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 “beacon chain.” 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.
Since the advent of Ethereum, new technological forms such as decentralized applications (DApps) and other blockchains have been greatly promoted. What’s 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. 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.
Ethereum 2.0 (also known as "Eth2" or "Serenity") is an Ethereum development that the public has been eagerly awaiting. Fang network upgrade is committed 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 problem by implementing some important features. These new features are the key differences between the existing Ethereum and the new upgraded version.
The biggest difference between the two involves the proof-of-stake (PoS) consensus mechanism, the use of shard chains and beacon chains . Let’s unpack these differences in detail.
Proof of Work (PoW) is used in Ethereum and numerous other blockchains. This mechanism is used to reward miners who create and verify blocks in the blockchain, thus maintaining network security and continuous updates. However, as the blockchain continues to develop, the demand for computing power has also increased accordingly, resulting in the inability of Proof of Work (PoW) to scale.
Proof of Stake (PoS) replaces computing power by "sharing risks" and solves this problem. 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".
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 shard chain is basically the same as any other blockchain. The only difference is that it only contains the specific information of a complete blockchain. Subset. This way, nodes only need to manage one segment or shard of the Ethereum network, thereby increasing transaction throughput and Ethereum’s overall capacity.
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 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.
The first phase or phase 0 focuses on launching the beacon chain, which is the core function 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 before the shard chain is fully implemented, the ether staked by all registered validators cannot be "unstaked". Therefore, validators’ 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.
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 begins in 2021.
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.
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.
Merge is different from hard fork and will not produce two different versions of the blockchain. Ethereum will remain a single blockchain, and all users’ 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.
Phase 2 is the final stage, 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 be launched after the merger or at a later date.
Promoted 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 scalability issues. 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.