It is no more news that the development team of Ethereum has been working on introducing new infrastructures to enhance the efficacy of the world’s first programmable blockchain. As the world awaits the implementation of the first phase of Ethereum 2.0, it is vital to understand the rudimentary of this enormous series of updates and how they all come together to establish an improved Ethereum ecosystem. Therefore, this article is a comprehensive Ethereum 2.0 guide that explores all of the core upgrades slated for the next couple of years.
What is Ethereum 2.0?
As its name implies, Ethereum 2.0, also known as Eth2 or Serenity, is an enhanced version of the current Ethereum blockchain projected to do away with recurring limitations while highlighting strengths. And seeing that the most documented shortcoming of the existing Ethereum network is the lack of scalability, the development team has adopted a plan to implement more robust infrastructures and increase the transaction speed. Currently, the Ethereum blockchain can only process a maximum of 15 transactions per second. As such, network congestion and high transaction fees are recurring issues, especially now that Ethereum has become the primary hub for the emerging DeFi news landscape.
In light of this, the plan is to tweak the working principle of the network in such a way that it is robust enough to accommodate 10,000 transactions per second. However, as exemplified by the designs and upgrades scheduled to go live starting from the closing weeks of 2020, it is not enough to solely focus on scalability at the expense of security and decentralization. The Ethereum network prides itself as one of the most decentralized and secure blockchain systems available today. And it is hellbent on maintaining this status. Hence, Ethereum 2.0 hopes to find a balance between scalability, security, and decentralization. Due to this philosophy, the core changes anticipated are the transition from the Proof-of-Work (PoW) consensus model to the Proof-of-Stake (PoW) system and the introduction of sharding, which somewhat means multiple parallel channels working synchronously.
While these upgrades may seem straightforward on paper, they require a myriad of fine tuning and overhauling. As a result, Ethereum 2.0 is a sequential array of updates divided into four phases and projected to last until 2022. Nonetheless, note that the launch dates for each stage are not set in concrete. Below is the Ethereum 2.0 roadmap and a quick highlight of the projected changes to expect.
Known as the foundational process of ETH2, Phase 0 sets the stage for the transition from PoW to PoS. Note that Ethereum currently utilizes the highly secure PoW, also known for its power consuming and unscalable consensus model where miners create new blocks and contribute to the validation process. For Ethereum 2.0, this model will give way to the scalable and less power-demanding PoS system. To achieve this, the development team will launch what it calls the beacon chain. In the future, this core chain will ensure that there is consensus maintained across all the parallel blockchains running on the Ethereum ecosystem. However, in Phase 0, the beacon chain will majorly function as a coordinating and registering system for validators and staked coins. In other words, this upgrade will usher in the PoS consensus mechanism.
Here, users interested in actively participating in the validation process will have to stake 32 ETH to qualify to be picked as validators and earn rewards for ensuring that the network is secure. To maintain a decentralized network, Eth2 requires a minimum of 16,384 validators. It is worth mentioning that it is impossible to withdraw the staked coins, at least not until phase 1.5 goes live. If everything goes to plan, expect Phase 0 to launch before the end of 2020. Like every staking-powered blockchain available today, validators must ensure that their nodes are online 24/7. Those who fail to do so may forfeit their staked coins as a penalty. Thus, individuals could join staking pools or opt for services that will take care of the technical requirements of Ethereum’s PoS consensus system.
Phase 1, expected to go live sometime in 2021, will serve as the implementation process of the shard chains, designed to run as interconnected blockchain that will share the load on the Ethereum ecosystem. Once these shards are fully functional, all nodes will only have to download the transaction history of a subset of shards to engage and execute transactions on the Ethereum network. This approach is less cumbersome than the current design that requires nodes or clients to download the history of the entire network. In Phase 1, expect a total of 64 PoS-enabled shards. However, they will not support smart contracts and accounts at this time.
Also projected for 2021 is phase 1.5, where the current Ethereum 1.0 chain will transition into a shard and henceforth utilize PoS as its supported consensus mechanism. In other words, mining will come to an end, and only PoS validators will see to the day-to-day validation needs of the Ethereum ecosystem.
This is the last stage of the planned Ethereum 2.0 upgrade. Phase 2.0 will usher in fully functioning shard chains. In essence, these chains will start supporting accounts and contracts and, at the same time, communicate seamlessly. Once this phase launches, we would have completed the Eth2 upgrade and have a working ecosystem with the infrastructures needed to establish a decentralized, scalable, and secure blockchain network. Nonetheless, there is no saying when to expect the implementation of this final phase. Most of the people involved in this project believe that Ethereum 2.0 will be completed in 2020.
How Does This Affect Users and Developers?
All the integrations and upgrades slated to go live from the first phase of Ethereum 2.0 will have no noticeable effect on the operations of users. The team has ensured that all additions to the current mainnet are compatible with existing infrastructures. Hence, you, as a user, do not need to download a specialized tool to continue to access the Ethereum network. Besides, there is no plan to create a new cryptocurrency. ETH will remain the native coin of the blockchain despite the transition to Ethereum 2.0. Therefore, beware of platforms, ads, and campaigns encouraging users to deposit ETH to receive ETH2.0. Such entities are fraudulent and plan to rob unsuspecting users of their funds.
Also, some believe that these implementations would have a positive effect on the price of ETH while reducing transaction fees and increasing network engagements.