-time upgrade, rather it’s a series of upgrades that will be implemented over the next few years. The upgrade seeks to improve the network’s scalability, speed, and efficiency to process more transactions without a hitch and the exorbitant gas fees currently experienced with the Ethereum 1.0 network.
To fully understand Ethereum 2.0, it is important to understand how Ethereum 1.0 currently works. Ethereum 1.0 currently uses the Proof-of-Work (PoW) consensus mechanism, which is the same mechanism Bitcoin uses. In PoW blockchain, participants compete in an activity called mining, which gives them the right to compete to validate transactions. Mining requires high computing power, as participants must solve complex cryptographic problems to get selected. This increases electricity consumption and because of this reason, environmentalists are not in support of cryptocurrency generally.
Ethereum 2.0 uses a Proof-of-Stake (PoS) mechanism. Proof of stake is a consensus mechanism used to validate cryptocurrency transactions. In PoS, owners of the cryptocurrency can stake their coins, which in turn gives them the right to check new blocks of transactions and add them to the blockchain. In the Proof-of-Stake consensus mechanism, the system rewards funds staked, and not computing power used.
PHASES OF ETHEREUM 2.0 LAUNCH
Based on information from the Ethereum Foundation, the Ethereum 2.0 launch will be released in three phases — Phase 0, Phase 1, and Phase 2
Phase 0: Phase 0, also known as The Beacon Chain, had gone live on December 1, 2020. The Beacon Chain introduced native staking, which is a key feature of the Proof-of-Stake consensus mechanism. The Beacon Chain is a separate blockchain from Ethereum Mainnet. The Beacon Chain is to be merged with Ethereum Mainnet in the first or second quarter of 2022. When that happens, the Ethereum Network is going to switch to a Proof-of-Stake consensus mechanism.
Phase 1: Phase 1, also referred to as “The Merge”, is bound to occur sometime later in 2022 or early 2023 and will merge The Beacon Chain with the Ethereum Mainnet. The Ethereum Foundation was set to release this upgrade in 2022, but it was postponed due to difficulties with code development and auditing.
Phase 2: Phase 2 which is the final phase is Shard Chains, and it will play a major role in scaling the Ethereum Network. In Sharding, instead of carrying out all operations on one single blockchain, the operations are spread across 64 different new chains. This further means that the ecosystem can process more transactions, and the burden on the main Ethereum Network will reduce. This phase also involves the replacement of Ethereum Virtual Machine (EVM) with Ethereum Web Assembly (eWASM). This will make Ethereum accessibility better for both users by making in-browsing support in dApps easier, and for developers by giving them the freedom to use other languages which will make developing apps for the Ethereum blockchain easy.
WHAT ARE THE MAJOR ADVANTAGES OF ETHEREUM 2.0?
1. Low Gas Fees: One major problem Ethereum faces today is that of exorbitant gas fees. Gas fees refer to the money paid to miners to validate transactions on the Ethereum Network. Gas fees usually skyrocket when transactions clog the blockchain, and often, miners will prioritize transactions with high gas fees, since it will benefit them. But with Ethereum’s switch to a Proof-of-Stake consensus mechanism, validating transactions will become easier and this will prevent transactions from clogging the blockchain.
2. Reduced Hardware Requirements: With the introduction of a Proof-of-Stake consensus mechanism, validators don’t need high-grade devices, since the system rewards funds staked, and not computing power used. Also, Sharding will reduce the disk space assigned to hosting Ethereum’s blockchain history. Since there will be 64 new networks, validators only need to host the history of their chain, which amounts to 1/64 of the total data.
3. Reduced Carbon Footprint: The switch to a Proof-of-Stake consensus mechanism will reduce electricity consumption, thereby reducing environmental impact. Estimates from Ethereum’s official blog report that PoS will reduce Ethereum’s power consumption by about 90–95%. Also, concepts like Sharding will reduce the overall energy cost of transactions.
CONCLUSION
Ethereum 2.0 sets out to do many amazing things and the successful implementation of Ethereum 2.0 could mean a lot of positive things for Ethereum. With better scalability, lower gas prices, and better accessibility, this would be a whole game-changer for Ethereum.
