Overview of What’s New in Ethereum 2.0
Ethereum 2.0 is expected to launch at Q4 2019. Learn what it will bring to the table
Ethereum is by far the most popular launching pad for decentralized applications. Ethereum gives you the tools you need to mint your own cryptocurrency, it provides a programming language and environment.
Ethereum is powered by Ether, which is the second most widely known cryptocurrency. The Ethereum project is backed heavily by the community and is being actively developed as we speak.
Ethereum 2.0 has been discussed and developed since 2018 and the first phase is proposed to roll out at the end of 2019. I’m super excited about what Ethereum will bring in the future.
Why Ethereum 2.0?
Ethereum can process roughly 25 transactions per second, which is clearly not sustainable if it would go mainstream. To put it in perspective, Visa is capable of performing 24,000 transactions per second, although the demand is only about 4,000 tps at peak hours.
More environmentally-friendly approach
Ethereum will switch from Proof of Work to Proof of Stake. In PoW, getting the right answer is very hard and expensive, and you get rewarded for getting it.
In PoS, getting the right answer is very easy, but getting the wrong answer is very expensive because you get punished for getting it.
PoW rewards doing the right thing, PoS punishes you for doing the wrong thing.
The downside of PoW is that there’s a lot of power consumption, which is the least environmentally-friendly option. For instance, Bitcoin energy consumption is comparable to the country of New Zealand.
By switching from PoW to PoS, Ethereum will become more secure by solving the 51% attack problem. I’m not an expert on security, please read this Github Gist for a more detailed answer.
What is Proof-of-Work?
Proof-of-Work happens through miners trying to solve exceptionally difficult math problems. Finding a solution is a randomized guessing game, but it’s easy to check whether a solution is the correct one, as there can be only one solution.
Miners aren’t able to cheat the system because it takes real-world resources to work out these solutions.
PoW is vulnerable to the 51% attack
Arguably, one of the biggest downsides of PoW is that is relatively vulnerable to a 51% attack.
A 51% attack is when a miner, or more likely a mining pool, controls 51% of the network’s computational power.
With that ability, they could invalidate valid transactions and double-spend funds. Bitcoin became so well known due to its ability to solve the double-spending problem.
PoS happens when a miner puts up a stake, or locks up a number of their coins, to verify a block of transactions.
The cryptographic calculations in PoS are much simpler for computers to solve; you only need to prove you own a certain percentage of all coins available in a given currency.
For example, if you somehow owned 1% of all Ether (ETH), you’d be able to mine 1% of all transactions across Ethereum.
Switching from PoW to PoS
Ethereum is planning a hard-fork in the near future to switch from PoW to a PoS system, most likely using a protocol called Casper.
Ethereum Casper Protocol
The Casper protocol has been created to help Ethereum make the move from a Proof-of-Work (PoW) model to a Proof-of-Stake (PoS) model while minimizing the risks associated with such a development.
Casper will be implemented in stages to reduce the risks on the network.
The first stage will be Casper FFG (The Friendly Finality Gadget), which is a mixture of both PoW and PoS. In this case, PoW will still be the main algorithm securing the network but every fiftieth block will be validated through PoS.
If you’re curious to learn how Casper works under the hood, Vitalik himself wrote on the subject here.
It’s important to keep in mind, however, that the early versions of PoS will not be decentralized. As Ethereum tests staking mechanisms, only a few participants will be allowed to join.
PoW will coexist with PoS for a while. Two different chains. See the tale of two Ethers.
Ethereum 2.0 Design Goals
The following are the broad design goals for Ethereum 2.0:
- To minimize complexity, even at the cost of some losses in efficiency.
- To remain live through major network partitions and when very large portions of nodes go offline.
- To select all components so that they are either quantum secure or can be easily swapped out for quantum secure counterparts when available.
- To utilize crypto and design techniques that allow for a large participation of validators in total and per unit time.
- To allow for a typical consumer laptop with
O(C)resources to process/validate
O(1)shards (including any system-level validation, such as the beacon chain).
Ethereum 2.0 will be launched in multiple stages. The stages are the following:
Phase 0 will use Casper the Friendly Finality Gadget (FFG) for finality.
Finality, in very loose terms, means that once a particular operation has been done, it will forever be etched in history and nothing can revert that operation.
The Beacon Chain will manage the Casper Proof of Stake protocol for itself and all of the shard chains.
The head block root associated with a
store is defined as
get_head(store). At genesis, let
store = get_genesis_store(genesis_state) and update
store by running:
time > store.timewhere
timeis the current Unix time
on_block(block)whenever a block
on_attestation(attestation)whenever an attestation
- Deposit Contract
The initial deployment phases of Ethereum 2.0 are implemented without consensus changes to Ethereum 1.0. A deposit contract at address
DEPOSIT_CONTRACT_ADDRESS is added to Ethereum 1.0 for deposits of ETH to the beacon chain.
Validator balances will be withdrawable to the shards in Phase 2 (i.e. when the EVM 2.0 is deployed and the shards have state).
A validator is an entity that participates in the consensus of the Ethereum 2.0 protocol. This is an optional role for users in which they can post ETH as collateral and verify and attest to the validity of blocks to seek financial returns in exchange for building and securing the protocol. This is similar to proof-of-work networks in which miners provide collateral in the form of hardware/hash-power to seek returns in exchange for building and securing the protocol.
Phase 2 is still actively in R&D and does not yet have any formal specifications.
See the ETH 2.0 Phase 2 WIKI for current progress, discussions, and definitions regarding this work.