The much-anticipated Ethereum 2.0 upgrade to the Ethereum (ETH) network is expected to significantly enhance the functionality and user experience of the network as a whole. One change from Proof of Work (PoW) to Proof of Stake (PoS), shard chains, and a new blockchain called the beacon chain in the heart are some of the more notable improvements. A meticulously prepared roadmap is expected to gradually implement all of this and more.
However, that is merely the tip of the iceberg. One of the most well-known cryptocurrencies in the world is ether, thus it's crucial to understand what Ethereum 2.0 is and how it will affect the entire crypto-sphere.
💻Table of Contents:
Introduction
The creation of new technologies in the form of decentralized applications (DApps) and other blockchains has significantly increased since the launch of Ethereum. The fact that many of these technologies were developed on top of the Ethereum network is more significant. Consider some of the most significant Decentralized Finance (DeFi) technologies; a major fraction of them are built on top of Ethereum.
Unfortunately, scaling problems began to surface. The cost of carrying out transactions increased along with the volume of transactions on the Ethereum network (which are paid in gas). The economics must make sense if Ethereum is to be the foundation for the next iteration of the Internet. It becomes impossible to utilize if not.
Ethereum 2.0 fills that role. The Ethereum network's scalability issue is the main one that the proposed ETH 2.0 upgrades are meant to address. These enhancements, which will all be implemented in accordance with a thoroughly thought-out timeline, will set Ethereum apart from its current form.
What is Ethereum 2.0?
The long-awaited upgrade to the Ethereum network, known as Ethereum 2.0 (also known as Eth2 or "Serenity"), aims to increase the network's scalability among other things. Speed, efficiency, and scalability should be increased through the application of many improvements without compromising security and decentralization.
This Ethereum version has been planned for some time, however, it has taken some time to launch. The main cause of this is the difficulty in securely and decentralized scaling a blockchain.
Thankfully, Ethereum 2.0 attempts to address this problem by adding a number of crucial features. The Ethereum we know and the Ethereum we should expect differ in a number of important ways thanks to these new features.
Differences between Ethereum and Ethereum 2.0
The use of shard chains, the beacon chain, and the Proof of Stake (PoS) consensus mechanism are the main distinctions between Ethereum and Ethereum 2.0. Let's examine these variations in greater depth.
Proof of Stake
By compensating miners for adding and validating blocks to the blockchain, Proof of Work (PoW) is a method used by Ethereum and many other blockchains to maintain network security. Sadly, PoW cannot scale since it needs more and more computer power as the blockchain expands.
By substituting "skin in the game" for computing power, Proof of Stake (PoS) addresses this issue. That is to say, as long as you have at least 32 ETH, you can stake it, commit it, and earn money by validating transactions. Check out Proof of Stake Explained to learn more about how PoS and staking operate.
Sharding
A node is required for anyone who wants to connect to the Ethereum network. A node keeps a copy of the whole network, therefore it must download, compute, store, and process each transaction that has ever occurred since Ethereum's inception. Even though you as a user are not required to run a node in order to transact, this slows down everything.
Shard chains are identical to other blockchains, with the exception that they only hold particular portions of a single complete blockchain. These benefits nodes because they only need to take care of one shard, or a portion, of the Ethereum network. This should boost Ethereum's total capacity and transaction throughput.
The beacon chain
Something needs to be in charge of keeping the parallel shard chains in sync with one another. By giving consensus to all the parallel shard chains, the beacon chain takes care of that.
A new blockchain known as the beacon chain is essential to Ethereum 2.0. Without it, scalability and the ability to share information between shards would not be conceivable. It has been stated that it will be the first feature to deploy on the way to Ethereum 2.0 because of this.
The road to Ethereum 2.0
Ethereum 2.0 won't be released completely at once. In order to assure the success of the new Ethereum, it will instead be issued in three parts, each of which includes unique features.
Phase 0
Given that the beacon chain is essential to the operation of shard chains, the initial phase, or phase 0, will be devoted to its release. Although shard chains won't exist for a while, the beacon chain will start to accept validators (also known as stakers) via a one-way deposit contract.
It's vital to remember that until shard chains are fully built, all registered validators who stake their ETH won't be able to "unstake." Therefore, ETH received from validators will be restricted till the following phase.
On December 1st, 2020, The Beacon Chain officially opened and has been operating in parallel with the mainnet ever since. The Beacon Chain has not been handling mainnet transactions since its introduction. Instead, it has operated in parallel, achieving agreement on the active validators and their account balances.
Phase 1/1.5
Phase 1.5 and phase 1 are really combined in the next phase. Shard chains, which enable validators to produce blockchain blocks through PoS, were introduced in Phase 1. In Phase 1.5, the shard chains will be formally introduced and the switch from PoW to PoS will start.
The merge
The merge marks the end of the move away from PoW and is a crucial step toward Ethereum 2.0. With the merge, the Ethereum blockchain will switch from a PoW to a PoS consensus method.
The Beacon Chain will be used to merge the present Ethereum mainnet protocol. This is a significant development because transactions involving Ethereum will now take place on the new PoS network. To safeguard the network and validate transactions, nodes in the network will stake a reasonable quantity of ETH tokens into a pool to create new ETH tokens.
Phase 2
Phase 2 will be the last stage, during which time Ethereum 2.0 will allow fully developed shards and turn into the official Ethereum network. Additionally, shard chains will be compatible with smart contracts, enabling creators of DApps and other technologies to smoothly interact with Ethereum 2.0.
Closing thoughts
In terms of scalability, Ethereum 2.0 is a significant improvement to the Ethereum network for a variety of reasons. Ethereum might eventually run out of resources and stop being the top platform for smart contracts in the cryptocurrency ecosystem if it does not get the additional features of PoS, shard chains, and the beacon chain.
Eth2's implementation will take some time, possibly longer than anticipated. The good news is that Ethereum developers are committed to seeing it through and that it is now well underway.
Disclaimer
The content is for informational purposes only, may include the author’s personal opinion, and does not necessarily reflect the opinion of The Daily CrptoZ. All Financial investments, including crypto, carry significant risk, so always do your complete research before investing. Never invest money you cannot afford to lose; the author or the publication does not hold any responsibility for your financial loss or gains.
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