With Ethereum currently one of the most popular cryptocurrencies available, there are more details on what Ethereum 2.0 truly is. Since the release of Ethereum, new technologies in decentralized applications (Dapps) have greatly increased. Most of these new technologies have been built on the Ethereum network. Also, significant portions of Decentralized Finance (DeFi) are running on top of the Ethereum network.
However, the issue of scalability began to immerge as transactions increased on the Etherum network. Also, the cost of performing these transactions increased as well. If Ethereum is going to be the platform to usher in the next generation of the Internet, the platform has to make economic sense. If not, it will be impractical to use. This is where Ethereum 2.0 comes in.
The proposed upgrade of Ethereum to Ethereum 2.0 will primarily address the issue of scalability. Ethereum 2.0 will be a contrast to the already existing version of Ethereum.
What is Ethereum 2.0?
Ethereum 2.0, also called “Serenity” or Eth2, is an upgrade to the Ethereum blockchain network. This upgrade will make the Ethereum blockchain more scalable, secure, and sustainable. Some of the notable upgrades to come with this upgrade include a shift from Proof-of-Work (PoW) to Proof-of-Stake (PoS) and shard chains. The upgrade will also come with a new blockchain at the core known as Beacon Chain. All these upgrades will be phased in through a carefully planned roadmap.
With the implementation of several enhancements to the already existing version of Ethereum, speed, efficiency, and scalability will be improved. This improvement comes without jeopardizing security and decentralization. Although this upgrade of Ethereum has always been on the horizon, it has taken some years to roll out. The major reason for the delay is that scaling a blockchain in a secure and decentralized manner is a daunting task.
Meanwhile, the goal of Ethereum 2.0 is to solve this issue through the implementation of some important features. These features are the major difference between Ethereum 2.0 and the already existing version.
Ethereum 2.0 Vs. Ethereum
The major difference between Ethereum and Ethereum 2.0 is using the Proof-of-Stake consensus mechanism, shard chains, and the Beacon Chain. Let’s explore these differences further:
Ethereum and most blockchain networks employ Proof-of-Work as their way of keeping the network secure and up-to-date. Rewarding miners achieve this to create and validate blocks on the blockchain. However, Proof-of-Work is not scalable because it demands more computing power as the blockchain grows.
On the other hand, Proof-of-Stake solves this issue of scalability by replacing computing power with “having skin in the game.” It means that provided you have at least 32 ETH, you can “stake” it on the network t become a validator. As a validator, you get paid for confirming transactions. The new Ethereum 2.0 uses Proof-of-Stake instead of Proof-of-Work.
If you want to have access to the Ethereum network, you must do so through a node. It is the job of a node to store a copy of the entire network. Therefore, the node must download, compute, store, and process every transaction since the start of Ethereum’s existence. Although you don’t necessarily have to run a node to transact, it slows everything down.
The shard chains are like any other blockchain; the only difference is that they only contain specific subsets of a whole blockchain. Here, nodes will have only to manage a slice or shard of the Ethereum network. This helps to increase transaction throughput and the overall capacity of the Ethereum network.
- Beacon Chain
While the shard chains are working in parallel, they all need to stay in-sync with one another. This will be the job of the beacon chain in the new Ethereum 2.0. The beacon chain will play a vital role in Ethereum 2.0. Without the beacon chain, information sharing between shards will be impossible, and scalability will be nonexistent.
The Roadmap to Ethereum 2.0
This upgrade will not happen all at once. It will come in three phases, and distinct features accompany each phase to ensure the upgrade is successful. The first phase is “phase 0,” which will be dedicated to releasing the beacon chain. Although there won’t be shard chains, the beacon chain will accept validators through a one-way deposit contract.
The next phase is “phase 1/1.5.” This will be a combination of two phases, 1 &1.5. While phase one introduces the shard chains, phase 1.5 is when the Ethereum’s mainnet will officially introduce the shard chains. It is at this stage that the network starts transitioning away from Proof-of-Work to Proof-of-Stake.
The final phase, called “phase 2,” is when Ethereum 2.0 will fully support formed shards and become the Ethereum network.
Ethereum 2.0 is undoubtedly an important upgrade to the current network. However, time will tell whether the project will live up to its bidding. On paper, the project is great, but the major work lies in its practical application.
Okereke has a passion for researching blockchain and cryptocurrency. He enjoys creating long form educational content to inform others on the opportunities in this space.