Crypto

Ethereum 2.0 & All That It Means For The Network

Eth2 is the long awaited update to the Ethereum platform for the purpose of increasing security, increased scalability and reduced energy consumption

Ethereum 2.0? What in the blockchain is that ?  Does it really make a difference? Very relevant questions regarding the current state of Ethereum and the blockchain space as a whole. To help answer them we’ve put together this comprehensive guide.

Ethereum 2.0 – or sometimes  simply Eth2 – has been there from the very beginning of what is today the most used blockchain platform, Ethereum, in 2015. Ethereum 2.0 was already part of the plan. The only difference being the name change from Serenity, to Eth 2.0.

What Exactly is Eth2?

Eth2 is the long awaited update to the Ethereum platform for the purpose of increasing security, increased scalability and reduced energy consumption – with roll out planned to begin this year.

Taking in account the popularity of Ethereum, this upcoming upgrade represents a major task and is set to roll out in phases. 

Other significant changes include a shift from the original Proof-of-Work consensus mechanism, to Proof-of-Stake. This will be accompanied by the addition of “shard chains”. 

Though this upgrade will change part of the mechanics of Ethereum’s blockchain, it will remain compatible with the main blockchain already in use. This means that individuals who already own Ether, use Ethereum based dapps, or have created them needn’t worry.

Ethereum Currently Versus Eth2

In its current state, the world’s most popular programmable blockchain can only handle about 15 transactions per second. This is far too slow to support mass adoption of any kind. 

Further, this year’s uptick in transaction fees – as a result  of increasing interest in De-fi – is yet another example that may justify the need to upgrade.  

The Ethereum 2.0 upgrade will address the aforementioned issues, without compromising the network’s permission less design in any way.

New Features

The migration to Eth2 us set to come with a few new internal mechanisms tailored to address the blockchain’s current challenges.

Sharding chains

In its current state, nodes that participate in the Ethereum blockchain have to go through the task of downloading data on every transaction in the network’s history, processing and storing it prior to computing any new transactions. This presents a major hurdle in the way of network speed 

Eth2 plans to iron out this crease by spreading nodes into smaller groups, running on lesser Hi that are still within the main network. Through this process, a node need only compute transactions related to its specific group.

“Shard chains are like parallel blockchains that sit within Ethereum and take on a portion of the network’s processing work.” as per Ethereum.org 

Proof of Stake

This change is one that has been spoken about repeatedly regarding Ethereum’s next up-grade. The current Proof-of-Work mechanism relies on mining, which is known to be a very energy intensive process. In a Proof-of-Stake system, this is replaced by a mechanism where financial commitment replaces energy consumption.

The Beacon Chain

The Beacon chain will act as a master blockchain that ensures consensus between the sharding chains is achieved. 

For this to happen, a validator creates new blocks which is immediately communicated to the beacon chain – making that information available to all other validators across the entire network.

Rolling Out The Red Carpet

The full implementation of Eth2 will not be an overnight update. Instead it will be a lengthy process that is planned to span over a number years, being rolled out in phases.

Phase 0

This phase will be the introduction of the beacon chain. However, it will not be in a fully functional state as there will be no shard chains to communicate with at this point.

In its semi-functional state, users will be able to stake their Ether without being able to withdraw any. Its other function will be registering validators. This update is expected in 2020.

Phase 1

This phase is planned for 2021 and is the actual addition of the much needed shard chains.

The roll out is set to begin with 64 Proof-of-Stake chains that will be given a portion of the network’s transaction data to process. However, these initial shards will not support smart contracts or accounts.

Phase 1.5

This is when Ethereum’s current main net becomes a shard and will eventually migrate away from the Proof-of-Work consensus mechanism.

This phase is also planned for 2021.

Phase 2

At this point, all shards should be fully operational and able to handle transactions and smart contracts. Further, developers will even be able to build customized shards.

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Joel Bonga

A part time cryptocurrency trader, mostly a hodler, and Blockchain/crypto freelance writer. Plus an occasional contributor at BIZZNERD.
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