What Is Ethereum 2.0 and Why It’s So Anticipated
For the Ethereum investors and enthusiasts, it seems the idea of Ethereum 2.0 has been brewing for a very long time. Like any ambitious project, the upgrade doesn’t have an ultimate fixed release date but rather will be rolled out in stages over the next few years.
Despite being only second to Bitcoin in market capitalization, Ethereum is undoubtedly the most influential cryptocurrency project. Hundreds of other coins and decentralized applications use part or whole of Ethereum’s blockchain.
While Ethereum is a mammoth of a project used by thousands of developers worldwide, it hasn’t been without tremendous bottlenecking issues causing lethargic transaction confirmation and abnormally high fees.
Well, this is where Ethereum 2.0 comes in as it aims to eradicate these problems.
What is Ethereum 2.0?
Ethereum 2.0 (also referred to as Serenity or Eth2) is essentially an enhancement to Ethereum, aiming to increase the network’s efficiency and scalability. The primary purpose of increasing the transaction throughput is to make the blockchain close to the competitiveness of financial brands like VISA and Mastercard.
There are three main phases in the roadmap for Eth2, the first of which has already been implemented (the Beacon Chain). Each step is supposed to take six to eight months to finalize.
The Beacon Chain (phase 0) was implemented on December 1, 2020 (though it was meant for a 2019 release) as a separate blockchain to introduce staking to the Ethereum mainnet. It is a fundamental component to Ethereum transitioning to the proof of stake (PoS) consensus mechanism.
Phase 0 stores a registry of the blockchain’s validators which will be deployed on the eventual PoS transition. Phase 1 (essentially the second phase) is known as ‘The Merge,’ which is expected to go live sometime in the first or second quarter of 2022.
The purpose of this stage is to merge the Beacon Chain to Ethereum’s mainnet or primary blockchain, effectively bringing an end to the era of proof of work (PoW) or mining.
The last stage, phase 2 (essentially the third phase), is Shard Chains or the introduction of sharding. There will be 64 shard chains on Ethereum’s blockchain, effectively meaning 64 times more scalability than before.
Presently, documentation from the Ethereum Foundation hasn’t stated when this addition will take effect, but rumors suggest some time in 2022.
Proof of stake and sharding
Now let’s cover proof of stake and sharding as these are the major distinctions between Eth1 and Eth2. PoS is a popular non-mining algorithm that achieves distributed consensus through the stake of validators rather than computational power as with proof of work.
Effectively, no mining is involved as transactions are confirmed autonomously through a pseudo-random process by the blockchain. The chances for validators to be selected in forming the next block depend primarily on the size of their stake and staking age.
Documentation from the Ethereum Foundation suggests one will need to stake a minimum of 32 ETH (roughly worth $137 180 at the time of writing).
PoS provides several benefits, primarily much less energy consumption than PoW, tremendously increased throughput, lower entry barriers in hardware requirements, and stronger support for sharding.
Sharding is a prominent latency-reducing technique in computer science where parts of a network are split into shards or partitions. The purpose is to ‘spread the load’ by breaking Ethereum’s blockchain into parts or chains (64 to be exact).
Each shard will have its own data while being distinct from other shards. Through this mechanism, the entire blockchain will become exponentially scalable. Hence, the combination of PoS and sharding will make the long-awaited realization of no network congestion possible, resulting in increased transactions per second.
What will Ethereum 2.0 bring to Ethereum?
As previously mentioned in the first section, Ethereum has been plagued by limited scalability, and it isn’t alone. Proof of work cryptocurrencies also faces the same problem primarily because of this particular consensus mechanism.
The other issue is Ethereum’s transaction or gas fees, which have become unpredictably high over the last few years due to how overloaded the network has become.
Fortunately, the foundation implemented an ‘improvement proposal change’ in August 2021, the ‘London hard fork,’ to make fees more predictable. This slight upgrade is part of the broader Eth2.
All in all, Ethereum 2.0 tells us the scalability is the name of the game. Presently, Ethereum handles roughly 30 transactions per second, which is abysmally low for any digital currency.
With Eth2, some experts suggest the network would handle 100 000 per second. This incredible throughput will result in more usage; more usage means the demand, and more demand should drive the price of Ethereum to new heights.
As expected, this possibility should excite any ETH investors. The Ethereum Foundation claims Eth2 will allow anyone to run Ethereum even on a smartphone, allowing greater network participation and heightened security.
So, overall, there’s a lot for Ether enthusiasts to be excited about for the future.
The Ethereum Foundation says Ethereum 2.0 is the ‘secure, sustainable and scalable Ethereum we’re working towards.’ Development on Ethereum 2.0 aims to take security, sustainability, and scalability to unprecedented levels only matched by a few.
As if the wait couldn’t be any longer, there is another ‘mini phase’ in Serenity’s roadmap, the unnamed phase 3. This development period would come after the previous three as a final check of sorts, tying up any loose ends to ensure Eth2 is thoroughly complete.
Other miscellaneous additions may include more shard chains and expanded privacy and security measures. Hence, in reality, the final Ethereum 2.0 may only be set by 2023.
Let’s also consider the roadmap is rather tentative due to the ever-evolving needs of Ethereum’s blockchain. So, there are still many unknowns, and the development team of Ethereum is known for missing deadlines and delaying updates.
Overall, Ethereum 2.0 is a highly ambitious endeavor to revolutionize blockchain technology. It’s something worth appreciating, considering the amazing work that’s already been done on the current Ethereum.
Hopefully, the hold-up for the ultimate Ethereum won’t be as long as the wait for Rockstar Games to release Grand Theft Auto 6!
Don't miss: The Best Forex Robots in 2021